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2011 4th Edition (Other Editions)


The task of providing retirement income seems to fall on each individual's ability to accumulate retirement funds during working years, sources such as:

You may receive retirement benefits from all of these sources. It is prudent not to rely on only one or even two of these sources. A balance (or diversification) of retirement income sources is best.


Everyone involved in the process of planning for retirement has given, or should be giving, some thought to inflation. Inflation has been a common part of our economic lives. Is there any good reason to believe that Inflation will change substantially in the years to come? Probably not, and inflation is something that every person planning for financial security must take into account. Inflation will affect your ability to save and invest money.


One important issue in retirement planning is the manner in which continued inflation can diminish the purchasing power of retirement income. Inflation makes it essential that you have diversified sources since some sectors of the economy do better than others at particular times - while the cost of living still moves inexorably upward.

Inflation will not stop when you retire. In fact, it can become even more vicious to a retiree on a fixed income. The need for inflation protection is a powerful element in the decision process when choosing long-term investments.


To offset inflation over a long period of time, you will need to place some funds in investments that have historically outpaced inflation.

Real estate has done so, but it is unsuitable for collectibles such as art, stamps, rare coins and gemstones. Furthermore, real estate presents management problems that can become quite a burden during retirement years.

An alternative could be a managed diversified portfolio of common stocks. This might be one of the options in a retirement plan, where the trustee or plan administrator handles the investment of a large pool of investors' funds.

However, for plans where the owner makes decisions regarding investments, you should consider the use of mutual funds or variable annuities. These investments allow the option of changes to the investment allocation to a more conservative option should your circumstances warrant.