The Silent Killer

Over the last few weeks, we’ve outlined the first few steps in The Relaxing Retirement Formula™ and you’ve gotten crystal clear on just how dependent you are on your Retirement Bucket™ today.

If you’ve come this far, and you’ve diligently discovered this critical number for yourself, I sincerely applaud you.

You’re in the minority already!

However, there’s a key missing factor to your number which I refer to as “The Silent Killer”. And, that is what will your level of Retirement Bucket Dependence be next year?

In 5 years?

In 10 years?

In 20 years?

The reason we have to even talk about this is…..


Many so-called financial “experts” have been lulled to sleep over the years with inflation’s enormous negative long-term impact. I continue to read articles and see websites of large financial institutions suggesting that you use 2.5% to 3% as an inflation rate in your forecasting.

This has always been a big pet peeve of mine as I believe it’s a grave mistake to assume that the low inflation rates we’ve experienced over the last 20 years will continue forever. That would be like assuming that the double digit inflation we experienced from 1979 to 1982 would continue forever.

If you take a real objective view of what has transpired over the last few years on a national level with the enormous level of federal debt financing going on, it would be difficult not to conclude that inflation is going to enter into our picture in a major way.

Let’s get back to your 3 potential fixed income sources that we evaluated last week and see how they stand up to inflation:

  • Social Security has a cost of living factor (COLA) built in, so, in theory, it keeps pace with inflation. If your benefit is $1,600 per month right now, it will likely be greater than $2,000 per month in 10 years. (In 2013, you received a 1.7% COLA increase)
  • Most pensions do not have a cost of living adjustment. So, if your monthly pension is $5,000 per month, your check in 10 years will still be $,000 per month while the price of everything has gone up!
  • Rental property income should, in theory, keep pace with inflation. However, local rental market forces, and most people’s lack of tenacity in “raising the rent” each year, may have an impact on what income increases you can count on in the future. Be careful and conservative with what you expect.

Now that you know all of this, take a look out at what your fixed income sources will look like, not just today, but in 10 years, 20 years, and 30 years. Create your own personal timeline.

How does it match up with your desired lifestyle costs that you’ve calculated?

Is there a deficit right now? How about in 10 years (due to inflation)?

If there is, don’t sweat just yet. That’s why you’ve saved all of that money all your life…to supplement your fixed income and fill in the gaps when you stop working.

Next week we’re going to move on to the next step in the Relaxing Retirement Formula™ which is to explore the most important question you need to answer now that you’ve done this all important groundwork.

It will completely change and simplify the way you view investing for the rest of your life.

Committed To Your Relaxing Retirement,

Jack Phelps
The Retirement Coach

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I appreciate the trust you place in me. Thank you!