#3 Clear sign of potential bankruptcy: You forgot to take inflation into consideration
Following the trend that we see with workers, few pay attention to inflation if their wages are also adjusted to cover the sudden increase in costs. However, this may translate to when they are retired, as a lot of those workers do not see the clear signs of inflation and do not take the possibility of prices rising into consideration as a factor that could easily make a big dent in their nest egg.
On average, in the United States, we see prices going up about 3% every year for services and goods. It is easy to assume that in 20 years time, your $100,000 retirement savings will no longer have the same buying power! It is actually predicted that it will have 60% less, and a lot of seniors do not plan ahead for it.
One way to anticipate this is to save more than you believe you need, and then you may not end up having to budget tightly when inflation rises unexpectedly. Another way to anticipate inflation would be to put off taking out Social Security benefits until you’re 70 if you can, as it would mean that when you start getting them, the payout will be even bigger! Whichever you choose, keep an eye out for any signs of inflation, as it can be a nasty surprise!
