In addition, the Federal Reserve has indicated its willingness to let inflation run hotter than the standard 2%, although some experts think the March surge is temporary. It s hard to say if inflation is a primary concern right now, but there s a strong case to be made that inflation could continue to tick higher over the next several years as the economy heats up, said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York. So I wouldn t discount anyone s concerns.
The economy is expected to grow more than 6.5% this year, according to a recent CNBC survey of economic experts. Respondents also anticipate that the unemployment rate will drop to 4.9% and inflation will come in at 2.5%.
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The projection for inflation in
2021 is only 2.24%, which is not outside of the normal yearly inflation rates. According to Kendall, though inflation has not increased by any extremes over the past 40 years, future retirees should still take inflation seriously when planning their investment portfolio.
You need to think, “How much will a 2021 U.S. dollar be worth in 2050?”
Let’s use someone’s retirement account as an example. If someone has saved enough to spend $50,000 a year for their 35-year retirement that starts in 2021, but inflation continues to increase at an average of 3% every year. Taking inflation into account, this individual will need:
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