INFLATION CUTS THE VALUE OF YOUR MONEY IN HALF EVERY 22 YEARS.
Here's why:
On average, U.S. inflation has risen 3.21% every year for the past century, doubling prices every 22 years. So, if you're 45 years old today, you can expect to see prices double—and your money lose half its value—not once, but twice during your retirement years.
It's a reality you have to consider when saving and planning for retirement.
THE 401K, IT'S NOT A RETIREMENT PLAN
RETIREMENT CHALLENGES
Living longer: increasing life spans create the risk you’ll outlive your savings.
Inflation: Rising healthcare costs, increasing general living costs, and taxes can erode your future purchasing power.
Market uncertainty: market volatility and low interest rates can have a devastating impact on your retirement income.
Life Story #1
27 years old young professional investing $300 a month to age 65 with the no tax, 0% floor, and no loss in the stock market strategy.
Total investment for 38 years will be $136,800. The accumulation is tax deferred and distribution is tax free.
Starting at age 66 when she retires, she will be receiving $72,000 a year of Tax Free Life Time retirement income.
If she lives for 10 years from age 66 to age 75, she will be receiving $720,000 of retirement income, all Tax Free.
If she lives for 20 years from age 66 to 85, she will be receiving $1,440,000 of retirement income, all Tax Free.
If she lives longer, you can do the math.
Life Story #2
40 years old male who saves $19,500 a year following the 401(k) guideline for retirement saving.
He saves $9,500 every year into his company’s 401(K) and $10,000 into the no tax, 0% floor, and no loss in the stock market strategy.
In 25 years, he will be saving $237,500 into his 401(k). At distribution at age 66 for retirement, he should have more than $237,500.
Just for example, his money has grown to $500,000 accounted with gains and losses in the stock market throughout the years.
At distribution at retirement, he would have to pay let say 30% tax on his money. He would be left with $350,000 after tax.
With the $10,000 he invested into the no tax, 0% floor, and no loss in the stock market strategy, he would have invested $250,000 in 25 years.
At age 66, he will be receiving $63,485 a year of retirement income without having to pay any income tax on the money.
If he lives for 10 years from age 66 to age 75, he will be receiving $634,850 of retirement income, all Tax Free
If he lives for 20 years from age 66 to age 85, he will be receiving $1,269,700 Tax Free Retirement Income.
If he lives to age 90, he will be receiving $1,587,125 tax free.
How long will the $350,000 from his 401(k) last him with the same distribution amount of $63,485? About 5.5 years.
