When you retire, the last thing you want to worry about is outliving your money. Fortunately, there are a number of retirement planning vehicles that can help you hedge against inflation. In this blog post, we’ll discuss four of the most popular options. So, whether you’re just starting to plan for retirement or are already in it, be sure to check out the information below.
Cryptocurrency
One option that is often overlooked is investing in cryptocurrency. Cryptocurrency has a number of characteristics that make it a great investment and hedge against inflation.
First, cryptocurrency is not subject to the same economic forces as traditional fiat currency. Because it is not backed by a government or central bank, it is not susceptible to the same economic policies that can cause inflation.
Second, cryptocurrency is decentralized and not subject to the whims of any one country or group of countries. This makes it much less likely to be impacted by geopolitical events that could cause inflation.
Third, cryptocurrency is a finite resource. There will only ever be a certain number of Bitcoin, for example, that can be mined. This scarcity gives it value and makes it less likely to be impacted by inflationary pressures.
Fourth, cryptocurrency is easy to store and transport. It can be stored on a computer or mobile device, or even in a physical wallet. This makes it convenient to use as an investment or hedge against inflation.
Finally, cryptocurrency has a number of advantages over traditional investments. It is much more volatile, which means that it can offer higher returns in a shorter period of time. It is also less likely to be impacted by government regulation or financial instability.
IRA’s
Individual Retirement Accounts are a great way to set money aside for retirement while getting some tax benefits and potentially earning a higher return on your investment than in a savings account.
There are two main types of IRA’s, traditional and Roth. Traditional IRA’s offer tax-deferred growth on your investment, meaning you don’t pay taxes on the money until you withdraw it in retirement. Roth IRA’s offer tax-free growth, meaning you pay taxes on the money when you contribute it but not when you withdraw it in retirement.
Both traditional and Roth IRA’s have contribution limits for each year. For 2020, the contribution limit is $6,000 if you are under age 50 or $7,000 if you are over age 50. There are also income limits for Roth IRA’s which can phase out your ability to contribute if your income is too high.
IRA’s offer a great way to save for retirement while getting some tax benefits. They can also be a great hedge against inflation. With traditional IRA’s, you defer taxes on the growth of your investment until retirement when you may be in a lower tax bracket. With Roth IRA’s, you pay taxes on the money when you contribute it but not when you withdraw it in retirement. This can be beneficial if tax rates go up in the future.
IRA’s are also a great way to invest in yourself. You can use them to invest in stocks, bonds, mutual funds, and other investments. This gives you the potential to earn a higher return on your investment than if you just kept the money in a savings account.
If you are looking for ways to save for retirement and hedge against inflation, IRA’s are a great option to consider. Talk to your financial advisor to see if they are right for you.
Gold & Silver IRA’s
A Gold IRA or Silver IRA is a self-directed Individual Retirement Account that allows investors to hold precious metals such as gold and silver in their retirement accounts.
Investing in precious metals is a great way to hedge against inflation and protect your wealth. They are also a good way to diversify your retirement portfolio.
Gold and silver IRA’s have the same contribution limits as traditional IRA’s. For 2020, the contribution limit is $6,000 if you are under age 50 or $7,000 if you are over age 50. There are also income limits for Roth IRA’s which can phase out your ability to contribute if your income is too high.
You can invest in gold and silver through ETF’s, mutual funds, and even physical coins and bars. You can also rollover a 401k to a gold IRA. Talk to your financial advisor to see if a gold or silver IRA is right for you.
Annuities
An annuity is a contract between you and an insurance company. You make a lump sum payment or series of payments and in return, the insurance company agrees to make periodic payments to you for a certain period of time.Â
Annuities can be a great way to hedge against inflation and protect your retirement income. They can also provide you with a steady stream of income that can last for 20 years or more.
There are two main types of annuities, fixed and variable. Fixed annuities offer a guaranteed rate of return on your investment. Variable annuities offer the potential for higher returns but they also come with more risk.
Annuities are not without risk. They are subject to fees and charges which can eat into your investment. They are also not as liquid as other investments, meaning you may have to pay a penalty if you need to access your money early.
Annuities can be a great way to hedge against inflation and protect your retirement income. Talk to your financial advisor to see if an annuity is right for you.
Artwork & Collectibles
Artwork and collectibles can be a great way to invest your money. They have the potential to appreciate in value over time and can be a good hedge against inflation.
Investing in art or collectibles is not without risk. They are subject to market fluctuations and you may not be able to sell them at a price you are happy with.
There are also storage and insurance costs to consider. If you are thinking about investing in artwork or collectibles, do your research first and talk to a financial advisor.
The Bottom Line
There you have it! These are just a few of the alternative options available to help you save for retirement and protect your wealth from inflation. Talk to your financial advisor to see which option is right for you.
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