Retirees Worry Inflation Will Ravage Their Savings

Retirees worry inflation will ravage their savings, but the reality is often less scary. Many retirees are concerned about spending their savings, with fewer than 1 in 3 retirees comfortable withdrawing money, and 7 in 10 saying it's very important that their nest egg doesn't shrink in retirement, according to a recent report from Corebridge Financial. More than a third of retirees say they've held back from spending to protect their savings stash. But what if those fears are outsized? A new paper analyzing how spending plays out in retirement suggests that retirees' spending declines over time. "Most existing financial planning tools and retirement research assume that retiree spending grows relatively lockstep with inflation," David Blanchett, head of retirement research for Prudential Financial and the paper's author, told Yahoo Finance. "But … in fact, for most retirees, spending declines over time," he said. This matters because understanding that spending doesn't increase to keep up with inflation dramatically reduces either how much you need saved or increases how much you can spend, Blanchett said. "While inflation is important, it's not that important," he said. "Hopefully, this allows people who are in retirement or about to retire to be more willing to do the things that they enjoy." ## Retirement and Inflation Relationship Retirees' inflation fears, often exaggerated. However, healthcare expenses, particularly toward the end of life, can be staggering.

■More than a third of retirees say they've held back from spending to protect their savings stash.

■Retirees' spending declines over time.

■Healthcare expenses, particularly toward the end of life, can be staggering.

Healthcare Expenses and Retirement Healthcare expenses, a significant burden for retirees.

■A 65-year-old who retired last year can expect to spend an average of $172,500 in healthcare and medical expenses throughout retirement, according to Fidelity.

■Healthcare expenses, particularly toward the end of life, can be staggering.

Inflation fears, a major concern for retirees. However, healthcare expenses, a significant burden. Healthcare expenses, particularly toward the end of life, can be staggering, and retirees should plan carefully to protect their savings.