We dedicated this week’s episode of Grow Money Business to discussing inflation and how it might affect your retirement plan. Throughout the episode, we dive into technicalities in detail, research what the data tells us, incorporate this concept into your retirement planning, the 4% rule, Monte Carlo simulations, stocks and bonds in inflation, and more.

 

Show Notes

[05:44] 4% Rule – Grant starts the conversation by explaining the 4% rule for retirement and how it enables you to live comfortably.

[14:55] Monte Carlo simulations - The Monte Carlo simulation is a mathematical method used to estimate the range of outcomes for a random process. This technique is used by computer systems to look at historical data and generate multiple possible outcomes from a single decision.

[21:35] 3% rate of inflation – Grant explains how you can use a 3% interest-bearing account with the extra money from your pension and how it can be useful for future inflation.

[31:45] Monte Carlo for retirement planning – Grant explains how useful Monte Carlo simulations can be for retirement planning.

[35:24] Stocks and bonds – Grant describes how high inflation affects stocks and bonds.

 

Resources

How Sequence-Of-Inflation Risk Impacts Retirees Beyond Just Sequences Of Returns

kitces.com/blog/sequence-of-inflation-risk-retirement-investment-monte-carlo-technology/

 

4% rule about how much to spend each year of retirement no longer works, creator says

usatoday.com/story/money/personalfinance/retirement/2022/05/20/retirement-4-percent-spending-rule-no-longer-works/50251755/