Ah, retirement! That is the end goal for many employed people who simply want to relax and live their best lives outside of work. I’ve talked with people who want to buy a little cabin on a lake and spend as much time there as possible. I’ve talked with people who want to move to Florida or Palm Springs. And then there are those adventurous types who dream of traveling the world, touring the country in an RV, or skiing the slopes of Colorado or Switzerland.

No matter your personal goals, you’re going to need resources to do them. That villa in Aspen isn’t going to buy itself! And that 28-foot RV will need gas in its tank and regular tune-ups.

Even if you think you’re on the right financial track for retirement, I urge you to crunch the numbers again (or, preferably, go over them with a financial advisor). The reality is, many people will end up being retired for upwards of 30 years, and things can change significantly in that amount of time. Let’s consider inflation for a minute. In 1990, just over 30 years ago, the average cost of rent was $465 per month. Today, (according to a survey by Rent.com) it’s $1,690 on average for a studio apartment and $2,017 or more for a three-bedroom unit. That’s four times as much! In 1990, a movie ticket was about $4, while today it averages $9.18. In 1980, a concert ticket for a big-name act was about $15, while today it’s closer to $100.

These are just some examples of how prices and the cost of living inevitably trends upwards over time. Over the course of 30 years, the cost of living will typically increase between 2.25 and 2.4 times. And that’s bad news if you’re on a fixed income.

That’s why I encourage my clients to make smart investments that will likely increase, if not surpass, inflation. It usually doesn’t make sense to tuck all your money into a checking account or low interest savings account. As inflation continues to rise, your money will only decrease in value (since the interest you’re earning won’t keep up). Instead, it’s a good idea to diversify your assets so at least some of your money has the potential to keep up with inflation. Again, talk to your financial advisor about creating the right blend.

If you don’t do anything with your dollars and let them languish in a bank account (or, heaven forbid, under your mattress!), you’ll need to accumulate much more money than you probably realize in order to retire. Remember, the cost of living will likely tick up between 2.25 and 2.4 times during your retirement. So, that $45,000 truck you’re thinking about buying today will cost well over $100,000 in 30 years time. And we haven’t even considered healthcare expenses or the cost of moving into an assisted living facility (which can be mindbogglingly expense!).

If you’re hoping to retire soon, remember to proceed with caution. Take inflation into account and always, always consult your financial advisor before taking the leap.

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