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« Can A Widow Collect Social Security While She Works? | Main | Is My Inherited IRA Subject to EstateTax? »

04/15/2011

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You're quite right that income needs to keep up with inflation during retirement, but you discuss one reason why that's hard to do - the irregular performance of stocks and bonds. What are retirees to do in a down year such as 2008? If they withdraw 4%+inflation in such a year, everything they withdraw will come from an already depleted principal. A few years like that could leave a once healthy portfolio in bad shape.

Part of the answer is to make investments that hedge against inflation and are independent of the stock and bond markets. Today, that would mean commodities, and currencies stronger than the US Dollar. Many retirees are also using tax lien certificates to profit from the real estate slump and earn returns that beat inflation.

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