What is the biggest danger of retirement?

[Learners Quest]

Another important point to consider when making a plan for retirement is the projected inflation rate. The value of one's retiring pension will be affected by inflation, as most pensions are fixed amounts. For example, if a person planned on living off of their pension until age 80, but the inflation rate was 5% per year, then they would have to live off their fixed income in real terms until they had reached 95 years old! Since this isn't realistic (unless the retiree had extraordinary medical care), your best bet is usually to invest at least some portion of your pension money. If you invest wisely and carefully, you can yield returns that will help you enjoy a very comfortable retirement.

It's important to note that you want to avoid chasing "hot" investments. While it may seem like a good idea in the beginning, chasing hot investments is a lot like using momentum indicators. What happens with momentum indicators is that they predict future price patterns based on past price patterns. For example, if a stock has been going up for the past year, then the indicator predicts that the stock will go up again next year. What happens is that traders buy into the momentum and prices become skewed higher. Once all of the people who want to buy have bought into the "momentum," then prices tend to fall because there aren't enough buyers anymore (a buying vacuum). The same holds true with investments.

 

[niche]

Inflation is a major problem for retired persons or older persons who do not have a job or monthly salary. In the last year, the prices of many items have increased greatly, often by 30-50% while the interest income remains low at 5%. So retired persons who are not pensioners are facing a major financial problem. If the senior citizen has health problems and requires medication or has to be admitted to the hospital the expenses will further increase while interest income remains the same. So it is better to maximize the amount saved, so that any medical or financial emergencies do not create a problem.