Canva: cyano66 from Getty Images and gerenme from Getty Images Signature Quick Read Retirees with heavy stock exposure face severe risk. The S&P 500 dropped nearly 40% in 2008. The rule of 100 suggests subtracting your age from 100 to determine stock allocation percentage. Conservative portfolios heavy in bonds or CDs may fail to outpace inflation and erode purchasing power. If you’re thinking about retiring or know someone who is, there are three quick questions causing many Americans to realize ...

When people talk about “cash,” they usually mean the money sitting in their checking account. But in personal finance, cash often includes more than just dollars you can spend today. That’s where cash equivalents come in. These low-risk, highly liquid financial products are designed to hold your money safely while keeping it easily accessible. And often, they earn more interest than a traditional checking account. Understanding what qualifies as a cash equivalent can help you make smarter decisions about ...

Inflation Impact on Savings and Investments - The Federal Reserve aims to maintain inflation around 2%, but current inflation is leaning toward 3%, negatively impacting savings and investments [1][2] - Inflation erodes the "real return" on investments, meaning that even positive nominal returns can result in negative real returns when accounting for taxes and inflation [3][5] - At 3% inflation, $10,000 loses nearly $300 in purchasing power annually, highlighting the significant impact of even small inflation rates [3] Financial Products and Returns - High-yield savings accounts (HYSAs) and certificates of deposit (CDs) often fail to provide returns that outpace inflation, especially when inflation spikes [4] - It is crucial to compare after-tax, after-inflation real returns when evaluating savings and investments, particularly for retirees who need to sustain purchasing power over time [5] Wage Adjustments and Inflation - Companies may not provide raises that keep pace with inflation, and some do not offer annual raises at all [6] - Employees are encouraged to negotiate pay adjustments based on the consumer price index (CPI) to ensure income aligns with inflation [6]