Inflation erodes the value of savings and reduces returns. In order to combat the sometimes extreme fluctuations of the stock market, retirement portfolios are often weighted more toward fixed-income investments. Conservative investments that pay a fixed income run the risk of being unable to keep pace with inflation. For example, the cost of health care, one of the largest expenditures retirees face, has been growing at over 5% annually.
*Investment products: Not FDIC Insured - No Bank Guarantee - May Lose Value.