Throughout most of 2022, inflation spiked at nearly the highest levels since the early 1980s, according to the Bureau of Labor Statistics. Last fall, Moody’s Analytics estimated that inflation was causing American households to spend $445 more per month buying the same items they did in the year prior.
From a longer-term perspective, inflationary trends are expected to persist to some degree for a while, which could be adding uncertainty to your retirement outlook. And while the stock market continues to exhibit volatility, many savings accounts and CDs don’t come close to tracking the pace of inflation.
For those looking to secure their financial future, times like these require exploring options that have the potential to deliver solid returns while minimizing risks.
One such strategy? Annuities.
What is an annuity?
You’ve likely heard of annuities. But if you’re like a lot of people, you aren’t sure exactly what they are and how they work.
Last year, consumers set a record by investing $310.6 billion in annuities, according to insurance trade group LIMRA, 17% more than in 2008.
In simple terms, an annuity is an investment tool that can provide you with secure retirement savings or a source of funding for unexpected expenses. Annuities are typically purchased from an insurance company such as ERIE, through a single, lump-sum payment or through a series of scheduled deposits.
When you purchase an annuity, the insurance company invests that money in ways that earn interest, until a predetermined date when it starts making payments back to you. Those payments typically continue until you or your spouse pass away.
One such investment from Erie Family Life Insurance Company, fixed-rate annuities, has a guaranteed interest rate, which can be a helpful hedge against market volatility. Annuity earnings grow tax deferred until you are ready to use them. Annuities also offer you the ability to turn your account balance into an income stream that you cannot outlive.
How else can ERIE help fight inflation?
Your future isn’t the only major finance that inflation targets. It can also hit you where you live.
In an effort to cool inflation, the Federal Reserve implemented a series of interest rate increases. These hikes, in turn, raised mortgage rates, driving the average 30-year fixed-rate mortgage to around 6%, double the level at the start of the year.
If the prospect of paying higher mortgage rates is preventing you from moving into your dream home, the next best thing is protecting the one you have now.
For current homeowners, ERIE’s Guaranteed Replacement Cost Coverage will pay for the full cost of rebuilding your house back to its previous size and specifications, regardless of how much it costs, should you experience a total loss.[1] And as the cost of rent continues to soar, safeguarding your belongings becomes all the more important. ERIE’s renters insurance can protect your things in the event of a covered loss.[2]
Inflation is a relentless opponent when it comes to your finances. ERIE offers ways to fight back. Ask your Agent to learn more about these strategies.
This article is not intended to provide estate planning, tax or investment advice. Please consult a qualified professional advisor.
ERIE® life insurance products and services are provided by Erie Family Life Insurance Company, a member of Erie Insurance Group, and are not available in New York. See individual policies for specific coverage details. Certain terms and limitations may apply. Refer to our disclaimer for additional information.[2]
