Protect Retirement Savings by Expecting the Unexpected

June 26, 2009

By Andrew Freiburghouse | Money Rates Columnist

There is no such thing as a sure thing, especially when it comes to investing. Even CDs, among the safest of all places to put your money, can fall in value due to an external factor such as inflation.

However, the constant presence of risk should not prevent us from planning to minimize risk. Especially if you are approaching retirement, risk has lost its appeal. It's time to protect retirement savings.

Here are two potential threats that, while not worth panicking over, are certainly worth keeping an eye on.

Global Currency

China and Russia have both floated the idea of a "global super currency" that would replace the U.S. dollar as the global default currency. It is truly impossible to know what the exact effect of such a change would mean to American savers, but it's hard to imagine that the U.S. dollar would benefit.

Savers looking to counter this risk may want to consider maintaining some deposit accounts denominated in currencies other than the U.S. dollar.

Inflation

The U.S. government has been spending a tremendous amount of cash over the past year and a half, trying to stop the U.S. from slipping into a deep economic depression. Estimates are that government commitments to economic assistance programs may reach up to $10 trillion.

Anytime such dollar figures are being bandied about, and meanwhile the value of gold has risen 25 percent in six months, people start to fear inflation.

Inflation is the worst nightmare of U.S. retirement savers because it directly lessens the buying power of money needed for retirement expenses. Savers looking to "hedge" against inflation may want to think about buying some gold-based investment.

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