Question

Which of the following statements best explains why inflation is an important factor to consider when saving for retirement?

a.Social Security benefits could drop.
b.Prices tend to increase over time.
c. Americans are living more active lives.
d. Health care costs are lower in retirement.

Answer 1

Inflation is an important factor to consider when saving for retirement because prices tend to increase over time, which can reduce the purchasing power of retirement savings.

Step-by-step explanation:

When saving for retirement, it is important to consider inflation because prices tend to increase over time. As prices rise, the cost of goods and services also increases, meaning that the same amount of money will buy less in the future. This can have a significant impact on the purchasing power of retirement savings.