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New research from SmartAsset highlights the harmful impact that inflation has on an individual’s retirement account, demonstrating that an increase of even a couple of percentage points over the long term can drain a retiree’s savings much sooner than anticipated.

The study considered three hypothetical retirees facing varying inflation rates per year and compared how their retirement savings fared under the circumstances. Susannah Snider, manager editor of financial education at SmartAsset, told BenefitsPro that the study shows the severe impact inflation can have, providing crucial context during a period of high inflation. In the United States, consumer prices rose 8.3% in August over the previous year.

“For retirees, or aspiring retirees, looking at this study, it’s worth noting the impact inflation can have on their savings and taking stock of ways they can reduce their cost of living or tamp down on their personal inflation rate,” Snider said. “Bottom line: High inflation can have a major impact on your financial plan and the longevity of your retirement savings.”

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