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October 13, 2017

Seniors can look forward to a little bit of extra money in their government checks next year. The Social Security Administration announced its annual cost-of-living adjustment this morning: a 2% raise for 2018. That’s the good news. The bad news: That’s not enough to keep pace with medical inflation, which trends higher than general inflation. And even modest inflation can take a bite out of your purchasing power: At 3% annual inflation, a dollar will buy just .50 cents’ worth of goods and services in 25 years. That all creates implications for your investment portfolio, because most retirees will need to maintain a healthy allocation to stocks to keep up with mounting costs. Still working? Be sure to keep socking that money away.

Best wishes,

Elizabeth

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ABOUT ELIZABETH

Elizabeth O'Brien is a senior writer at MONEY, covering retirement and health care. You can email her at elizabeth.o'brien@moneymail.com and follow her on Twitter at @elizobrien.

 
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