At Easter dinner this past Sunday, we were talking about how much things cost, namely healthcare. My good friend and mentor, Dean, had recently told me he purchased his first home for $12,000. Then my father-in-law chimed in and said their next door neighbor recently purchased a new sewing machine for $10,000. We all kind of chuckled and made comments like, “I wonder if you can drive that sewing machine to work?”

Isn’t it crazy to think how the purchasing power of the dollar has lost ground in the last 40 years? The Bureau of Labor and Statistics has an inflation calculator, and when I ran the calculator it said $10,000 in 1970 had the same purchasing power as $58,676 in 2012. One of the most important concepts I teach is retirement is all about cash flow not net worth. Your income determines your lifestyle in retirement. If your income is fixed and is not adjusted to keep pace with inflation, then how will you sustain your lifestyle during the next 20 or 30 years? I meet with people who tell me due to stock market volatility in recent years the amount of money they have invested today is about the same amount of money they had invested 4 or 5 years ago. If you have the same amount of money today that you had four or five years ago, then is your purchasing power keeping pace with inflation?

Once upon a time you could retire and just buy a basket of municipal bonds and live off the tax-free interest income. Unfortunately in today’s ultralow interest rate environment that type of strategy just won’t work for most of us. As more and more baby boomers begin to retire, one of the questions or concerns I often hear is, “How can I generate more income in retirement?” Many people today who are in search of income are exploring investments such as dividend paying stocks, high-yield corporate bonds, master limited partnerships, annuities, real estate investment trusts, utilities, preferred stocks and treasuries with yields ranging from 0.5% to 7% with varying degrees of risk.

Albert Einstein once said, “The world we have created is a product of our thinking; it cannot be changed without changing our thinking.” As you prepare for and transition through retirement, remember that retirement is all about cash flow not net worth. Be sure to explore all of your retirement income options. Be sure to consider the concepts, ideas and strategies that may have worked in the past may not be the same concepts, ideas and strategies that will work in the future.

For an interesting look at inflation be sure to check out the inflation calculator that the Bureau of Labor Statistics makes available. Here is the link