Inflation: An Enduring Cause for Concern
A gallon of milk was .31 cents in 1960, just 60 years ago.[1] Now, that same gallon of milk can run you more than $4.00. A change of a few dollars may not sound huge, but that change equates to an increase in price by more than 1,000%, and we all know milk is not the only item that has surged in price in recent decades. We are once again seeing high levels of inflation, often the highest we’ve seen in years, so the buying power of the money and assets you have saved may be changing as well. When planning for retirement, you must consider what you will have left as inflation continues.
History of Inflation
Almost everything you are purchasing is rising in price right now. Because of this, inflation is a major concern. A $100 bill in 1960 had the buying power of just $40 in 1980 and just $11 in 2021.[2] What will that 1960s $100 bill be worth in 20 more years? Ten years of 7% inflation reduces $1 million to a worth of about half that much. Can your savings withstand inflationary levels that extreme? With inflation at a 40-year high, daily life has quickly become the most expensive it has been in decades. But inflation doesn’t just impact your wallet. The market and overall economy can also be negatively impacted by inflation. With individual purchasing power decreasing due to dollars stretching less and less, economic growth decreases as well. The last time the US saw inflation rates above 5% was during the last Great Recession.[3]
Inflation and Retirement Don’t Always Mix
Not everyone has retirement income that increases over time. If you will be living off savings in your retirement years, inflation may need to be a larger concern for you than for others. Placing your savings in the market can be one method for combating inflation, but exposing your nest egg to an unnecessary amount of risk can lead to other issues down the line. In this period of high inflation and market volatility, making financial decisions for your future can be difficult and stressful.
Our advisors here at Moore’s Wealth Management would be more than happy to provide a complimentary consultation to look over your finances with you and assist in preparing for the years ahead. To schedule a free consultation, click here or call our office at 770-535-5000, where a staff member is awaiting your call Monday through Friday, 9 AM to 5 PM.
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