Understanding Inflation and Its Impact
Joel Johnson, CFP® discusses inflation and the impact it causes on this week’s segment of Better Money Atlanta.
How Inflation is Measured
The Consumer Price Index measures the change in price of goods and services in the economy.
This compares the cost of something one year ago with the cost of the same thing today. For instance, if the inflation rate is at 8%, an item that was $1.00 last year now costs $1.08.
The target rate of inflation is 2%, which can be manipulated by the Federal Reserve by adjusting interest rates.
How to Plan for Inflation
Retirees need to have a retirement income plan or projection that shows how much money they need in order to keep up with inflation. Answer these questions in your retirement plan:
- How much income do you want in retirement?
- How many raises will you need to give yourself?
- What interest rate or earning rate do you need?
Information presented here is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.
Johnson Brunetti is a marketing name for the businesses of JB Capital and JN Financial.
Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.
The guarantees provided by any type of insurance contract are based on the claims-paying ability of the insurance company.
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