What’s All This Talk About Inflation?
I think we can all agree that inflation is on the upswing. But will the increases persist or are they merely
the result of transient factors? Here are my thoughts.
I think prices shot up temporarily in the spring as a result of the post-pandemic recovery. By July, the core CPI, which does not include food and energy, had already begun to decelerate. That doesn’t mean it will drop to historic lows again and stay there. To my mind, government spending on social programs and the continuing housing shortage make that scenario unlikely. I think the new normal will be inflation rates a little north of 2%.
If my prediction is correct, we’ll experience a gradual reduction in purchasing power. The cumulative effect of even moderate inflation can have a significant impact on the value of a dollar over time. Over the 20 years from 1991 to 2021, the cumulative price change was 100.44%*, which means that a $1 item would cost $2 today. Anyone who retired in 1991 and is still living today would need double the
income to keep up with inflation.
Given the changing economic conditions, now’s a good time to review and reset financial plans created
within the last 10 years. As we plan for the future, we should make sure inflation and interest rate assumptions are aligned with today’s economic realities.
Design Your Own Custom Money Map
Johnson Brunetti is ready to help you review your existing plan or create one. Our firm has helped hundreds of pre-retirees and retirees navigate a changing world. Contact us to put our experience to work for you.
*Source: https://www.usinflationcalculator.com/
Information presented in our podcasts 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.
Related Resources
-
How to Jumpstart Your Retirement Planning
Retirement planning can feel overwhelming, especially after decades of hard work and diligent saving. With so much to consider, how can you ensure your money lasts as long as you do? The good news… -
Case Study: What Should My Investment Portfolio Include?
As you approach retirement, your investment strategy must shift from aggressive growth to a focus on income generation, asset preservation, and moderate growth to outpace inflation. Consider th… -
How Can I Protect My Retirement Savings from Market Volatility?
We’ve been receiving a lot of questions lately about how to best protect your retirement savings against stock market volatility. It’s easy to let recent fluctuations in the market shake your conf… -
Avoiding the Retirement Tax Trap
Once you retire, understanding your tax implications becomes even more crucial. After all, taxes don’t disappear in retirement. In fact, as you begin withdrawing from your retirement savings, you … -
Podcast Episode 406: How to Plan for a 30-Year Retirement
Prefer to watch? Click here to watch and listen on YouTube. The retirement landscape has changed dramatically. Today’s retirees bear much more of the responsibility for securing their financial… -
What Should I Watch Out for When Reviewing My Retirement Tax Return?
Now that tax season is over and your return is filed, you may be wondering what you need to review in preparation for next year, especially if you’re approaching retirement. In this week’s Mone… -
Retiring In Uncertain Times
During times of economic uncertainty, it’s natural to feel overwhelmed. It seems like every day there’s a new update from the markets. But rather than reacting to the noise, focus on why you have … -
How Do Tariffs Affect the Stock Market?
If you’ve been tuned into the news lately, you’ve probably heard a lot about tariffs. The current administration’s latest economic push has introduced a wave of uncertainty in the market. But what… -
How Do I Get Out of Debt Fast?
Most people with debt want to get out of it quickly and efficiently. To do that, you first need a clear understanding of your financial situation. Second, you need a clear, actionable plan. In … -
Why Do I Need to Account for Inflation in Retirement?
Today’s question is: What is inflation and why is it important to account for in my retirement plan? Inflation is the rising cost of goods over time. Meaning, it will cost you more money next year…
