The following graph shows the impact of inflation on your purchasing power over the last 100 years.
Should you worry about this?
If you had been retired 10 years and the following expenses all increased significantly, how would you adjust for losing one-eighth of your money? These price changes are real. This happens all across the nation and the graph above shows what your dollar will buy now versus so many years ago.
- Medical costs have gone up by $112 a month
- Auto insurance increased by $89 a month
- Food costs have gone up by $223 a month
- Gasoline costs have gone from $76 a month to $132.
This is the same effect as if your monthly income went from $3,400 a month down to $2,900 a month. That’s a huge pay cut!
The big question is how can you adjust your spending to make this work? Inflation is here to stay. We must learn how to own assets that keep up with inflation. We must have income sources designed to adjust upwards. It takes planning, for many years in advance, to have assets that will go up in value as your expenses increase. Your task is to search out these kind of assets that will go up during inflationary periods but not go down in deflationary times. I will add more “how to” in the near future that will meet this criterion but you are the one that must take the initiative to learn more about this. For further help, go to www.moneymastery.com. I encourage you to make it a habit to study and use search engines and social media and referrals to find our ways to invest that will increase in value and income over the next several years. You can do this. Give me your success stories when they happen. firstname.lastname@example.org.