This is a membership Morsel from “Too Young to Retire”. Today, we are continuing to
talk about Money in retirement and the slow erosion of your monies caused by inflation.
When you retire, you apply for a pension, social security, and Medicare. The government says that when they start sending you a check, the amount is fixed, and other then a minor adjustment for inflation, it stays the same.
The problem is, the inflation adjustment is always less than the actual inflation; so, you slowly lose buying power with what you get. The other thing is that the Medicare cost increases usually goes up faster than the inflation adjustment in the social security. This is in effect a double whammy, and you have less each year.
Also, as inflation goes up, your buying power drops. I think of the mid 1970’s when we hit 12 % inflation, rents were skyrocketing, food prices were going out of control, and gas hit $5.00 per gallon. That was up from 30 cents per gallon the year prior.
It was do able if you were working or had a lot of pre-inflation debt. The increased monies you brought home made paying the debt cheap. But if you wanted to borrow monies, the interest rates were through the roof. My first house bought in 1979 had 12 ¾ % interest and that was considered cheap. At the time we closed it was up to 16-1/2 %.
The inflation also stole from your investments and savings. If you had fixed investments like annuities, bonds, or savings accounts, the interest they paid you was less than inflation. You were in effect paying them to keep your monies. If you were working, the possibility existed that pay raises would keep up with inflation. If your income was fix every month the amount you could afford kept decreasing.
The government is now embarking on a high inflation course that will get worse if they keep spending. Are you going to suffer or profit by it? By being part of the 2 Young 2 Retire you can see how other people are dealing with the effects of inflation and what might be an applicable for you.
There are so many things you will learn that you should never run out of options. Sign up for our classes, join in the discussion and become part of our community about life after working at www.patterson2y2r.com
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