Inflation – How it Affects our Buying Power and Retirement

29 01 2012

Things will cost more tomorrow = Inflation.

No signs of slowing down = Longevity.

  • In 1985 a postage stamp cost twenty-two cents.  Today it rose to forty-five cents. [1]
  • In 1985, $10,000 had the same buying power as $21,054.37 does today. [2]
  • Medical expenses have increased 43% in the last five years alone and will likely increase at a higher rate overall.
  • By the time America’s baby boomers reach to be 100 years old, there could be more than a million centenarians. [3]

The realization of Inflation is scary to many folks.  What we can do is: protect ourselves by saving more.  We should also try to reduce living expenses by following the mantra “I will live below my means”.  If we counter these rising costs with saving more today, we can possibly offset the cost of inflation – though this may not be necessarily true, but we can try today.

With regard to retirement – there is a financial vehicle in place that allows for future retirees to withdraw money from their retirement account tax-free.  This is known as the Roth IRA.  Money deposited into the account comes from taxed earned income.  People can begin withdrawing monies at the age of 59 1/2 or if they are to purchase their first home.  There are other rules/regulations from the IRS here.

Inflation does not discriminate – it affects everyone.

______________________

[1] www.prc.com

[2] www.bls.gov/home.htm

[3] www.abcnews.com, Secrets to Living Longer with Barbara Walters 2008

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