How to Beat Inflation

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How to Beat Inflation

How do we know if we have enough money set aside for savings, retirement, or even just to keep ahead?  It seems like every day there is a new military conflict to fund, another investment that underperforms, or another world event that promises to impact my finances.  These events (plus many more) result in my money just not going as far as I would like it to or thought it would. 

A short while ago I said to my adult children, “I have been married for almost 37 years, but I spent less time thinking about finances when I got married than I do now.”  Retirement had become the thing I was closing in on and looking more closely at every day (as I was growing older).  Knowing inflation is beating up the global economy and seeing it in my own finances, I found myself spending more and more time thinking about how to beat inflation

How much money is enough to have set aside?  In 1978, the year I graduated from high school, it was nothing special to expect to get out of school and at least live a middle-class lifestyle.  Growing up in Detroit where the automotive industry dominated the culture, everyday assembly line jobs could provide that middle-class lifestyle, so the expectation was that if you work hard, you may even be able to do more than simple middle class.  As life went on, it seemed the harder I worked, the harder I had to work to maintain my lifestyle.  In college, I learned about inflation (as part of the broader topic of economics), but it didn’t stand out to me any more than my studies in Western Civilization or any of the general education courses I had to take. 

As I looked back at life in the 1970’s and 1980’s, it just seemed simpler, easier.  I don’t remember spending any time at all thinking about how to beat inflation.  But now, here I was getting closer to retirement age, and I HAD to think about it!  It was the very thing that was eating away at my ability to go into retirement and be comfortable. 

Consider the cost of things the year I graduated from high school compared to what they cost now. In 1978, a new GMC pickup truck had an MSRP base price of less than $5,000.  Recent articles in USA Today and the Detroit Free Press reveal that the average price for most high-end pickups now exceeds $70,000.  That means the price of the pickup truck is now fourteen times as expensive as it was in 1978. 

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1978 Pickup Truck ($5,000)                                 2017 Pickup Truck ($70,000)

In 1978, the average price of a home was $58,500.  The average price of a home today is now $388,200 as found in the most recent US Census.  That means a house is now nearly seven times as expensive as it was in 1978.  It doesn’t matter what product you look at or what facet of our living expenses you consider, you quickly find that the price of the things we use every day or that impact our earnings have gone up by multiples.  But what about income?

In 1978, the median household income was $50,184, but in 2015 had only risen to $56,516 (also as found in the US Census).

That is barely more than a 10% increase in income at the same time the things we use in our lives cost as much as fourteen times as much.  That means there is virtually no way for my income to keep up with the expense of living, and this is the tangible effect of inflation.  Your investments are most likely not able to keep up with inflation, and yet they are supposed to be what makes retirement possible!

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But what exactly IS inflation?  Merriam-Webster defines it as, “…a continuing rise in the general price level usually attributed to an increase in the volume of money and credit relative to available goods and services.” 

In the world of Economics, another way to say that is, “A general increase in prices and fall in the purchasing value of money.”

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How does that happen?  It will be worth a look at some specific actions that affect the value of the dollar in another, future blog post.  For today, we still want to know (especially since we are approaching retirement) how to beat inflation

Common sense would say that to minimize the effects of inflation we need to either reduce our expenses or to increase our income.  Since few of us facing a financial squeeze feel like we are living extravagantly, cutting back on our expenses will be difficult, and will have little impact on our ability to maintain our lifestyle through retirement. 

The other option is to increase income, even in retirement.  One of the best ways to do that today is through online marketing.  If you want to know more about this amazing way to add to your income, something you can do from the comfort of your home (even while you are still part of the employed workforce), click on the link below and take advantage of a free 7-part video training series.  It will give you real steps to take to teach you how to beat inflation on your own terms, at your own pace, and in your own way.  You don’t need any special experience to succeed, and this is perhaps the best way to answer the question of How to Beat Inflation.

Until next time,

Mark Brockett

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