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Inflation – Back to the Future

Even low inflation rates can impact your retirement outlook over time. Will the levels of U.S. public debt and loose...


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Inflation sometimes seems like one of those afflictions of an era long since passed into the history books. While it‘s true that double-digit inflation has been absent for the last 30 years, you may remember the high inflation years of the 1970s. 1

Will the levels of U.S. public debt and loose monetary policy revive the inflation rates of yesteryear? No one really knows. However one thing is certain – even low inflation rates over an extended period of time can impact your finances in retirement.

A simple example will illustrate.

An income of $50,000 today at an inflation rate of 3% would have a purchasing power of just over $32,000 in year 15 a 35% erosion. Said differently, to maintain the desired lifestyle that a $50,000 income would provide requires $77,900 of income after 15 years of 3% inflation. 2

Here‘s something else to consider. Retirees may be subject to a higher rate of inflation than – the headline  Consumer Price Index. Why might this be the case?

Healthcare inflation has outstripped CPI inflation by as much as 3% in recent years. 3 And retirees may expect to spend more on medical expenses than most Americans.

Inflation is a thief; it steals the purchasing power of your retirement savings. But, as with your other possessions, there are strategies that may help you from being robbed of your purchasing power.

InflationData.com, 2015
This is a hypothetical example used for illustrative purposes only. It is not representative of any specific investment or combination of investments.
YCharts.com, 2016; USInflationCalculator.com, May 17, 2016

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2016 FMG Suite.

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DISCLOSURE: Investment advisory services are offered through Gretchen Stangier, Inc. DBA Stangier Wealth Management (“Stangier Wealth Management”), an investment advisor registered with the U.S. Securities and Exchange Commission. Stangier Wealth Management only offers investment advisory services where it is appropriately registered or exempt from registration and only after clients have entered into an investment advisory agreement confirming the terms of engagement and have been provided copies of the firm’s ADV Part 2A brochure and Part 3 documents.

DISCLAIMER: This website is for informational purposes only and does not constitute a complete description of our investment services or performance. This website is in no way a solicitation or offer to sell securities or investment advisory services except, where applicable, in states where we are registered or where an exemption or exclusion from such registration exists. Information throughout this site, whether stock quotes, charts, articles, or any other statement or statements regarding market or other financial information, is obtained from sources which we, and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Nothing on this website should be interpreted to state or imply that past results are an indication of future performance. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION POSTED ON THIS OR ANY ‘LINKED’ WEBSITE.

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