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Old 01-10-2016, 07:22 PM
 
Location: Wasilla, AK
7,266 posts, read 4,150,962 times
Reputation: 15701

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Quote:
Originally Posted by Escort Rider View Post
In the long run, I don't think its axiomatic that investment returns will either out-perform or fall behind inflation, or stay exactly even for that matter. Why do you say that inflation will necessarily always run ahead of investment returns? It may, of course, but it is one of the long-term imponderables.

The thread I was responding to was about SS and pensions, not investments. SS and pensions will pretty much always lag behind inflation in terms of COL increases..
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Old 01-10-2016, 07:37 PM
 
Location: Los Angeles area
14,018 posts, read 17,747,361 times
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Quote:
Originally Posted by AlaskaErik View Post
The thread I was responding to was about SS and pensions, not investments. SS and pensions will pretty much always lag behind inflation in terms of COL increases..
Thanks for the clarification.
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Old 01-10-2016, 08:43 PM
 
13,931 posts, read 7,422,661 times
Reputation: 25432
Quote:
Originally Posted by AlaskaErik View Post
But not at 100 percent. So you're gaining, but not as fast as the rate of inflation.
But, at least with Social Security, you're unlikely to live long enough to notice much of a decline. I figure I'm likely to collect a Social Security pension for about 15 years. Even if I spend the rest of my assets down to zero, I'll still have a roof over my head and food on the table.
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Old 01-11-2016, 12:00 AM
 
45 posts, read 31,130 times
Reputation: 79
Yes most of us have seen real inflation over our lifetime. Thirty years ago was 1986 I was paying 422 a month for a mortgage including taxes and insurance. my roommate was paying $300 for his rent including utilities. We were each earning about $10 an hour and doing fine.
We didn't own a computer, cell phones, cable tv, internet. Food, gas, insurance, property taxes and food are all way us.
Now we each own a house with a larger mortgage and retired so spend about 30-40K each were that would have been a dream amount before.
I expect in the next 30 year we will have increased prices for food, gas, insurance, property tax and food as well as seriously higher medical and dental bill. We had to plan for inflation, one thing is mortgages will be paid off so we will save a few hundred a month on that but investments better grow or we will be spending down retirement accounts. He won't live 30 more years since he is 68 and smokes so I will inherit his home and land and any invested money he has left.
I will want much more electronics and medical care as I age, just got my first tablet but still don't have a smart phone.
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Old 01-11-2016, 12:08 AM
 
Location: Wasilla, AK
7,266 posts, read 4,150,962 times
Reputation: 15701
Quote:
Originally Posted by aliceacrasperfolk View Post
Yes most of us have seen real inflation over our lifetime. Thirty years ago was 1986 I was paying 422 a month for a mortgage including taxes and insurance. my roommate was paying $300 for his rent including utilities. We were each earning about $10 an hour and doing fine.
We didn't own a computer, cell phones, cable tv, internet. Food, gas, insurance, property taxes and food are all way us.
Now we each own a house with a larger mortgage and retired so spend about 30-40K each were that would have been a dream amount before.
I expect in the next 30 year we will have increased prices for food, gas, insurance, property tax and food as well as seriously higher medical and dental bill. We had to plan for inflation, one thing is mortgages will be paid off so we will save a few hundred a month on that but investments better grow or we will be spending down retirement accounts. He won't live 30 more years since he is 68 and smokes so I will inherit his home and land and any invested money he has left.
I will want much more electronics and medical care as I age, just got my first tablet but still don't have a smart phone.
You've got to have a smart phone! Otherwise, you're just living in the 20th century. So drop the Jitterbug and slowly step away, keeping your hands in full view.
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Old 01-11-2016, 12:12 AM
 
33,046 posts, read 22,072,092 times
Reputation: 8970
Quote:
Originally Posted by mathjak107 View Post
the problem is cola''s don't and are not expected to match someone's personal rate of inflation .

the cpi's are only price change index's on a basket of stuff and in no way may reflect your own life in an accurate way .

Inflation is like a lamb to homeowners and a lion to renters in retirement.

"What? Now I gotta buy my landlord another house?"
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Old 01-11-2016, 12:15 AM
 
33,046 posts, read 22,072,092 times
Reputation: 8970
Quote:
Originally Posted by aliceacrasperfolk View Post
Yes most of us have seen real inflation over our lifetime. Thirty years ago was 1986 I was paying 422 a month for a mortgage including taxes and insurance. my roommate was paying $300 for his rent including utilities. We were each earning about $10 an hour and doing fine.
We didn't own a computer, cell phones, cable tv, internet. Food, gas, insurance, property taxes and food are all way us.
Now we each own a house with a larger mortgage and retired so spend about 30-40K each were that would have been a dream amount before.
I expect in the next 30 year we will have increased prices for food, gas, insurance, property tax and food as well as seriously higher medical and dental bill. We had to plan for inflation, one thing is mortgages will be paid off so we will save a few hundred a month on that but investments better grow or we will be spending down retirement accounts. He won't live 30 more years since he is 68 and smokes so I will inherit his home and land and any invested money he has left.
I will want much more electronics and medical care as I age, just got my first tablet but still don't have a smart phone.

I pay more to rent a room than my next door neighbor pays to own a house.
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Old 01-11-2016, 01:03 AM
 
Location: Wasilla, AK
7,266 posts, read 4,150,962 times
Reputation: 15701
Quote:
Originally Posted by freemkt View Post
I pay more to rent a room than my next door neighbor pays to own a house.
And after 30 years he'll have a paid off house and you'll have a box full of receipts. If you can afford to pay that much in rent, you can afford to buy.
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Old 01-11-2016, 03:26 AM
 
71,677 posts, read 71,801,099 times
Reputation: 49257
Quote:
Originally Posted by freemkt View Post
Inflation is like a lamb to homeowners and a lion to renters in retirement.

"What? Now I gotta buy my landlord another house?"
this is 100% false as a general statement .

the homeowner here in the tristate area can have a paid off home that 30 years ago cost 40k . that mortgage that is paid off amounts to a piece of your utility costs today .

today that home has 13k-18k in taxes on it a year .

the fact it is paid off will not even cover the utility bills.

on the other hand a renter can rent a smaller apartment for a lot less money then maintaining that entire house .

think of the renter who goes from a 3 bedroom apartment when the family lives there to a 1 bedroom after they are out . they see more cash flow improvement then that homeowner with that house .


how about the renters like us who rent and invest elsewhere and the returns easily surpass any advantage we would have owning .

you are making a case for the possibility of owning insulating you from inflation in certain locations or situations but you would be wrong in many others .

the reason is most of us will never rent the same kind of house we would buy .

homes in our area start at 700k and go up . i would never rent a a home . but we have an apartment in a high rise for a mere fraction of that price with pool and tennis courts .

this is a typical non cottage type home here . i would never rent that . so it really is hard to compare cash flows since odds are folks do not rent what they would buy . we buy way more house then we would rent generally .

in many urban areas you have apartment buildings which are way cheaper to rent then to buy a home .

http://qns.com/story/2015/12/30/see-...ing-for-1-05m/

Last edited by mathjak107; 01-11-2016 at 03:36 AM..
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Old 01-11-2016, 03:37 AM
 
20 posts, read 11,057 times
Reputation: 23
Inflation is the worst thing that happens in a life time.
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