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Old 01-11-2016, 03:42 AM
 
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inflation can be a good thing too if you are able to keep up with it .

paying off that 40k home in today's dollars is nothing . that mortgage that was a heavy burden decades ago cost less then a car payment today .

in retirement the biggest factor to how you will feel inflation is cash flow and how much discretionary spending you have in the budget .

some one with no money like freemkt will feel it very hard because everything as he ages will be a need and not a want .

there is nothing for him to cut back from except internet service which may be a good thing for us .

on the other hand those with discretionary spending in the budget will likely cut back in the middle of retirement making what they do not do or buy cover rising costs in what they do .

each person may vary slightly but study after study as a group shows the same patterns for those with discretionary spending in the budget .


how you feel inflation will have less to do with whether you rent or buy and more to do with location and how much discretionary spending you do .
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Old 01-11-2016, 06:37 AM
 
Location: The Carolinas
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Quote:
Originally Posted by swathisharan View Post
Inflation is the worst thing that happens in a life time.
DEATH is the worst thing that happens in a lifetime: it renders inflation kinda moot, don't you think?
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Old 01-11-2016, 07:17 AM
 
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Originally Posted by mathjak107 View Post
without at least 5% increases on it the policy would likely be useless in the end . in fact nys requires it in any partnership plan .
After all the years ours is still good and would cover the full cost of most good nursing homes for each of us. Just gotta cover the 60 day elimination period. The community and home care amount is good and has the five percent also along with the same elimination period.
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Old 01-11-2016, 07:20 AM
 
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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..
Not necessarily with pensions. Ours is based on a local urban COL and that has had a COLA above the national norm and above the region we live in for a number of years. Our pensions have grown in retirement at a rate above the region we live in and above the SS calculated COLA. As a married retired couple our COL is lower than it would be for two independent working folks yet our COLA with our pensions is calculated for each of our individual pensions and not as if we were a married couple. It really works to our advantage. So much works better for a married couple with their own independent retirement resources.
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Old 01-11-2016, 07:25 AM
 
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Quote:
Originally Posted by mathjak107 View Post
inflation can be a good thing too if you are able to keep up with it .

paying off that 40k home in today's dollars is nothing . that mortgage that was a heavy burden decades ago cost less then a car payment today .

in retirement the biggest factor to how you will feel inflation is cash flow and how much discretionary spending you have in the budget .

some one with no money like freemkt will feel it very hard because everything as he ages will be a need and not a want .

there is nothing for him to cut back from except internet service which may be a good thing for us .

on the other hand those with discretionary spending in the budget will likely cut back in the middle of retirement making what they do not do or buy cover rising costs in what they do .

each person may vary slightly but study after study as a group shows the same patterns for those with discretionary spending in the budget .


how you feel inflation will have less to do with whether you rent or buy and more to do with location and how much discretionary spending you do .
And how if at all you have staggered when income streams kick in. The longer you wait after retirement for you SS benefits the more years of inflation you erase and you in most cases will have built in a few years of inflation protection. It is great to retire with a targeted spending range and then have money above that range kick in over the years. Could make you start looking at new houses which a few do.
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Old 01-11-2016, 07:45 AM
 
Location: Tennessee
23,625 posts, read 17,606,575 times
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Most people probably acknowledge it to some extent, but end up underestimating it.

I think another thing people reading this forum often forget is that the people reading this forum have an interest in retirement, and many are at least somewhat sophisticated investors.

There's going to be a bit of a selection bias here.
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Old 01-11-2016, 07:47 AM
 
Location: Florida
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Inflation is the big unknown variable in planning. Especially if you retire at an early age. If you have inflation adjusted pensions/SS you may still fall behind as you goods and services may increase in costs faster than the average inflation adjustment.

I think you have to plan on inflation by investing in equities.
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Old 01-11-2016, 08:05 AM
 
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Quote:
Originally Posted by rjm1cc View Post
Inflation is the big unknown variable in planning. Especially if you retire at an early age. If you have inflation adjusted pensions/SS you may still fall behind as you goods and services may increase in costs faster than the average inflation adjustment.

I think you have to plan on inflation by investing in equities.
Or as I noted above especially with pensions be aware of what your pension COLA is tied into and what the COL is if you transplant. The following is a good tool to help measure how your COLA is going to impact your pension based on the COL of where you live in retirement.
Cost of Living Index for Selected U.S. Cities

You can see there are some sweet pension COLA that when transplanted help you stay ahead. Many are from popular areas to leave and popular areas to move to. If you stay where you worked maybe not as sweet. Also if you have a state pension and live in a lower cost area of the state and your pension COLA is based on a more expensive area.
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Old 01-11-2016, 08:08 AM
 
Location: Washington State
18,596 posts, read 9,612,389 times
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It's a concern. I have investments that should be able to keep up with inflation, SS income in the future that is tied to inflation, and a pension from work that is fixed which of course means it will decrease in value over time. Unless I have miscalculated somewhere, my wealth should continue to increase in retirement.
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Old 01-11-2016, 08:22 AM
 
Location: Loudon, TN
5,796 posts, read 4,848,703 times
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We take inflation into account two ways. First, our pensions get COLAs, but they are capped at I think 2% per year and tied to the CPI. Secondly, when we were preparing to retire I charted our various income streams to see what shape we were in, how much we should be taking from investment accounts and when, and when we should take SS (neither of us eligible yet), and if there were low years in the beginning and how to deal with that. My employer offered a temporary annuity and I took that to fill the gap before DH can take SS in order to levelize the earlier years of the chart. When I am eligible we will probably delay my SS, that will be our other hedge against inflation and will give us a big bump in the later years. We are just now looking into some plans to maximize our rental income by selling our out of state rental and buying a vacation rental, which will give us a greater income and a place to have fun.
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