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Old 01-10-2016, 01:48 PM
 
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I was messing around with an inflation calculator and was surprised at the calculations. I looked back 20 years.
$10 in 1995 dollars today would have to be about $15 to be close to the same spending power. For some retirement could be 20-30 years. Doesn't look to great being on a fixed income.

Here's a calculator I found online. What were you making per hour say back in 1970, 1980, 1990, or whatever compared to today's wages. Did you really increase in pay as the years went by?

Inflation Calculator 2016
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Old 01-10-2016, 01:58 PM
 
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yes but inflation is not a straight line up as it is when raising a family .

how it effects retirees varies and it is really linked to how much discretionary spending you do .

we tend to spend our money in a smile shape as we age if we have discretionary money .

early on we spend lots of money going and doing early on , then by mid 70's it drops like a rock as we do less , buy less and use less , it holds that pattern until the 80's when healthcare kicks up .

a lot of what you no longer buy and do offsets the inflation in what you continue to use and do .

if you have a fixed rate mortgage or a paid off home inflation effects are even less .

over all a lot less inflation adjusting usually needs to be done then those charts and calculators imply .
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Old 01-10-2016, 02:00 PM
 
Location: Los Angeles area
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Nice calculator and easy to use. Social Security and many pensions are inflation-protected. For those who rely on their own 401(k)'s etc., they have to count on the earnings to offset inflation.
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Old 01-10-2016, 02:07 PM
 
Location: Whereever we have our RV parked
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If you live in fear of the future you'll never retire. You try to keep your savings and investments earning interest and going up in value to counteract inflation. SS is also tied to inflation, but there's no guarantees. Honestly, inflation can wipe out the value in your savings in a relatively short period of time. Eventually, you have to say, "What me, Worry?". For myself, I'll trying to live under my means, but calculating exact future expenses is as impossible as estimating how long you're going to live.
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Old 01-10-2016, 02:15 PM
 
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I like this one better:

https://smartasset.com/investing/inf...tor#fFm0jExbjV

You can more easily see what a fixed income today would "buy" in, say 2045. Thus, if one lived the same way, the difference is what you'd need.
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Old 01-10-2016, 03:53 PM
 
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We got our benefit statements for our LTC insurance a few days ago and it gave the original daily benefit when it was issued and the current amount based on a 5% annual simple inflation growth. It was interesting but it showed that without a inflation benefit or one at a lower rate it would increasingly have become less helpful. Trying to plan without the ability to deal with inflation in all areas of retirement could be a big ouch.
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Old 01-10-2016, 04:15 PM
 
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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 .
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Old 01-10-2016, 04:20 PM
 
Location: Wasilla, AK
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Quote:
Originally Posted by Escort Rider View Post
Nice calculator and easy to use. Social Security and many pensions are inflation-protected. For those who rely on their own 401(k)'s etc., they have to count on the earnings to offset inflation.

But not at 100 percent. So you're gaining, but not as fast as the rate of inflation.
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Old 01-10-2016, 04:23 PM
 
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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 .
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Old 01-10-2016, 06:46 PM
 
Location: Los Angeles area
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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.
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.
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