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When putting aside money for retirement don’t forget that a dollar today will buy less thirty years from now due to inflation. https://www.usinflationcalculator.com/
For many this is obvious but not for everyone. If you spend that million bucks of savings equally each month over the next 30 years your total buying power in today’s dollars is only about 650K overall. And that 2/3 could differ if inflation goes higher than the roughly 2% that’s thought to be good for the economy.
Something to think about. And yes good investments can keep your savings growing and even gain you more than a million worth of value. But you/we can’t spend like crazy in those early years.
It’s why COLA-protected Social Security is such a good deal. My delay-to-age-70 $45k/year benefit spends like $45k in 2019 dollars forever. In the hyperinflation years of the 1970s and early 1980s, retirees got wiped out. Their savings eroded away and their defined benefit pensions eroded away. After a decade of it most saw their purchasing power decline by 50%.
Look at today’s debt to GDP ratio. At some point, all that debt is going to be inflated away.
It’s why COLA-protected Social Security is such a good deal. My delay-to-age-70 $45k/year benefit spends like $45k in 2019 dollars forever. In the hyperinflation years of the 1970s and early 1980s, retirees got wiped out. Their savings eroded away and their defined benefit pensions eroded away. After a decade of it most saw their purchasing power decline by 50%.
Look at today’s debt to GDP ratio. At some point, all that debt is going to be inflated away.
the good news is at some point debt can be inflated away ...the bad news is the the debt gets inflated away ...
that paid off mortgage on that 35k house you bought 30 plus years ago means little in affordability in many areas today .
the fact someone paid off a 35k mortgage on a home they bought in the 1970s may be just about a meaningless amount , when taxes are 12-18k a year and utilities cost more then the mortgage was, so it really may not make staying in your home any more affordable. so it cuts both ways .
Last edited by mathjak107; 03-22-2019 at 07:26 AM..
When putting aside money for retirement don’t forget that a dollar today will buy less thirty years from now due to inflation. https://www.usinflationcalculator.com/
For many this is obvious but not for everyone. If you spend that million bucks of savings equally each month over the next 30 years your total buying power in today’s dollars is only about 650K overall. And that 2/3 could differ if inflation goes higher than the roughly 2% that’s thought to be good for the economy.
Something to think about. And yes good investments can keep your savings growing and even gain you more than a million worth of value. But you/we can’t spend like crazy in those early years.
I agree some do not understand this and probably do not understand the need to invest in investments that at least keep up with inflation as opposed to fixed rate bonds.
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