KEEPING UP WITH INFLATION AND THE COST OF LIVING 6/7

Hoping as the cost of living and inflation rise, salaries and Social Security benefits will increase as well is just wishful thinking. The Social Security’s annual cost-of-living adjustment (COLA) is an increased benefit which is provided monthly.

Unfortunately, there was no COLA for 2015 and only a 0.3 percent increase for 2016. Those receiving Social Security benefits were left to fight inflation while receiving minimal or no adjustment for the rising costs.

For the most recent 2017 benefit year, award benefits increased by 0.3 percent, the same as 2016.

Attempting to keep up with inflated costs on a fixed retirement fund budget negatively affects the purchasing power of retirees. When planning began, their financial roadmap may have aimed for one specific amount which would have addressed the mortgage/living situation, debt, pending auto loans, medical expenses, possible unexpected expenses and to maintain a certain lifestyle.

Sadly, inflation is causing as many as three out of five middle-class new retirees to outlive their retirement funds if they attempt to maintain pre-retirement style of living. Pre-retirees will have to factor in an annual inflation rate of about 3% to ensure they do not outlive their retirement funds.

Researching the Consumer Price Index will provide additional information as to how much consumers are paying for goods and services now versus how much was paid for those same goods or services in years past. For those who prefer a more precise look at inflation, the U.S. Inflation Calendar uses the latest data to determine a cumulative rate of inflation for any date between 1913 to 2017.

Pre-retirees should also keep an eye on investments when gauging how inflation will affect their retirement lifestyles. 401ks and IRA’s are both examples of investment vehicles susceptible to the effects of an increased cost of living can have on retirement. Verifying value and all terms with the investment company or your agent can provide much-needed insight to protect your retirement fund as much as possible.

https://www.bestliferates.org/seniors/most-stressful-financial-concerns/
http://www.wunrn.com