Can Your Finances Handle the Future Inflation?

The Federal Reserve often talks about the problems associated with inflation, and they work very hard to prevent serious inflation in our economy. Inflation can also be the kiss of death for a retired couple living in the United States on a fixed income.

The prices go up but the amount of money they have coming in remains the same and therefore their ability to buy things goes down. Over time this can cause their buying power to go down to such a low point that they cannot afford to even live.

Wages and salaries in the United States have not gone up significantly in a very long time, but the price of food, energy, gasoline, and many of the other necessities that we buy each and every day have gone up. Additionally, with the Cap and Trade rules the price of energy may double.

Worse, all the money we are spending on the stimulus package will cause future-inflation and make your dollar worth even less. And if your wages are not going up and everything around you is, you can see how damaging inflation can be to your quality of life and your standard of living.

This is why financial planners often suggest that you need to have a hedge-against-inflation and that means you need investments that also go up along with the cost of everything else. This way you are making money that grows with inflation.

This is another reason why it is very unwise to stick lots of hundred dollar bills under your mattress and save them in your house for a rainy day because if that rainy day comes in the far off future those hundred dollar bills may not be worth $100 anymore. Depending on the percentage of inflation-year-over-year it’s almost like earning interest the wrong way, as your buying power is stolen from you. Please consider all this.

Leave a Reply

Your email address will not be published. Required fields are marked *