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TURN-KEY FINANCIAL GROUP
INFLATION: Worse than a thief in the night
Quite simply, inflation is what happens when prices increase. The rate of inflation is obtained by comparing the cost of a number of items at two intervals over a period of time. Anyone who shops for food or fills up the family car knows immediately the effect of inflation in real time.
When surveyed, Americans place how inflation is likely to affect their retirement toward the bottom of their list of worries. This is predominately among those who are still working, mostly because there is the belief wages will either increase along with the rate of inflation or additional money can be made from some other source. The reality is the Commodity Price Index (CPI) in October of 2005 rose at 4 percent while average wages rose by only 3.1%. While some may be able to overcome the effects of inflation during their earning years, those in retirement are most often deeply affected. Retirement often denotes a fixed income. Retirees will suffer because inflation causes the cost of goods and services to increase while income (hopefully) remains the same. Goods include elements of food, clothing, and shelter while services include healthcare, including long-term care. This is in a time where our population is living longer; much longer.
The future rate of inflation is difficult to predict over the decades, as is predicting income tax rates over the same period.
Our strategies do NOT guarantee your money will grow at the same or greater rate than inflation. There is not one retirement plan or contract which will guarantee this. Our best attempt at countering the effects of inflation is having your money provide you with twice, or more, income from the same dollar spent on traditional vehicles such as 401(k) and IRA, plans and the income will be tax free, if simple requirements are met. The Indexed Universal Life Insurance contract provides for the money to last a lifetime. The strategy utilizing guarantees and options against indexes is a proven method of eliminating losses.
The reason we allege inflation is worse than a thief in the night is, typically, a thief will visit only once and a deterrent such as an alarm will be installed to ward off future attacks, but inflation, like taxes, will be with us forever. Every attempt should be made to eliminate their debilitating effects to the maximum extent possible.
The following is a link to a simple inflation calculator so you can see for yourself what an enemy to the retiree it truly is.
Email: info@turn-keyfinanical.com