Beware Inflation!
“Inflation is taxation without legislation” – Milton Friedman
Most people underestimate how much inflation will affect their retirement plans. Just like compound interest, the effects of a relentless year on year accumulation are significant. For instance, if you retire at 65, and think you may live until 90, which is not unusual nowadays, you will need about twice as much income in your twilight years as you do when you have just left your job.
The problem with inflation is that there is no person or body to whom you can appeal if you think you have been hard done by. Inflation happens, get over it! You should check that your investments are well-placed to nullify the worst of runaway inflation, and make sure your investment strategies include either a good initial margin or an excellent annual return in order to deal with it.
I can’t emphasize strongly enough the need for a good investment advisor, such as Ken Himmler (www.kenhimmler.com), or a company such as Integrated Asset Management, (www.iamllc.biz) who can look after your interests. Inflation has averaged nearly 3 1/2% since the beginning of the 20th century, and that rate of inflation requires more than double the income over 25 years — more recently the rate has been lower, which still requires nearly twice as much income over the same period to buy the same goods.
What are we to make of the current administration’s plans? The $250 bonus is very welcome. However, we have not yet seen the impact of all the proposed spending, and experts generally agree that creating spending will result in inflation. There is a purpose to the funds that are being provided to stimulate the economy, and they may well be needed at this time, but that does not change the fact that they will lead to greater inflation.
Retirement living is often on a relatively fixed income, and those who are already retired will find it hardest to adapt to the increased inflation which is likely to occur. Nonetheless, the best investments will allow you to come out ahead, and enjoy a long and relaxed retirement.
Authored by Kenneth Himmler, Sr.
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