The cost of goods and services increases over time, and this is known as inflation. Your savings, spending power, and whether you are able to meet your retirement goals can be largely impacted by inflation. In this article, we will discuss why it happens, how it can affect you, and what you can do about it.
First, goods and services increase in cost when the supply cannot meet the demand. For example, if your grocery store typically sells 500 apples each week, but their supplier has limited stock, the apples will cost more – especially if your grocery store found another, more expensive provider to fulfill their inventory needs while their primary supplier restocked.
Rising manufacturing and production costs also cause inflation. For example, a furniture manufacturer will need to raise prices to help cover rising lumber costs.
To address the climbing cost of living, employers also pay their employees a higher wage over time, and that money needs to come from customers and consumers.
What does this mean for you?
It means the money you have today may not be worth as much in the future.
Part of the trouble with inflation is that it happens so slowly that it's easy to ignore over a short period of time. Frankly, this makes it even more important for you to be concerned. Even if you save what feels like enough money to live on once you are retired, it might not be enough when that day comes.
There is no avoiding it: you need a plan of action to ensure your future is financially covered.
Save time, effort, and money by working with a Certified Financial Planner (CFP)®. They will help you address these potential challenges and prepare you so you can maintain your lifestyle as you age. Statistics also show that the average household with an FA for 15 years or more had asset values 131% higher than an average “comparable” household without a financial advisor.
We regularly help our clients prepare for a secure, comfortable retirement. Call 519-396-PLAN (7526) or send us a message here to start discussing your retirement plan.
The sooner we get started, the better.