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Archive for the Inflation Category

March 11, 2017

Retirement Investors: Beware the Inflation “Whipsaw Effect” of the Stimulus Package

Right now, the last thing most investors are worried about is inflation. The price of almost everything, from real estate to stocks to mutual funds, is going down. If you want to get more for your money, all you have to do is sit back and wait until even better bargains come along. In other words, we are experiencing deflation. There are, however, indications that this situation may be short-lived, and that inflation may soon once again rear its ugly head.
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August 22, 2008

Gold as a Retirement Investment?

When people think of retirement investments, gold rarely crosses their minds. After all, gold doesn’t provide any income, and the whole purpose of saving for retirement is to replace the income shortfall when you’re not working any more.

To be sure, gold makes little sense for those who are already retired, and are seeking an investment that will generate income for day-to-day living. Future retirees, however, are less interested in current income than in growth and security of their retirement nest egg. For them, gold can be a part of a comprehensive retirement saving strategy.
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August 20, 2008

Current retirees slated to receive big Social Security benefits increase

Next year, current recipients of Social Security can expect the biggest annual increase in benefits in 25 years.

After decades of miniscule increases—last year’s was a paltry 2.3%—the Social Security Administration expects that next year’s benefits will be about 6% higher than this year’s. To be exact, if there’s no additional inflation, the increase will be 5.7%, but that’s an unlikely scenario given the soaring costs of food, oil, and other essentials.

How should future retirees view this development? It depends.

Without a doubt, recipients of Social Security can rightfully expect their benefits to keep pace with inflation—otherwise, they’re getting poorer. And while there’s no proof, rumors persist that the government manipulates the CPI to rein in so-called entitlements like Social Security. In any event, retirees will need the 6% increase just to hold their ground.

On the other hand, the “return on investment” of Social Security has been high for current retirees and is dropping. The well is running dry. If current retirees are too well taken care of, the cuts that future retirees will have to suffer will be all the worse. Where’s the fair break-even point? We’re still working on that. Stay tuned…

August 18, 2008

Business Week: July Inflation a “Real Scorcher”

According to recently released figures quoted in Business Week, July’s inflation rate was double that predicted by economists.

Consumer prices increased by 0.8%, due largely to the rise in energy bills. As it stands now, the current year-over-year inflation rate is the highest it’s been in over 16 years.

It’s hoped that the current decrease in energy prices will bring the total year inflation numbers back down.

In any event, rising unemployment claims coupled with rising prices continue to raise the specter of 1970s-style “stagflation.”

August 2, 2008

Upper middle-class retirees aren’t immune from inflation woes

Having owned an employment agency for twenty years, Linda Miller thought she was well-off enough to retire four years ago, and she did.

Now, she’s back at work selling Avon cosmetics. Why? “All the money is going for gas and groceries,” she laments.
[Read more]

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