Inflation Math for Today’s Retiree

You may have heard the saying, “inflation hurts savers and benefits borrowers.” 

The expression suggests that borrowers benefit from inflation because they pay back lenders with dollars worth less than when the money was initially borrowed. But for savers, your hard-earned dollars may lose buying power over time.

One popular way to show the “hurts savers” illustration is with retirement calculators. A fixed amount of money will lose buying power at a much faster rate if inflation averages 7% versus 1% over an extended period.

That’s one reason why we caution against using some online tools. You can plug in a set of numbers, and the results may take you by surprise. They often raise more questions than answers.

You don't have to go it alone. 

When markets cycle lower like they have been lately, perspective is critical. If you’re not connected to someone with experience, it can be easy to miss the big picture.

If you zoom out a bit in history, most investors haven't lived through a prolonged price drawdown. For example, a bond fund manager would need to be around 80 years old today to have been working during the inflation of the 1970s (the last time we saw similar movements to what we’re seeing today). We are certainly living through unusual times.

But price swings aren’t surprising to those who are prepared, and you don’t have to figure things out on your own.

When we create your portfolio, we look at your unique goals, time horizon, and risk profile. Our team has managed several market cycles, and we’ve seen plenty of ups and downs across the investing process.

Please reach out if inflation and today's markets have you feeling uncertain. Our team of professionals watch the trends closely, and we can help put today’s inflation in a better perspective. You don’t have to go it alone: we are here to help you keep things in perspective.