The Rising Price of A Good Time

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How much will you spend in the future?

This is an important question, and we can get nearly there by looking at your current expenses. However, the biggest determinant of your future spending is actually inflation.

What costs you $1 today is likely to cost $2 or more in 25 years and you need to account for this when thinking about a retirement that could last that long or more. To pay for this, our assets must grow at least at the rate of inflation, or we must have far greater assets and plan to spend them down in retirement. This is why investment plans geared to pay for retirement have a significant portion invested in stocks.

Stocks represent ownership in companies and companies must earn more than inflation in order to cover their rising costs. So, if we own a portfolio of companies over time, we can feel comfortable that we will earn more than inflation.

By tying your assets to investments that offer growth above inflation, we can have some confidence of meeting your expenses in the future with the assets you have today.

So, what do you think? Do you have a portfolio that accounts for the rising cost of living? How confident are you that you will be able to maintain your current standard of living in the future? Does your financial plan support your perception?

To share your comments, send me a direct email at joe@bestfinlife.com.

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