There’s a cold hard truth about the reality of inflation that you’re probably not aware of. Ever wonder why after you’ve made the 2 to 3% adjustment to cope with rising inflation costs you still can’t make ends meet? Same thing if you’ve gotten a 2-3% raise. You’re still not keeping pace with the economy. That’s because you’re being lied to as to what the true rate of inflation really is.
The truth of the matter is that we have been blatantly and systematically lied to about inflation. By repeatedly changing the way inflation is measured, the government winds up misguiding the public as to the true effect on our wallets. This is good for politicians and the Federal Reserve (which is a private entity owned by commercial banks, run by non-elected government officials), but dangerous for us, not only because we underestimate our need for money in the future, but also because we are ultimately being fleeced. (click here)
The CPI (Consumer Price Index) is the measurement used by the government to calculate the rate of inflation. It’s in the government’s best interest to show that the rate of inflation is low. This way they can regulate prices, calculate wages and pensions, control Social Security’s annual COLA (Cost Of Living Adjustment) increases as well. Financial planners, the kind we all listen to, use this data to predict future costs.
The problem with this pricing methodology is that it paints an untrue portrait of inflation. The CPI measures inflation by the amount of the price of a “basket of goods and services” used by consumers changes over time. But the basket itself actually changes. If the price of a porterhouse steak is included in the basket and the price rises, a family may substitute chopped hamburger beef. The government shrugs and says “See, they’re still eating beef” so there’s no inflation nor rise in the ‘basket of goods and services’.
The CPI leaves out a lot of things when they calculate the rate of inflation. For example, they leave out housing costs or rents. All of us know that those two things are rising way higher each year than the 2-3% projected. Over a 50 year period, housing costs have risen 216%. Housing costs in one area of America will probably be priced differently in another part of the country, so where you live can affect your price experiences.
You should not expect the national or a regional CPI to always mirror your price experiences. Another factor in whether you think the CPI reflects your price experience is that most consumers notice price changes in those goods and services purchased frequently. These items, such as food, clothing, and gasoline, have relatively large price swings because of the seasonal influences in supply and demand. Less attention is paid to many items (such as most household appliances) that are purchased infrequently, which often have relatively stable prices. (click here).
Critical cost of living increases are NOT factored into the CPI.
The true costs of rising healthcare is a glaring exception in the CPI calculations. This one factor affects senior citizens the most. Seniors spend more on health care than the younger generation by at least 20%. Financial planners miscalculate the true rising health care costs by advising their clients they can live on less in their retirements. This is a very costly mistake to our senior citizens.
OK. We have the facts now. Inflation is huge. What do we do? Is there a solution?
Financial Planners advise folks preparing for retirement that there is only one course to prepare for inflation and that is to invest “wisely” in the stock market. Forget CDs or Money Market funds that traditionally pay out low rates. You’ll never earn enough to keep up with inflation! Instead, take on risk and seek out high-paying yields, dividend paying stocks and bonds and inflation will be under control. This is such a crock of BS! The markets go up and the markets go down. Heaven forbid if you’re in a down market, retired and need to CYA (Cover Your A$$) and pay your rising bills. You’re advised not to sell or liquidate but simply just withdraw from your cash reserves to tide you over. Really? Tap into your principal which would then permanently reduce your cash reserves forever?
Other tidbits of advice, for retirees to keep up with inflation in their retirement years is to #1 Work longer and save more. #2 Estimate inflation at 4% or higher. #3 Own income-producing assets, such as rentals or cash-flowing businesses. #4 Support putting the dollar back on the gold standard. Forget this option. Never going to happen. The government knows its got a good deal going.
“By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.” – John Maynard Keynes
I’ve been retired now for 18 years and I have also met a lot of retired folks over these past 18 years. I’ve noticed one constant trait in all these people as their retirement years progressed. Everything was fine and dandy when they first retired. They traveled. They bought properties in gated retirement communities. They play golf. They play tennis. They buy cars. They attend parties and functions. And when they all have a few drinks in them, they start to tell you the truth and the reality of their so-called retirement years. Practically all of them have side hustling jobs/hobbies (whatever you want to call them) specifically to bring in extra money because their Social Security checks, pensions, annuities, investments just aren’t bringing in enough cash to keep up with all the rising costs they face daily.
Don’t believe me? Just look around you. Practically everyone, whether celebrity or a regular Joe or Jane are working. Look at your TV shows. See a lot of actors and actresses with gray hair, still working? Mick Jaggar is 76 years old and he is still touring with The Rolling Stones. Mick had a little heart event last year but that didn’t stop him from finishing out his tour, did it? Liam Neeson is 67 years old and is still kicking (literally) butt to save his daughter’s kidnapping, airplane hijacking or train robbery. Helen Mirren is 76 years old, still making movies and peddles skin care routines in TV advertisements.
Do you think these people continue to work because they love their jobs? Nope. They have expenses, which keep rising and they want to continue to live their lifestyles.
So, here’s the three legged stool retirees use in order to keep up with the true reality of inflation: they learn frugal ways, they save and invest cautiously and they continue to work because they have come to the realization that the only way they can keep up with the rising costs of everything is to keep bringing in those dollars. Period.
Thankfully there are many things a senior citizen can do, to keep earning money without working as a greeter at a Wal Mart (NOT that there is anything wrong with that!) Social Media has opened many doors to seniors who can earn money from the comfort of their own computer at their home desk. Many seniors are making videos on YouTube, producing podcasts or blogging (yours truly) on many topics that solely interest other fellow retirees. For a more complete list of senior job opportunities click here.
My final thought is that we may have to keep on working in our retirements because no one has been honest about inflation with us retirees. We haven’t been advised to save enough, downsize and live frugally enough and realistically I don’t see Wall Street investments giving us the steady income we probably need in our later years. We may have to side-hustle well into our 80’s to maintain any quality of life. Which is probably one of the reasons many of us are living longer and healthier. Jobs give our lives meaning and direction. It keeps our minds young and sharp. Jobs give us hope.
Live well and prosper, my friend. Live well and prosper.