How Inflation Devastates Those On Fixed Incomes

Due to the major central banks printing more fiat currencies in an attempt to stimulate failing economies, our currencies are being devalued due to the enormous amount of “paper” and “digital” currency created out of thin air and injected into the financial systems, outpacing the production of goods and services thus creating worldwide price Inflation at an alarming rate.

A lot of people have a vague sense that too much inflation might be a bad thing. But in a world where central banks and governments promote and implement policies intended to increase inflation by 2% annually, most people don’t seem to fully understand just how much inflation erodes their purchasing power over time.

2% may not sound like a lot; however, you must remember that this decrease in the value of your money compounds over time and it especially devastates savers and those on fixed incomes.

If you take a look at Social Security benefits, it will really drive this reality home.

Every year, Social Security recipients receive a cost-of-living adjustment (COLA). The Social Security Administration has recently announced that the COLA for 2021 will be 1.3% so that means the average recipient will receive an increase of just under $20 a month.

Unfortunately, the actual cost-of-living for retirees, or really anyone, is going to increase much faster, depending on where they live, how they live, and where they spend much of their money.  This isn’t merely theoretical either. According to Anderson, Social Security benefits have lost 33% of their buying power since 2000.

Investment advisor Dennis Miller sums it up…

“You can rely on the Social Security payments. But they will lose purchasing power. The purchasing power of the payments will diminish every year, year after year, because the COLAs are not enough to cover the actual increases in the cost of living.  This is just a simple fact, and it’s not an accident, it’s purposefully built into the system. And this decline in purchasing power might shave 20% or 30% off your standard of living over the first 20 years of retirement. If it was tough to live on Social Security early on, it will be brutal after 20 years.”

And inflation is only going to get worse. As Peter Schiff put it in a recent podcast, “The Fed is not going to fight inflation.”

In other words, the purchasing power of your savings and your Social Security check will likely decrease even faster.

This underscores 2 key points.

1. You can’t count on Social Security to actually secure you a comfortable retirement.
2. You need to plan to protect your wealth from the persistent, insidious erosion of inflation.

See the original article here.

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