Inflation (for YOU) May Be Less Than You Think

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6a017c332c5ecb970b01a73de5d743970d-320wiJim Lorenzen, CFP®, AIF®

While historic inflation rates average a bit over 4% and many people doing their own calculations may be using figures in the 2-3.5% range, the actual numbers may – just may – be far less – maybe as low as 1%!

Why?  Because inflation doesn’t apply to ALL of your spending.  Many people are paying on a fixed mortgage – those payments won’t increase.   Granted, other outlays (food, energy, and products) may increase; but, the total may be less than you think.

If 70% of your spending increases at an average rate of 3% annually, but 25% of your expenditures remain constant, you’re actual realized increase is more like 2.25%.

But, what if you’re retired an your spending decreases?  That’s when your overall cost increases may be closer to 1%… maybe.

It’s important that your planning reflect these realities, as well as others.  There are other considerations, to be sure.  A bad (or no) plan can be the most expensive of all.

Jim

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Jim Lorenzen, CFP®, AIF®

Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-based registered investment advisor with clients located in New York, Florida, and California. He is also licensed for insurance as an independent agent under California license 0C00742.  IFG helps specializes in crafting wealth design strategies around life goals by using a proven planning process coupled with a cost-conscious objective and non-conflicted risk management philosophy.

Opinions expressed are those of the author.  The Independent Financial Group does not provide legal or tax advice and nothing contained herein should be construed as securities or investment advice, nor an opinion regarding the appropriateness of any investment to the individual reader. The general information provided should not be acted upon without obtaining specific legal, tax, and investment advice from an appropriate licensed professional.

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Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER® professional and An Accredited Investment Fiduciary® in his 21st year of private practice as Founding Principal of The Independent Financial Group, a fee-based registered investment advisor with clients located in New York, Florida, and California. He is also licensed for insurance as an independent agent under California license 0C00742.

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