KEEPING UP WITH INFLATION AND THE COST OF LIVING – Hoping as the cost of living and inflation rise, salaries and Social Security benefits will increase as well is just wishful thinking. The Social Security’s annual cost-of-living adjustment (COLA) is an increased benefit which is provided monthly.
Unfortunately, there was no COLA for 2015 and only a 0.3 percent increase for 2016. Those receiving Social Security benefits were left to fight inflation while receiving minimal or no adjustment for the rising costs. For the most recent 2017 benefit year, award benefits will increase by 0.3 percent, the same as 2016.
Attempting to keep up with inflated costs on a fixed retirement fund budget negatively affects the purchasing power of retirees. When planning began, their financial road-map may have aimed for one specific amount which would have addressed the mortgage/living situation, debt, pending auto loans, medical expenses, possible unexpected expenses and maintaining a certain lifestyle. Sadly, inflation is causing as many as three out of five middle-class new retirees to outlive their retirement funds if they attempt to maintain a pre-retirement style of living. Pre-retirees will have to factor in an annual inflation rate of about 3% to ensure they do not outlive their retirement funds.
Pre-retirees should also keep an eye on investments when gauging how inflation will affect their retirement lifestyles. 401ks and IRA’s are both examples of investment vehicles susceptible to the effects of an increased cost of living can have on retirement. Verifying value and all terms with the investment company or your agent can provide much-needed insight to protect your retirement fund as much as possible.
Ahhh…. The big Inflation!!! I get asked about this often as to whether or not the affordability of living in Thailand will change based on inflation. And the answer is a resounding YES. But not the inflation in Thailand. The inflation in your home country! As inflation starts to eat away at the buying power of let’s say the USD that means it can buy less right? That also means that it continues to buy more and its purchasing power increases if the inflation rate isn’t matched when living in someplace like Thailand.
Yes I have seen the price of things got up since living here for 17 years. I have seen the price of a meal go up by 16%!!! You might be saying, “YIKES JC that’s a lot.” But 16% of 30 Baht is only 5 Baht or the equivalent of 14 Cents US. Would that influence your dream, prospects, or life in Thailand if you were already living here? I don’t think so. Most everything else besides food, if you stay out of the tourist areas, has pretty much stayed the same. Or has been such a slow or small increase, that I just haven’t even noticed and I on a pretty small budget.
So if you have a worry about inflation eating up your retirement income or savings then someplace like Thailand becomes even more attractive.
