As defined benefit plans continue to be a thing of the past, retirement planning is becoming a necessity. While planning the best way to live throughout your retirement years, be sure to incorporate inflation expectations. Inflation is defined as: "a general increase in prices and fall in the purchasing value of money." Inflation has a significant impact on those that hold a large portion of their net worth in bank savings account and over the course of 20-30 years of spending throughout your retirement.

It is undeniable that prices are higher than they were ten years ago, and they will continue to rise. Certain expenses have been rising quickly and may have a significant impact on retirees. It was widely assumed that when Obamacare was rolled out, healthcare costs would plateau; however, a recent study by PricewaterhouseCoopers' Health Research Institute estimates that medical costs will rise 6.5% this year and 6.8% in 2015. Pork, beef, and chicken prices all have increased; pork prices increased 50% last year due to a virus, beef prices are up 74% since 2009, and boneless skinless chicken breasts are up 23% this year, alone. In addition to poultry, orange juice, milk, coffee, and produce prices have all risen significantly.

Statistics show that people are living longer, which means they are spending more time in retirement. Inflation generally doesn't noticeably decrease purchasing power over the course of a couple years, but it is very noticeable over the course of a 20-30 year retirement. Ten years ago $10,000 bought much more than it does today, just like ten years from now $50,000 will buy much less than it currently does.

When planning for your retirement, be sure to take rising prices into consideration; don't let inflation sneak up and spoil the golden years of your life.

Ethan Wade, Financial Advisor


(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).