Inflation presents significant financial challenges for retirees living on fixed incomes, as rising costs strain budgets. Although Social Security has a Cost of Living Adjustment (COLA) built in, Social Security was never meant to be your only source of income after retirement, but rather it was intended to supplement your other retirement income. This article will explore key areas most affected by inflation, such as food, energy, healthcare, and discretionary spending, and provide practical tips to help you adapt. For those planning to retire in 2024 or the next few years, identifying and managing everyday expenses is more important than ever to maintain financial stability. #1 Keeping … [Read more...]
How Families Are Adjusting To The Crazy Inflation Rates
On April 12th of, 2022, the U.S. Bureau of Labor Statistics (BLS) announced that the annual US inflation rate had reached a record high of 8.5%, a level not seen since December 1981. This level of rapid price increase is being felt all over the nation and even in Europe. Those with low incomes are having the hardest time adjusting to the rapidly increasing cost of living, as is often the case. But working families across the nation are also being forced to adapt and change in order to cope with rising prices. This has impacted every corner of our society, from gas to prices at the grocery store. Adjusting to this level of inflation hasn’t been easy, and here is how some families are looking … [Read more...]
Price and Wage Changes since 2000
When we think about price changes we often think of them in terms of the changes in the Consumer Price Index (CPI-U for all Urban Consumers). Looking at it that way, we may get the idea that price movements are monolithic i.e. that they all move together, so "prices" were up 2% or 5% or whatever, over the last 12 months. But that is a bit misleading since prices all move independently. For this reason, the U.S. Bureau of Labor Statistics publishes a CPI database with a breakdown of all the various components. By analyzing the various components of the CPI over the last 20 years we developed the following Chart. Click Chart for larger image As we can see … [Read more...]
Cost of Living: LA and New York vs. The World
Los Angeles When you think of a city with a "high cost of living" you might think of Los Angeles. After all, you've probably seen some HGTV show where Tarek and Christina or The Property Brothers buy a tiny old house for half a million dollars and it needs a ton of renovations just to make it livable! So LA has to be an expensive place to live... right? Well compared to New York... not so much. According to PayScale's Cost of Living Calculator the cost of living in New York, NY is actually 60% higher than Los Angeles. Looked at another way, even though the Cost of Living in LA is 48.0% above U.S. average, Los Angeles is still only the 9th most expensive city in the U.S. when it comes to … [Read more...]
Comparing the Cost of Living When Retiring (or Moving)
Most of us dream of the day we can retire and be free from the daily grind. Retirement offers us the opportunity to remake our lives and often we can choose to live almost anywhere. In years past that often meant moving to a a warmer climate like Florida or Arizona. One of the major considerations when choosing to relocate (whether for retirement or for a job) is the cost of living. Will your pension (or paycheck) cover your daily expenses? And that's where our Cost of Living Calculator comes in handy. It allows you to choose your starting location and your proposed destination and get a comparison between the two. For instance, suppose you are tired of the cold in Albany, N.Y. and … [Read more...]
Inflation: America’s #1 Export
What’s America’s No. 1 Export? by Bill Bonner In 1950 the typical working man was able to support a family. Today he can barely support himself because the costs of his main expenses have gone way up. He has to work about twice as long to pay for a new car and a new house. Health care is worse. In 1950 the cost per person per year was about $100. According to the government’s numbers, prices today are about 10 times higher. So health care should cost about $1,000. Not even close. It’s $9,000. In 1950 the typical father earned about $60 a week. For a family of four, he had to work fewer than seven weeks to cover the year’s health care expenses. Today how much does he earn? We’ve … [Read more...]
Cost of Living – Fish and Chips
Cost of Living Fish and Chips Fish and chips still remains the favorite take away meal in the UK despite fierce competition. The exact origins are unknown but it has been established that chips arrived from France during the 18th Century. There was also mention of fried fish and bread in ‘Oliver Twist’ by Dickens, published in the 1830s. The Oxford English Dictionary claims the earliest usage of "chips" in this sense was in Charles Dickens' A Tale of Two Cities (published in 1859). Fish and chips became standard fare among the working classes in Great Britain due to the efficiency of trawl fishing in the North Sea, and the development of railways which allowed fresh fish to be rapidly … [Read more...]
Cost of Living: How Much of Your Budget Goes to Food?
Cost of Living: Food Knowing what percentage of our cost of living is spent on food is always a good thing to know. We recently published an article by Lynn Carpenter on her Cost of Living- Real Basket of Goods in it she compares the cost of several ordinary food items over the decades. Her weekend meal basket included "one loaf of bread, one pound of coffee, one dozen eggs, three pounds of mid-price beef, one box of Corn Flakes or Cheerios, five pounds of potatoes and one Hershey bar." In this article she determined that over the years a minimum wage earner would have to work 9.25 hours in 1938 to buy this food. But by 1961 a minimum wage earner only had to work 3.75 hours to buy the same … [Read more...]
The Real Basket of Goods
I recently received the following from Ed Devol, "When I try to educate people about the impact of inflation, I find putting it in terms of time worked for something is a good way of explaining inflation". Thanks, Ed. I agree, when I am deciding whether to purchase something, I like to think of it in terms of how many hours I have to work to buy it. (It helps keep it "real"). In addition economists often link how many hours the average person has to work to eat. A poor country might require eight hours of work a day just to eat. While a rich country might require only 1 hour a day. So you might like the following article by Lynn Carpenter as she tracks prices and earnings over the last 60 … [Read more...]
Does the Consumer Price Index (CPI) Include Taxes?
Question: I have heard over the years that the CPI does not include taxes as one of its components. In other words, an increase or decrease in a tax rate is not considered a change in consumer prices/costs. Is this true? If so, how is this omission justified? Thank you, James Schmidt … [Read more...]
