Today’s economy looks different than when many pre-retirees first built their plans. Inflation has eased from its 2022 peaks but is still running above the Fed’s 2% goal – i.e., about 2.4% year-over-year according to the Bureau of Labor Statistics as of March 2025. At the same time, interest rates are much higher than several years ago. Many people approaching retirement today remember the 1980s when inflation was in the double digits. The Federal Reserve is currently keeping its benchmark interest rate at 4.25–4.50% (after cutting from over 5% in late 2024). Stock markets have fallen and then rallied slightly recently, so volatility and global risks persist. In practice, this means bond … [Read more...]
Inflation and Retirees
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 Social Security Tax and Inflation Affect Couples’ Retirement
Planning for retirement is an essential part of couples' financial management. As life expectancy increases and healthcare costs rise, ensuring that you have sufficient funds to maintain your lifestyle during retirement has become more critical than ever. Two major factors that can significantly impact retirement income are Social Security tax and inflation. Many people don't realize that Social Security income can be taxable, (which doesn't seem right since Social Security was a "tax" from your income to start with). Understanding how these elements affect your financial future can help you make more informed decisions and better prepare for the years ahead. What is Social Security … [Read more...]
May’s Low Inflation, the Price of Gold and More
The U.S. Bureau of Labor statistics released the May inflation data on June 16th. Annual inflation fell from 1.13% in April to 1.02% in May. The Consumer Price index crept up to 240.236 from 239.261. Monthly inflation was 0.41% (40% of the total annual inflation). The primary factor in the increase was energy costs, gasoline was up 2.3% while fuel oil was up 6.2%. Many other items were actually down... airfares down -1.5%, used cars and trucks down -1.3%, food at home down -0.5%, of course physicians services and motor vehicle insurance were up 1% and 0.9% respectively, along with apparel which was up 0.8%. Current Annual Inflation Chart We’ve updated the current annual inflation chart … [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...]
Living Longer: Health Care, Life Insurance and Retirement Costs for U.S. Citizens
At first glance, one would tend to assume that living longer is a blessing. One gets to spend more time enjoying the company of loved ones, see grandchildren grow up, etc.. However, it’s also worth wondering how current standards of longevity for U.S. citizens tie in with the hefty costs of medical care, the issue of purchasing life insurance, and the cost of retiring. Let's take a look at how much we’re actually spending on health care compared to other countries, how longer lives impact our life insurance premiums, and whether or not we should all just find a different country to retire to. Health Care Costs in the U.S. Obamacare was definitely not the first time the issue of health care … [Read more...]
Inflation and Your Retirement Nest Egg
Inflation has a big effect on the future value of our nest egg. As we begin to think about retirement we dream of our "magic number" that amount of money that we will need to retire comfortably. But with the rate of inflation constantly changing in is like trying to take aim at a moving target. To make matters worse it's not just the value of the money that is changing it is also the amount of interest you can earn on that money. With the FED actively working to keep interest rates low your savings often earn virtually "Nil" in the way of interest and to make matters even worse once inflation and taxes take their bite your nest egg might actually be shrinking. In today's article Dennis … [Read more...]
Should You Buy an Annuity?
For many cash strapped seniors an annuity sounds like the perfect solution. And it can be if you think you’ll outlive your mortality date. The only trouble is that the insurance companies offering annuities have perfected estimating your mortality date based on factors like gender, birth year, where you live, where you were born, the age your parents died, and your health (or unhealthy) habits. One disadvantage of an annuity is that when you die there is nothing left for your heirs. On the other hand, with an insurance policy you (or your heirs actually) come out ahead if you live less than your mortality date. So in addition to Dennis Miller's advice in the following article you might … [Read more...]
What Does 8% Inflation Really Mean?
By Dennis Miller Eight percent is not good news. In my latest article I shared some reader feedback from our inflation survey, and in case you missed it, the Money Forever Reader Poll Inflation Rate is 8%. But what does that number really mean for us – seniors and savers trying to protect our buying power? It's time to read the tea leaves and find out. Up to Your Ass in Alligators You may remember the old poster that read, "When you are up to your ass in alligators, it's tough to remember the goal was to drain the swamp." You may have felt overwhelmed during the last few years, as the investment options for your retirement portfolio changed. You might read about the benefits of gold … [Read more...]
How to Calculate the Social Security Cost of Living Adjustment
How Does The Government Calculate the Cost of Living Adjustment (COLA) on your retirement benefits like Social Security? I recently received the following question from Jerry: What formula does the government uses to figure out COLA based on inflation for retired people each year? That is a great question! Social Security benefits are indexed for inflation to protect beneficiaries from the loss of purchasing power due to inflation. The government uses a complex averaging system to take the average CPI index for the 3rd quarter of the previous year versus the average CPI index for the current year and calculate the inflation rate based on that. Cost of Living adjustments are … [Read more...]