Asset Preservation and Distribution Specialist Tom Eaglehouse discusses fears of inflation and how it could affect retirement planning.

Greensburg, PA – January 25, 2013 – Tom Eaglehouse, Founder of The Estate and Elder Planning Center, recently explained inflation, its historical effect on the economy and how it affects our retirement planning today. Mr. Eaglehouse explains:

Inflation is a multi-dimensional thing. It is not just the increase in prices.  Most Americans would agree that their view of inflation has to do with the prices of certain items and if the prices of those items they buy most frequently are up from the prior year – then they are dealing with the effects of inflation.

Price Inflation hurts retirement because most retirees live off a fixed income, so it is especially painful if the interest rates available from safe investments and bank-offered savings plans are low. It is a classic case of, “costs are up and revenue is flat.” However, there is a lot more to it.

Monetary Inflation is a whole different type of inflation. It is a simple inflation to track because it simply means the Government is asking the Federal Reserve to print more money. They are asking to inflate the amount of money available. This idea is, in historical terms, relatively new monetary inflation started during the Kennedy Administration and has been a steady policy in Washington since it started, regardless of political party. Democrats have inflated money supply just as the Republicans have inflated the money supply. And you know what? We, as Americans, like it. More money around equals more prosperity … As long as the money holds its value.

Monetary inflation likely played a key role in the decision to abandon the gold standard in the US, on  August 15, 1971, leading to the “Nixon Shock”.  In essence, the change to a floating exchange rate in the US represented a form of reset for our own currency right here in the United States.

What does this mean to us today? Mr. Eaglehouse continued:

The debate will continue to rage on because although history says one thing you cannot ignore the following and very recent financial report:

10:12AM EST December 13, 2012

The CPI (Consumer Price Index), out Friday, sizes up prices paid by consumers. It’s expected to fall 0.2% for November.

Even the so-called “core” CPI, which omits prices for food and fuel, is expected to rise just 0.1%. This suggests possible deflation and not inflation at all even at a time where the amount of Government debt is reaching nearly unbelievable levels and the Federal Reserve is running the printing press 24/7.

The important thing to consider is the possibility of inflation and, more specifically, what are you doing with your finances to manage that possibility? If you don’t have a plan of action, you may consider some amount of your retirement money positioned to grow with inflation. For long term planning, it is likely a good idea since prices tend to go up over time.

For more information on how Tom Eaglehouse can help, please visit www.estateandelderplanning.net.

About Tom Eaglehouse:

Tom Eaglehouse began his career working in personal finance, followed by sales and management. He created and operated a successful small business for eleven years and in 2003 he began working with seniors after witnessing firsthand what a debilitating illness can do to a family.

The Estate and Elder Planning Center was created to help families better prepare for life’s unexpected situations. Being able to provide a family a solution and peace of mind is what drives Tom’s passion for assisting seniors and those who love them.

Tom is also a member of the National Ethics Association and is working toward certification as an Estate and Trust Specialist™.