Financial Advisor Matthew Zagula discusses fears of inflation and how it could affect retirement planning.
Pittsburgh, PA – March 8, 2013 – Matthew Zagula, President of First Financial Advisors and Bleier Zagula Investments, recently explained inflation, its historical effect on the economy and how it affects our retirement planning today. Mr. Zagula 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. Zagula 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 Matthew Zagula can help, please call 1-800-723-0533.
About Matthew Zagula:
Matthew Zagula has been a coach to the nation’s top lawyers specializing in estate planning and elder law, an accomplished financial advisor to his clients, an author, radio personality and founder of several institutes dedicated to providing sound fiscal advice to veterans and seniors for just about the last 20 years.
Zagula’s experience in insurance and financial planning began with Guardian Life Insurance Company and extends through a position with Northwestern Mutual where he acted as a special agent for advanced cases. Zagula has an extensive background in retirement and estate planning, and executive benefits.
Zagula has been and continues to be at the forefront of many training programs with some of the nations best Elder Law Attorneys and Financial Advisors.