Financial Advisor Richard Paul discusses fears of inflation and how it could affect retirement planning.

Novi, MI – January 19, 2013 – Richard Paul, Founder and President of Richard W. Paul & Associates, LLC, recently explained inflation, its historical effect on the economy and how it affects our retirement planning today. Mr. Paul explains:

Inflation is multi-dimensional. 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.

It is important to realize Price Inflation hurts retirement because most retirees live off a fixed income, therefore 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, is 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 represented a form of reset for our own currency right here in the United States.

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

The debate will continue to rage on because although history says one thing, you can’t ignore the following 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 this topic, or to learn how Richard Paul can help, please visit www.rwpaul.com.

About Richard Paul:

As founder and president of Midwest Financial Consultants, and Richard W. Paul & Associates, LLC (a registered investment advisory firm), Rich works to provide comprehensive financial planning strategies to pre-retired and retired individuals, helping them achieve total wealth optimization and a reliable income source in retirement. A firm believer in achieving success through a personalized strategy, Mr. Paul acts as each individual’s financial coach and works to optimize their current financial situation by managing and minimizing financial risks and tax liabilities, and positioning accounts for continued growth, regardless of market volatility.

Rich is the local guest host on the nationally syndicated radio show called, “The Financial Safari,” which airs on WMUZ and WLQV. He now has his own radio show on WJR News/Talk 760 called “The Rich Paul Show: Your Retirement Survival Guide” airing on the last Thursday of each month at 7pm.

Rich is also releasing a book, “The Baby Boomer’s Retirement Survival Guide”, focusing on the transition into retirement, and how to construct a portfolio to give you income for life. He has also been quoted on over 100 dot coms as well as featured as a “Financial Trendsetter” in the USA Today.