Ever Present Risk.

Last week, Social Security announced a 3.2% cost-of-living adjustment (COLA) for 2024, a significant decrease from 2023’s COLA of 8.7%.    

Have you planned for the “ever-present risk” of inflation in your life, as discussed by Mark Miller in last week’s New York Times article, “How to Protect Your Retirement From Nagging Inflation?”
 
A good starting place for planning the next 30 years is by reflecting on the past 30 years. I plan for a stock market that will increase three-fold, as the Dow Jones Industrial Average has performed over the past 3 decades, placing it at about the 100,000 point level.
 
That is a nice hedge against inflation.
 
I plan on a burn rate (expenses) of $100,000 in today’s dollars to cost me $225,000 in future dollars, an inflation rate of about 2.5%.
 
That is what I’m hedging against.

There are a lot of unknowns and nuances to consider when integrating inflation risk in my planning, but there are a few things I can count on. My yearly mortgage won’t change. My yearly healthcare costs will most likely go through the roof.
 
And then there is everything else in between.
 
How are you addressing inflation in your world?
 
How are you integrating it into your planning, your portfolio, and your life?
 
As Miller’s article points out, addressing this ever-present risk in your financial plan today allows you to live your rich life in the years ahead.
   
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