Have You Factored Inflation Into Your Retirement?

8/17/2021 Marine Bank

On August 11th, the U.S. Bureau of Labor Statistics reported that the Consumer Price Index increased 5.4% over the past 12 months. Shockingly, media outlets ran with absurd headlines like these: “Inflation is Not as Bad as Feared” and “Inflation Fears Moderate” and even this one: “Core Inflation Starts to Ease.”

Ok, maybe it’s technically true that inflation “only” rose 0.5% in July after rising 0.9% in June, but an increase of 0.5% every month is going to bring annual inflation north of 6%. Maybe this will hit home more: that 10% return on your portfolio is not 10% after inflation. Not even close.

Maybe you don’t worry about some of the underlying data in the most recent inflation numbers? Maybe it doesn’t bother you that over the past 12 months:

  • Energy is up over 23%;
  • Fuel oil is up over 39%; and
  • Used cars and trucks are up over 41%.

Well, you should remember this: Inflation can do a number on retirees’ incomes. Most people don’t think about that, but with longer lifespans, we run a real risk of seeing our retirement savings eaten away. Curbing its impact takes planning.

Inflation Lessons from a Paper Route

I learned that lesson early from my newspaper route when I was 10 years old. I had a Schwinn Stingray bike, with baseball cards in the spokes. Because I delivered every day without fail, the kickstand wore out. So my pedal constantly hit the stand. You heard me coming halfway up the block.

On Fridays, I collected the week’s newspaper payment from the customers on my route. The weekly delivery cost was 90 cents, and several of my customers gave me a dollar, which meant a 10-cent tip. This was the 1970s, an era of rapid inflation. The newspaper then announced an increase in the delivery cost to $1. And I didn’t think much of it.

The next Friday, I arrived at my first stop, the home of a friendly elderly woman. Her expression was pained as I approached the door. She said she knew about the price increase, but she could not give me anything more than the $1. She realized that there would be no tip for me. She informed me that the ever-increasing cost of everything was crushing her. She could not keep up with the inflation.

At several stops that Friday afternoon, I heard the same sad tale. I discussed the situation with my mom that night, telling her I never wanted to be in that position when I was older. She gave me the motherly advice of “study hard, so you can make a good living.” Thanks mom.

What You Can Do About Inflation

It’s actually quite simple: one must address the inflation issue early – when still a pre-retiree. Planning ahead and understanding the risks is paramount.

This issue is a big concern for today’s retirees. They will likely experience a longer retirement than any other generation ever. They need to guard against the insidious damage done by regularly increasing costs over the decades.

On behalf of your 85-year-old self, plan ahead to create lifestyle-sustaining income. Your advisor can help.

With help from our financial advisor, Dallas Lee Whittaker, you can manage your finances and achieve your goals. 

Dallas Lee Whittaker


(217) 547-1371

I would like to learn more about Marine Bank's Financial Planning program. Please contact me

Dallas Lee Whittaker CMFC, CLU
Senior Vice President

Dallas has over 20 years of experience in all areas of wealth management and financial services. He is passionate about adding value to the lives of his clients through education and addressing their financial goals in a collaborative manner. With a deep knowledge of insurance which is an added benefit when doing financial planning, Dallas is an asset to our clients and the Marine Bank Wealth Management team.

Dallas currently holds a Chartered Mutual Fund Counselor (CMFC) designation awarded through the College for Financial Planning and a Chartered Life Underwriter (CLU) designation through the American College. As Senior Vice President of the Marine Bank Wealth Management Department, Dallas focuses on comprehensive financial planning to help individuals and businesses achieve peace of mind in their financial lives with an emphasis on retirement strategies, legacy planning, and generational wealth management.

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