The Effects of Inflation on Your Generation

Why is everything suddenly costing so much? This is what you might be wondering these days.

 

It’s no secret that inflation has soared in the last several months. The Consumer Price Index (CPI), a commonly used measure of the price of consumer goods and services, has risen nearly seven percent over the year. That’s the highest rate since 1981 and much higher than the 1.5% average annual inflation rate of the previous decade. (Source: Sapiat)

 

Inflation will impact us in many ways depending on where we are in our life cycle. Some of us are affected more than others whether it be the rising costs of housing, healthcare, gas, food prices, or general consumer goods.

 

On today’s Thrive Forward episode, we are talking about inflation by each generation and how it affects us now. Let’s consider the four main generations.

 

Boomers (57-75)

  • This is the demographic that is impacted the most due to healthcare. Most of them are nearing or in retirement and they need more assistance. They are the most concerned with inflation because they have experience it more. Health care which older generations tend to use more has also been hit., Even groceries, which Boomers and Generation X typically spend more money on are up 5.3% right now. (Source: Morning in America)       

 

Gen X (51-56)

  • While we can learn from what has happened in the past it’s not the same today. We see that this generation is solid in their careers and possibly just starting to think about retirement. They also might be moving into their second home; therefore, their impact is in regard to household furnishings and housing in general.

 

Millennials (25-40)

  • This generation has actually experienced four financial crises during their lifetime.

    • The dot-com where their parents might have lost some of their retirement savings.

    • The great recession; when some were graduating college and their parents were losing their jobs;

    • COVID 19-where we saw mainly millennial women impacted.

    • Now lastly, rapid inflation.

  • Millennials spend the most with housing, food and alcohol, transportation, and more. They tend to control how this inflation occurs.

 

Companies are not going to change the prices that they have on something if they know someone will buy it from them. We want something, we are going to get it. When is the last time you looked at the price on something?

 

If we control for the most part the demand of something we can relate it back to us. Where are we going to put our money?

 

Action items:

Here are the following categories you can adjust within. 

Cash Flow

  • Are you looking at your cash flow? Can you preserve that lifestyle given the increase in costs? You need to understand where your money is going.

 

Lifestyle

  • Inflation isn’t going to be high forever it does fluctuate. Re-evaluate and see what you need to keep and what might need to go. What changes can you make?

 

Long Term

  • Do you have an understanding as to the risks on the table? It would be a good time to establish your financial partners (planners, CPA, estate planning attorney and more!) Then understand what you can do from an expense standpoint now and in the future.

 

Inflation doesn’t have to be a scary topic it instead can be a powerful tool to consider what we can and should be doing with our lives now and in the future.

 

Resources:

If you are interested in learning more about Forethought Planning and how we can help you on your journey, please schedule an appointment to our complimentary 30 min Wealth Assessment session to learn more about how we incorporate these strategies and others to assist you through the financial planning process. 

Investments in real estate may be subject to a higher degree of market risk because of concentration in a specific industry, sector or geographical sector. Other risks can include, but are not limited to, declines in the value of real estate, potential illiquidity, risks related to general and economic conditions, stage of development, and defaults by borrower.

 

Securities offered through LPL Financial, a member of FINRA/SIPC. Advisory services offered through Advisors’ Pride, a SEC registered investment advisor. LPL Financial, Advisors’ Pride, Forethought Planning and the guests of Thrive For[e]ward podcast are separate and unaffiliated parties. Any of the parties listed above are not affiliated with Forethought Planning, Advisor’s Pride, or LPL Financial. The views expressed here are those of the participants, and not those of Forethought Planning, Advisor’s Pride, or LPL financial. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. LPL Financial and Forethought Planning do not offer legal services. Socially Responsible Investing (SRI) / Environmental Social Governance (ESG) investing has certain risks based on the fact that the criteria excludes securities of certain issuers for non-financial reasons and, therefore, investors may forgo some market opportunities and the universe of investments available will be smaller.

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