While passion may be required for great achievement elsewhere, on Wall Street it almost always leads to disaster.
— Benjamin Graham
Inflation is delaying retirement for some older Canadians
Results of a survey of Canadians over 55 conducted in June 2022.
| I have delayed (or am planning to delay) my retirement because… | |
|---|---|
| I don't have enough money saved/invested | 62% |
| Inflation/cost of living increase this year | 54% |
| I have too many debts | 40% |
| My children still need financial support | 26% |
| I love my job too much to quit | 23% |
| The COVID-19 pandemic | 21% |
| I take care of my spouse/partner | 13% |
| I am caring for my partner or another family member | 10% |
The goal of this chapter is education, in my mind, which is the key to ending fear of the future. So, let's look at some of these risks and what can be done to manage each one.
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An inflationary lifestyle
When people think of the word “inflation,” they naturally think of it as an economic term. Inflation affects all aspects of our economy, and we will talk about it shortly. However, lifestyle inflation is more important to discuss.
Think about this. You have worked for a company for several years, and you have recently been hired by another business that pays you more; in fact, your take home pay increased by 30 percent overnight.
The first thing you do is think about how you will spend that extra money: a new car, a bigger home or apartment, a vacation, new clothes—the list is endless.
Lifestyle inflation is a simple equation that most people follow: The more you earn, the more you spend. It is called “inflation” because a person's standard of living increases in relation to income.
The problem is that people tend to spend money as if there is no future instead of saving for the future. And in doing so, they changed their financial future.
For example, if you were to use $500 of extra pay at your new job, you would be paying for literally years of extra work. Assume that investing $500/month over ten years at a 5% annual rate of return would generate an additional $75,000.
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