Financial Advisor Jim Black Explains How Gas Prices and Inflation Affect Retirement Planning
Financial Advisor Jim Black discusses how higher gas prices and inflation will affect your retirement and income planning.
Redmond, WA – November 28, 2012 – Jim Black, co-founder of Absolute Return Solutions, Inc., recently discussed how gas prices will affect your retirement planning and how inflation is a “stealth tax” waiting to happen.
“Gas prices affect us in many ways. The vast majority of what we eat and what we wear gets to stores by long haul truck delivery. For example, higher oil prices increase the production cost of fertilizers and food processing and these higher costs are passed on to consumers in the form of higher prices at the grocery store. As these cost increases ripple across multiple supply chains, they can push core inflation higher,” remarked Jim Black.
The inflation rate in America is based on the Consumer Price Index (CPI) and is calculated by the government monitoring a “market basket of goods and services” to accurately index the cost increases we all deal with over time. The Bureau of Labor Statistics explains that the CPI represents all goods and services purchased for consumption by the reference population. These goods and services are broken into major categories such as Food/Beverages, Housing, Apparel, Transportation, Medical Care, Recreation, Education/Communication and others.
“The CPI does not include investment items, such as stocks, bonds, real estate, and life insurance, since these items relate to savings and not to day-to-day consumption expenses,” explained Jim Black. “I found that quite interesting, because it is blind to market pressures and it excludes taxes which we already know are going up, starting in 2013. So, my clients who are in retirement face an increase in their cost of living due to higher taxes, but there isn’t any relief for that cost.”
Jim also offered three insights as to how this information informs the retirement-planning strategies for his clients. “First, taxes are undoubtedly going up. Second, regardless of economic maneuvers (what they call quantitative easing), what our clients buy is likely to get more expensive – even if the government’s ‘basket’ doesn’t want to own that reality. Finally, we keep a close eye on our income-planning strategies, so that the retirees who place trust in us can continue to live the lifestyle they earned.”
For more information on how Jim Black can help, please visit www.absolutereturnsolutions.com.
About Jim Black:
Jim Black has over 20 years of experience in the financial planning industry, and now devotes his efforts to the distribution planning arena. His main focus is helping clients to “retire” based on their own terms. For Absolute Returns Solutions, Inc. that means focusing on desired income and estate goals; striving to better assure lifetime income and asset preservation.
After graduating from Brigham Young University with a degree in international finance, Jim went on to earn his MBA from Willamette University. Jim is also a Certified Financial Planner™.