Perspective on Inflation Inflation doesn’t affect everyone in the same way. It does its worst damage when household income is derived in large part from sources that are not adjusted for it. For example, if one has a pension or annuity that does not provide cost-of-living adjustments, long-term inflation will eat into purchasing power significantly. Social Security, however, which is an important income source for many people, is adjusted annually for inflation. Benefits went up 5.9% this year, roughly in line with recent inflation trends. That adjustment followed a lengthy period when inflation was unusually low and annual increases in benefits were modest. Along with Social Security, many retirees depend on withdrawals from investment accounts. Although some may worry that because of rising inflation retirees will need to reduce spending and take less from their investment portfolios, such a quick reaction may be premature. Historically, the year-over-year inflati
Investment and economic observations by N. Russell Wayne, CFP, MBA. Mr. Wayne is the president of Sound Asset Management, inc. and former Managing Editor of The Value Line Investment Survey.