MSN readers are feeling pressured by inflation: Poll
Three quarters of MSN readers admit to feeling the pinch of rising prices. And the older you are, the higher the apprehension.
At least retirees' government retirement benefits and (if they’re lucky) pension plans will keep their purchasing power intact over time though.
However, warn many financial advisors, this isn’t necessarily the case.
“Many of my clients keep needing extra infusions of income, even though their private pension, Canada Pension Plan and old-age security income is indexed to inflation,” advisor Christine Butchart told Investment Executive.
The CPI measures price changes for a basket of goods and services, based on average spending by Canadians in a particular year. But this basket contains mutually exclusive expenditures, such as both rent and the cost of owned accommodation, and home heating costs using both fuel oil and natural gas.
As there can be large differences in the price increases for these expenditures, the inflation experienced by individuals can vary significantly, particularly in different areas of the country.
Younger people tend to spend more on electronics, for example, while older people will normally spend a greater percentage of their income on essentials like food and utilities. And people of any age who drive a lot will clearly be more worried about changes in the price of gas.
Consider this: The costs of operating a car have increased at a much faster pace than the CPI over the past decade — including increases of 80% for gas, 59.4% for insurance premiums and 57% for parking fees, for instance.
All this suggests that you’d be wise to use a somewhat higher inflation adjustment on the spending side than on the income side, Butchart says.
Are you currently feeling the sting of inflation? Do you worry about what this is going to mean in the future? What are you doing about it?
Gordon Powers, MSN Money