Do you inflate your savings?

[Bruce Wayne]

The vast majority of Britons are overrating their savings, a new report finds.

This is because three people in four do no consider the impact inflation will have on their nest eggs when choosing where to invest their money, National Savings and Investments reveals.

What about you guys? Do you take into account inflation when dealing with your savings?

[PrincessPerky]

Re: Do you inflate your savings?

I would if I had any . Actually I now think about it more, since coming to this site and learning more about money and such. Before I was perfectly happy to have a pile of coins in my closet, now I wrapped them and sent them to the CC.

[jmjj215]

Re: Do you inflate your savings?

Are you talking about people inflating what they will have or what they have right now? Projecting what you will have is pretty tough - even with good analysis.

[BAGAGT1]

Re: Do you inflate your savings?

Are you talking about people inflating what they will have or what they have right now? Projecting what you will have is pretty tough - even with good analysis.

I think this might help....

"Most people know that £1,000 buys much less today than it would have ten years ago. Yet when it comes to saving for the future, the majority of people seem to be disregarding the impact that future inflation will have on their investments," said Karen Jones, National Savings marketing director.

http://www.myfinances.co.uk/uk-economy/economic-indicators/inflation/britons-have-inflated-opinions-about-savings-$15034761.htm

[marglo]

Re: Do you inflate your savings?

I wish I had some...we had quite a lot when we retired but it has gone SO fast between taxes, loans to one of our kids, one trip and paying off debt....now I consider what we have left our EF and until I get our debts paid off, it isn't likely we will be saving more. But yes, if I had savings, I would consider inflation.

[jmjj215]

Re: Do you inflate your savings?

I think this might help....

"Most people know that £1,000 buys much less today than it would have ten years ago. Yet when it comes to saving for the future, the majority of people seem to be disregarding the impact that future inflation will have on their investments," said Karen Jones, National Savings marketing director.

http://www.myfinances.co.uk/uk-econo...-$15034761.htm

Okay, I get ya. They're not considering the effect inflation will have. It's like people thinking they'll be 'sitting pretty' with $1 million to retire on in 40 years. You'll make it - but it'll probably be pretty close.

[Tree0164]

Re: Do you inflate your savings?

Well yes and no. I know that there will be inflation. No way around that.

We are saving as much as we can to retirement. I just upped hubby's 401k to 15% after he got a small raise. Makes me feel better.

[ken1706]

Re: Do you inflate your savings?

Any ideas about what rate of inflation we should assume in our planning?

That can make a big difference. Seems like the general rule of thumb is 3%. That means after about 24 years, things will cost about twice as much. However, if it's only 2%, it'll take 36 years. But if it's 5%, prices double in only about 15 years.

To play safe, I've been using 4% in my planning.

[jmjj215]

Re: Do you inflate your savings?

Any ideas about what rate of inflation we should assume in our planning?

That can make a big difference. Seems like the general rule of thumb is 3%. That means after about 24 years, things will cost about twice as much. However, if it's only 2%, it'll take 36 years. But if it's 5%, prices double in only about 15 years.

To play safe, I've been using 4% in my planning.

I think on average it has been 3.5% - so using 4% is more conservative.

[BAGAGT1]

Re: Do you inflate your savings?

Well yes and no. I know that there will be inflation. No way around that.

We are saving as much as we can to retirement. I just upped hubby's 401k to 15% after he got a small raise. Makes me feel better.

And that is key when saving for retirement, everytime you get a raise, up your 401k contribution (until you hit the max, then up an IRA or any other savings vehicle). I generally up my contribution 1% every year when I get a raise, and any other time when I get extra income. At the moment I'm contributiing 12%, and hoping that if I get a decent 3 - 4% raise next year, I can up my contribution to 15%.

[obi_positive]

Re: Do you inflate your savings?

I assume 4% inflation. So at 3.3% or 3.5%, I know I'm losing some on the emergency fund with ING and Emigrant. But at least they keep the loses down somewhat.

For retirement investments, I shoot for the 10% and above return (by looking at historic returns for the last several years). After inflation and other costs, I can look at making at least 5-6% or higher returns.

I also look at the value of my home (compared to those recently sold in the neighborhood) to see what kind of equity has grown over the years. Inflation can sometimes help me.

[Bruce Wayne]

Re: Do you inflate your savings?

Sounds like people here take it into account but I'm not sure the majority do, especially given the below inflation interest rates offered by most banks.

[PrincessPerky]

Re: Do you inflate your savings?

This site so does NOT represent the majority of people!!!!

[Tree0164]

Re: Do you inflate your savings?

This site so does NOT represent the majority of people!!!!

Absolutely, most people got their heads in the sand.


If you are coming here, great job.