00:01
Inflation is a genuine issue for retirement planning because a person age 65 will on average live between 18 and 20 years and the cost of goods can double over that time period.
00:11
Is this statement true or false? so inflation refers to the situation where there is an increasing tendency in the general price level.
00:46
Typically speaking, in a normal economy, inflation is typically around 3 % percent.
00:59
Per year.
01:02
So let's take a look at what that effect would have if someone is expected to live another 18 to 20 years.
01:07
We're going to use the high end of 20 years.
01:10
So what would $1 today cost 20 years from now? that's what we're going to look at to answer this question.
01:33
Okay.
01:34
So we're starting with that $1, and we're going to multiply it by 1 .03 because it's growing, this one represents the $100 ,000.
01:44
Percent value of that dollar .03 is the inflation rate at 3 % per year.
01:51
3 % divided by 100 gets me 0 .03...