Gas Pains

The arrival of $4 per gallon gasoline, not to mention other skyrocketing energy costs, seems likely to bring a whole new branch of mathematics to retirement planning equations.

Inflation has always been a factor in any financial plan worth its salt. But most of the time inflation is viewed as something that slowly and steadily rises over time. When inflation starts to gallop, however, you have to start looking at it as a horse of a different color, so to speak.

What is worrisome here is that although gas prices may moderate somewhat in the future, the point they return to is bound to be much higher than what we have historically been used to. So it’s obvious that one way or another, gasoline is going to be taking a bigger bite out of retirees’ income.

But that’s not all. Anyone who’s been to a super market lately, and who knows how a price scanner works (not everyone does, after all), knows that escalating food prices are giving energy prices heavy competition for what’s going to take a bigger chunk out of consumers’ wallets.

Even now, many people are having to make hard choices when it comes to their weekly/monthly budgets. Do I drive or do I eat? Or do I do both, but take smaller portions of each?

So, yes, it would be nice if the insurance business could just keep dreaming about boomers and other pre-retirees taking wads of their disposable income and putting it into annuities, long term care insurance, life insurance and all the other goodies available from the industry. But where is that money going to come from, I wonder, when many people (boomers among them) are being faced with hard choices now?

And let’s not forget that it’s only in the last couple of years, really, that personally-borne health care costs have even started to be mentioned as a significant factor in post-retirement income plans.