Prices increase (inflation) and thus everybody would want their incomes to increase so as to keep up with rising prices. Obviously, prices of selected goods may increase for reasons unrelated to inflation. For example, the price of vegetables and fruit may rise when they are in shortage due to either heavy rainfalls or droughts.
With all of this taken into account, you also need to factor in inflation. Assuming you are not right on the verge of retirement, it is no secret that your purchasing power will look a lot different by the time you retire.
The fact is that everything will be more expensive and that needs to be factored in when determining how much you really need to save.
Inflation affects people in diverse ways particularly the most vulnerable such as those at risk of poverty.
Unfortunately, inflation might be taken for granted. Present increases in pay, or some additional bonuses might seem adequate for a short time in keeping pace with the increased cost of living. However, what will happen upon your retirement when there are no longer pay rises or additional bonuses to compensate?
Even if you have put money aside, if inflation was not factored in during your employable phase, your purchasing power will look a lot different when you retire as prices would double every number of years and amount saved would not be enough to help you maintain a decent lifestyle.
This is even more so as according to the latest WHO data published in 2018, life expectancy in Malta is:
- Male 79.6,
- Female 83.3 and
- Total life expectancy is 81.5.
PROTECT yourself from the effects of the rising cost of living by considering the following. Watching your spending! Budget now! Start now!
- Put money aside for tomorrow’s needs and any other activity you would like to pursue.
- Set aside more to compensate for inflation.
- Reliance on your social security pension might not be enough. The yearly cost of living increases might not be enough to cover the continuous increases in prices of goods and services. Investment gives rise to new incomes but it is very important to seek advice from trustworthy financial advisers.