Tuesday, September 11, 2012

Keeping Up With Inflation Isn't Easy

OK, I admit it, I've had paid jobs for a pretty long time. I've been in this career for more than 27 years now. And, it's not the first career I ever had. But, I'm not writing this to brag about my grey hair. I'm not writing to show you how boring I am for having been in the same profession for this long. What I am doing is trying to show how hard it is for workers to keep up.

Back in days gone by, I heard talk all the time about how each generation left the country better off than they found it. I heard talk about how standards of living had gone up. And, in many ways, standards of living continue to go up. But, they are going up these days primarily because of technology, but not because people have more buying power.

I think back to a position that I held in the early 1980s. I didn't make much money. But, I had health care benefits. I had a traditional indemnity plan with a $200 deductible and a $500 maximum family out-of-pocket limit. And, I didn't pay a penny for it. It was employer-provided.

Things have changed. I'm not here to lament what my employers have done. Instead, I'm looking at the workplace in general. Pay raises except for those due to promotions tend to be barely enough to cover inflation. Pension plans have disappeared for many workers, often replaced by 401(k) plans that may provide for an adequate retirement, but only if the worker contributes perhaps 8% to 12% of his or her pay annually. Health care benefits continually get cut back (higher deductibles, higher co-pays) while the employee pays a larger percentage of the total cost. How about other perqs that workers used to get? Company cars? Largely gone. Lots of employee get-togethers? Largely gone.

The fact is that the deal has changed. For many, if not most, there appears no way to keep up with inflation. The 90s that had stock options that made many wealthy are gone. For those that didn't have that experience, maybe you won't have your parents' retirement.

All I can tell you is to save early and save often. Maybe you'll get to retire someday.

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