Real

Inflation Rate

(Since 1972)

8.77%

DYI:  As we know or we all should know inflationary stats are massage to reflect a far lower number than the real percentage increase.  Budget deficits since they are never payed for just continuously rolled over behaves just the same as printing money thus a debasement of the currency or more commonly called inflation.

When President Richard Nixon removed the last vestige of the Dollar’s convertibility to gold in 1971 any inhibitor to budget deficits – increase in the national debt – was gone with the U.S. left with a 100% fiat currency. 

So…I looked up each year percentage increase from the prior year beginning with the first full year after Tricky Dick (President Nixon) removed the last vestige of a gold standard.  Put the numbers in Excel and clicked on the arithmetic average from 1972 to 2017 the real average annual inflation has been 8.77%!  Here is the problem when attempting to save money and make it grow beyond the inflation rate.  Just to break even on an average basis – some years higher or lower hence the average – you will need to save 8.77% of your income.  Most will want an easy number to remember as in 10% add on the necessary amount to save for retirement would be an additional 15%.  That’s correct you will need to save 25% of your income if you are under the age of 40 to have a secure retirement.  Of course later you start that number will have to rise to reflect less years of compounding.

DYI