Remember What it Costs

Inflation is a factor- but not as bad as you think
Think back to 1980, Ronald Reagan was on the verge of becoming President. The U.S. Olympic hockey team surprised the world with a gold medal. And America was going through difficult economic times.

The cost of living jumped more than 12% that year. It was the last year of double-digit increases in the Consumer Price Index. From 1980 to 1999, the average annual inflation rate was just 4.01% and in the last decade, it has dropped to less than 4% per year (Source, U.S. Bureau of Labor Statistics, Consumer Price Index).

Still, at that modest level, prices continue to rise. This table compares prices of some everyday items, and how much they increased in the past 20 years. The right-handed column projects what you can expect to pay in 20 years if prices continue to increase at the same level for each individual item listed.

Costs keep moving higher
Item	1980	2000	2020*
1 gal. of gasoline	$1.27	$1.61	$2.04
Loaf of bread	$0.50	$0.92	$1.69
1/2 gal. milk	$1.05	$1.59	$2.41
Dozen eggs	$0.73	$0.84	$0.97
12 oz. can frozen orange juice	$1.19	$1.80	$2.66
New single-family home	$84,600	$167,400	$433,566

Source: Bureau of Labor Statistics, Consumer Price Index data, based on U.S. city average for June 1980 and June 2000, except for single-family home data, which was provided by U.S. Bureau of the Census and U.S. Commerce Department, and represents data as of the end of 1980 and the end of 1999.

The moral is simple. No matter how slow the increase in the cost of living may be, you must factor in the reality of inflation as you plan your future. Investing in a fixed annuity, which allows your money to grow tax-deferred,* gives you the opportunity to accumulate wealth at a rate that may help you overcome higher living costs.

*Distributions are subject to income tax and distribution before age 59 1/2 may be subject to an additional 10% tax penalty.

Content is for informational purposes only and may not accurately reflect your specific situation. Information is not intended to provide financial, legal, tax, or accounting advice. You should consult a qualified advisor for advice specific to your own circumstances.