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Every Year, Everything You Buy Costs More

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As anyone who knows me well can attest, I read a lot of magazines. My wife doesn’t hesitate to tell me quite often that my magazines are “out of control”. I get a lot of them, but don’t have much time to read unless I am traveling. Well, I found an article I liked so much when I was traveling a few months back that I ripped it out, folded it up, and put it in my pocket with a bunch of receipts. This made for a nice little surprise as I was going through a pile of receipts this weekend.

The article is from the May 2007 issue of Financial Advisor magazine. In the article, Nick Murray summarizes the baby boomers’ lives in seven words: “Every year, everything you buy costs more.” Murray uses the simple example of the postage stamp, which as recently as 1980 cost 15 cents but now costs 41 cents, almost triple. After going through a few other examples, he ends the article by exclaiming three great truths:

  1. “Longevity risk is synonymous with purchasing power risk.”
  2. “The great risk of modern retirement isn’t losing one’s money, it’s outliving it.”
  3. “Every year, everything you buy costs more.”

Murray also astutely points out that the risk of principal loss over the long term is entirely overblown, citing that in the 188 rolling 30 year periods since Hamilton became the first US Treasury secretary, equities have had a negative return in exactly ZERO of those periods. Certainly food for thought.

His writings and materials are aimed at financial advisors and professionals, but you can read more of his writings at www.NickMurrayInteractive.com.

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August 25, 2007 - Posted by | Retirement

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