Demo Dozen

SHOULD LONG TERM INFLATION WORRY YOU?

 

The term "inflation" figures prominently in daily news reports about the "state of the economy."  But what does inflation mean to the average American?  Is it, or should it be, a concern?

 

To address this question, you have at your disposal a computer model  that, using information you provide, allows you to see how long-term inflation can have a significant effect on something very important to you:  your money and its purchasing power!

 

 

Here are the basics:

        1)  You have an annual salary

        2)  You expect a raise each year.

        3)  The costs of the goods and services you buy are impacted by inflation.    

                             

How does inflation affect your overall "purchasing power" (the ability of your salary to keep up with inflation) over the long-term?

 

In this simulation, you will have an opportunity to define an initial salary and an annual raise, and then to set an annual inflation rate, to explore the implications on long term purchasing power. The results may surprise you!

 

An illustration of output from the simulation (shown below), tracking a growing salary (with a 2% annual raise) not keeping pace with inflation (at 3%) over time, underscores the potential impact that inflation can have on our lives.