Originally Posted by
Rick Potter
I have always considered myself lucky with inflation. I remember stories of fellow workers who had been retired 20 years and their retirement was eaten up by inflation. When I retired in 1999, inflation remained very low overall, for 20 years. My retirement has a COLA maxed at 3%, same as the older guys and I have so far done pretty well. Now I will start feeling the inflation much more, as I am limited to that 3% COLA.
This round of inflation is starting to look like the late 70's when interest rates for mortgages were well over 10%, and property taxes were doubling in one shot. I had bought a new home in '73 and there were model homes nearby that the builder kept open for over seven years as he built more homes in the area. I went over and picked up the brochure for the homes about every six months. The brochure never changed, just the prices. I paid $40,950 for our house in 1973, and the same house in 1978-9 was over $80K. Fortunately for me, I bought it while I could afford it.
This sounds ridiculous but we had a desert shack we could move to if we could not make the payments, as it was a stretch when we bought it. They were $226, not including taxes. Within five years of buying it, they would have been tripled because of the price increase plus the higher interest rates. We lived there 32 years, and I sold it to my daughter at a deal ($600K) in 2006. It has almost doubled in price since that point. I agree, ridiculous.
So, who makes the money on inflation? Government. When we sold it, we got another home and paid higher taxes than before, while she moved in and also paid higher taxes than she had, of course her old home was sold and......etc.
