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How Does Inflation Work?

Saving for Retirement: How Does Inflation Work?

Saving for Retirement: How Does Inflation Work?

Every day in the news, we hear about inflation. It’s rising at record speeds, and we feel the pinch in our wallets. Prices of goods are going up, prices for services are going up, and bills are going up, yet our wages stay mostly the same. Inflation has a huge effect on the value of our money, especially our savings accounts, when preparing for retirement. Keep reading to learn more about inflation, the domino effects of when it occurs, and how to prepare for inflation to ensure you have enough money saved for retirement.

What is Inflation?

Inflation is a measure of the rate of rising prices of goods and services in an economy. If inflation is occurring, leading to higher prices for basic necessities such as food, it can have a negative impact on society.

The article continues that inflation can occur in nearly any product or service, including need-based expenses such as housing, food, medical care, and utilities, as well as want expenses, such as cosmetics, automobiles, and jewelry. Once inflation becomes prevalent throughout an economy, the expectation of further inflation becomes an overriding concern in the consciousness of consumers and businesses alike. Central banks of developed economies, including the Federal Reserve in the U.S., monitor inflation. The Fed has an inflation target of approximately 2% and adjusts monetary policy to combat inflation if prices rise too much or too quickly.

What Happens When Inflation Occurs?

When inflation occurs, the Federal Reserve (America’s central banking system) responds by raising rates. By doing this, interest rates rise on mortgages, auto loans, and other credit, making it more expensive to borrow money and, in turn, can cause long-lasting effects. It slows down the public’s spending on items which can allow supply chains to catch up and curb a recession, although this leaves many people unable to make purchases. Then, once inflation goes down, the Federal Reserve will lower interest rates to encourage spending once again.

Ways to Prepare for Inflation

  1. Don’t make any large purchases. When inflation is high, interest rates are high, too. As mentioned earlier, this makes money very expensive to borrow. Once inflation lowers again, and the interest rates follow, you may be stuck paying a very high interest rate. If you can avoid it, don’t purchase things like a new car or a new home.
    Focus on paying off your credit. If you have credit card debt, focus on paying this off to get rid of the most expensive money you have.
  2. Save when possible. If you do not have credit card debt, you can focus on adding more money to your savings account. Your savings account is an important buffer to have against rising costs, and the point of a savings account is to use it during tough times. If you’re able to add to it instead of taking from it, focus on that.
  3. Budget and trim. Take a look at your spending habits and see what you can reign in. Now is a great time to cancel any subscriptions you’ve forgotten about, that old gym membership you haven’t used in years, or start going to the less expensive grocery stores.
  4. Invest. There are ways you can protect your money during inflation, such as investing in gold. Gold is very well known for increasing in value as the purchasing power of the dollar declines, which is exactly what happens during a period of inflation. By investing in gold, you can make sure your retirement account stays stable. This will protect your money now and if there happens to be another period of recession during the time you are planning to retire.

Hedge Against Inflation with Priority Gold

There are many ways you can invest in gold to protect yourself against inflation. One of them is through a precious metal IRA. Having an established Gold & Silver IRA (Individual Retirement Account) means that you will have:

  • Retirement Security and hedge against inflation.
  • IRS Tax Exemption on qualifying precious metals.
  • Direct Physical Ownership of tangible assets.
  • Full control of your precious metals investment.
  • FREE Shipping, Insurance, and Free storage for qualifying accounts.

If you are ready to invest in gold to protect your savings and secure your future, we can help. Priority Gold is one of the most trusted precious metals dealers in the United States, with a BBB A+ Rating, AAA Rating with Business Consumer Alliance, and 5 Stars Rating with TrustLink.

We specialize in providing precious metals investment services with Security, Liability, and Great Convenience for customers. Our team is committed to helping to streamline their precious metals purchases at a fair price, selecting the right precious metals portfolios, and meeting their important financial objectives.

We offer Free Storage for qualifying Gold & Silver IRA accounts, a fast & easy gold buying process, and smooth IRA Transfer. And gold shows up on schedule. Priority Gold guarantees the highest customer service standards, which come with honesty, professional conduct, and an Ethical Code of Business.

For more information, visit us at

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