Time To Fill Inflation Buckets

With inflation levels not seen in Canada in decades, saving for retirement needs to consider using ‘inflation buckets,’ says Jim C. Otar, a retired engineer, financial planner, and the founder of www.retirementoptimizer.com. Many planners use a two per cent CPI indexation for their forecast assumptions, ignoring the fact that inflation was higher than two per cent in 60 per cent of the time and higher than four per cent in about 28 per cent of the time since 1900, he says in the article ‘Time To Fill Inflation Buckets’ on the Private Wealth Canada website. Many life annuities and company pensions do not come with full CPI indexation. If this money is needed for essential expenses, then the retiree needs an ’inflation bucket.’