Inflation is defined as the continuing rise in prices, primarily caused by an increasing volume of money in the economy. In other words, over time your money just doesn’t stretch as far. Right now, many people are painfully aware of gas and grocery prices. Even if this current “squeeze” is temporary, over time the prices creep up.  We’ve all experienced this in our lives, regardless of our age.

Is it possible to completely inflation-proof your money and assets?

Inflation is the “silent tax” that affects everyone’s money in some capacity. Because inflation represents the purchasing power of money, it’s an economic phenomenon that doesn’t discriminate. By this, we mean that there’s no way to come out unaffected. It is, however, possible to out-pace inflation. 

What does this mean?

If you want your dollars to have more impact, you must have more dollars. The answer to the problem of inflation is simply to have more money. One hundred thousand dollars may be a comfortable income for you now, but based on current inflation projections, you could need $350,000 for your income to feel the “same.”  This means you must save money with inflation in mind.  One of the few effective ways to combat inflation is to make, and save, more money.   Another is to purchase inflation-proof assets.

Two Inflation-Proof Assets

When the value of the dollar decreases, costs go up. That’s inflation. While this can seem overwhelmingly negative, there are actually two major assets that improve over time because of inflation. That would be whole life insurance and a fixed mortgage. The reason these improve over time is that whole-life premiums and mortgages are fixed payments. They do not increase (assuming you are not renewing your mortgage at a higher interest rate every 5 years or so). This means as time goes on, the payments have a lower impact on your bottom line. 

Let’s dissect how this works.

Say you pay $1,000 a month for your home. If we use a very conservative annual inflation rate of 1.42% (average annual growth in wages over a 252-year history), we see that at the very end of the 30-year mortgage, it’s going to feel like $653.  If we use a 2% inflation rate, that $1,000 today will feel like $549 in 30 years.  Yes, these are very low inflation rates in our current climate, but you get the idea – the higher the inflation rate the bigger the impact.  This impact works the same for your monthly or annual whole life insurance premium deposits.

Note: The reason we use a Present Value calculator is that we’re trying to work backward to find out what the mortgage payment would feel like in today’s dollars. 

Whole life insurance is such a valuable asset, because not only do your premiums feel like less and less over time, the cash values and death benefits are designed to grow with certainty. You won’t lose money from your cash value or death benefit and the interest and dividends are ‌a huge improvement from a typical savings account. Slow and steady wins the race.

Essentially, you are getting increasing value at a lesser “cost”.  Where else does that happen?  True, you are getting weaker dollars in the future, but you are getting more of them – the only way to really out-pace inflation. If you understand the value of having a premium that improves with inflation, and out-earns (by 400% to 500%) typical secure savings vehicles, you can inflation-proof your money. Under normal inflationary periods, the growth will out-pace inflation.  This method is built on the contractual guarantees of whole life insurance, as well as a solid history of insurance companies paying dividends.  They have not missed a dividend in over 175 years!

Whole life insurance also has greater certainty than assets correlated to the stock market. In short, life insurance has certainty, staying power, and inflation benefits beyond a level premium. It’s a great foundational asset that can give you more certainty and thus help other assets perform better. Reach out today, put your money to work, and start beating inflation!