Yes, I fear inflation more than anything, because it compounds and never corrects.
But this article also implies that my pension is suddenly worth less. One of the things I learned on this forum was to think of my non-COLA pension as if it were part of my portfolio.
Using some easy numbers as an example, the theory goes like this:
Say you have $1M in your portfolio. At 4% a year, that's $40K. So if you have a $40K pension, you have the equivalent of a $1M portfolio.
But if you change that number to 5%, your $40K pension is only equal to having an $800,000 portfolio.
So, that $40K pension is now worth $200,000 (20%) less than it was when the rate was 4%.
It's pretty funny what you can do with figures sometimes
But this article also implies that my pension is suddenly worth less. One of the things I learned on this forum was to think of my non-COLA pension as if it were part of my portfolio.
Using some easy numbers as an example, the theory goes like this:
Say you have $1M in your portfolio. At 4% a year, that's $40K. So if you have a $40K pension, you have the equivalent of a $1M portfolio.
But if you change that number to 5%, your $40K pension is only equal to having an $800,000 portfolio.
So, that $40K pension is now worth $200,000 (20%) less than it was when the rate was 4%.
It's pretty funny what you can do with figures sometimes