x#37 Cars Social Security IRS

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for educational purposes only and does not constitute investment advice or an

offer to buy or sell any security or insurance product. All information

provided here is for educational purposes only and does 

not constitute investment, legal or tax advice, an offer to buy or

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such third party's views.  All examples are hypothetical and for illustrative

purposes only.  Please contact us for an assessment of your personal

financial circumstances and to obtain personal investment advice

INFLATION AND YOUR CAR:

Once-depreciating vehicles are rising in value, and some recently

purchased ones are worth more now than their original price.

With car companies still trying to resume normal levels of factory

output, dealers have been left with a scarcity of new vehicles to sell at

stores, pushing many buyers into the used-car market where they are also encountering

limited options.

Used-car prices rose 40.5% in January from a year ago, according

to data released Thursday by the Labor Department, a jump that helped

accelerate U.S. inflation to an annual rate of 7.5% last month, a new

four-decade high.

Cars that were $25,000 new three years ago are $25,000 today.

The average price paid for a new 2021 model-year vehicle in April

was $38,585, according to J.D. Power. In January 2022—nine months later—that

same model-year vehicle was selling for an average of $48,765 as a slightly

used vehicle.

SOCIAL SECURITY:

Retirees can start Taking Social Security benefits any time

between ages 62 and 70, but for every month of delay, the payment increases.

Benefits are also adjusted annually to reflect increases in the Labor

Department’s CPI-W, a measure of inflation affecting blue-collar workers.

For example, someone born after Jan. 1, 1960, who is entitled to

$2,025 a month at age 62 would receive $3,587 before cost-of-living adjustments

by holding off on claiming until age 70. With a 5% inflation adjustment, the

benefit available at age 70 would be about $5,300.

Cost-of-living increases start at age 62, whether you claim or

delay, and continue for as long as you live. Based on the rise in third-quarter

inflation, the increase for 2022 was 5.9%, the largest since 1982, according to

Social Security Administration data.  BUT, inflation was up 7.5% last

year.  So even though S.S. payments went up 5.9%, the buying power of S.S.

payments declined by 1.6%.

A person who postpones benefits until age 70 instead of 62 would

have to live to 80½ years old to come out ahead.

TIPS

When inflation exceeds expectations, prices of ordinary bonds

typically get hammered. That is when Treasury inflation-protected securities,

or TIPS, tend to do well. 

Backed by the U.S. government, TIPS are bonds with principal and

coupon payments that adjust to keep pace with the consumer-price index.

The bond market currently expects inflation over the next decade

to average about 2.46%. That is the difference between the minus 0.51%

inflation-adjusted yield on the 10-year