‘Preference for a smaller reward sooner than a larger reward later’
‘Jam today and jam tomorrow’ could well be a mantra for the baby boomer generation. Unfortunately, for most people in retirement, jam might not be on the table tomorrow if they don’t allow for inflation today. Inflation is often underestimated. We don’t usually notice it on a month to month basis (or even year to year). Its impact is insidious. It’s also been relatively benign for some time now.
Drive home the impact of inflation:
- £10,000 income, 25 years ago, would have to roughly double in value to maintain the same purchasing power today. That’s during a period where inflation has been low by historic standards.
- Make it real. Use prices of everyday goods and services. Around 25 years ago, fish and chips cost £1.68, a pint of beer just 99p and a Mars bar 15p!
- Invite your clients to take a quick quiz. ‘Back In The Day’ is a fun way to check the cost of things in the past.