When it comes to financial planning, one conversation is often overlooked—but absolutely essential: inflation.
At Circle of Wealth®, we help people find money they’re losing unknowingly and unnecessarily. But that only works if we also help them protect their future lifestyle—and that starts with understanding how inflation can erode purchasing power over time.
🚨 The Real Goal: Lifestyle, Not Just Numbers
Clients aren’t just saving for a dollar amount—they’re saving for a future lifestyle. And they want that lifestyle to match how they live today… just adjusted for inflation.
That’s why when we answer the “4 Critical Financial Questions”—like how much to save, when they can retire, or whether they’ll need to reduce their lifestyle—inflation assumptions are baked into every one.
🧠 Don’t Fall for Recency Bias
After the spike in inflation between 2021 and 2023, many people are now anchored to those high numbers. But we call that recency bias—the tendency to give more weight to recent events than long-term reality.
In truth, when you look at historical data:
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10-year average (2015–2024): 2.86%
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30-year average (1995–2024): 2.54%
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60-year average (1965–2024): 3.96%
So while short-term headlines scream about 8% inflation, the long-term trend tells a different story.
🛠️ A Powerful Teaching Moment
When discussing inflation with clients or prospects, it’s not about predicting the future. It’s about providing perspective and giving them the power to choose the assumptions they want to use in their plan. That creates buy-in and reduces fear.
We typically default to a 3% inflation rate—reasonable, historically grounded, and easy to explain. But the magic is in asking the client:
“Would you like to use that number… or something else?”
This simple question turns a scary, complex topic into a confident, collaborative conversation.
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