The CPI-W is an Accurate Measure of Retirees' Household Inflation

FALSE!

The Bureau of Labor Statistics very clearly states in their FAQ re the CPI "it seldom mirrors a particular consumer's experience".  Gosh, I wonder why, since they use the CPI-W to determine Social Security cost of living adjustments.  CPI-W is how urban wage earners and clerical worker spend their money with these two qualifiers:

• More than half the household income must come from clerical or wage occupations
• One of the household's earners must have been employed at least 37 weeks during the previous 12 months.

This group represents only 29% of the population, and certainly not most seniors.

This is why we require our clients to develop an Expense Plan, or budget:  To determine what their particular household's inflation rate is and will be in the future.  Of course, these are just estimates.  For example, our expense plan template assigns different inflation rates for many of the line items:

• If you have a fixed mortgage, that payment has an inflation rate of zero
• If you spend a lot on medical expenses then those line items will inflate much more
• If you buy a lot of clothing, those prices haven't inflated much at all.

So the point is, every household should have a customized estimate of their inflation rate.  Averages are never very accurate.  For example if you have a boy and a girl, what is their average gender?

Your Constructive Comments are Welcome!