Is Your Money Slowly Disappearing?

By: Jack Strulowitz

If you’ve been watching the news lately, you’ve noticed that inflation dominates the headlines. The U.S.-Iran conflict sends oil prices in one direction on a Monday and diplomacy reverses them by Friday, energy costs can’t seem to make up their mind, and the ripple effects show up every time you’re at the pump. The headlines change, but the underlying reality doesn’t: the cost of living keeps going up. And here’s what caught my attention: most people read those numbers, wince a little, and move on with their lives. And that reaction, that casual shrug, might be the most expensive financial mistake you can make.

Let me put it this way. Imagine you have a beautiful swimming pool in your backyard. It’s full, it looks great, and you’re proud of it. But there’s a tiny crack in the bottom that you can’t see. Every day, a little bit of water leaks out, never enough to notice in any given week or even any given month, but after five years, you’re standing in a half-empty pool and wondering what happened. That’s what inflation does to your money, never announcing itself with alarms, just quietly and persistently draining the value of every dollar you’ve saved.

And this is where most people get the math wrong. When someone says they have a million dollars saved and they feel comfortable, my first question is: Comfortable for how long? Because a million dollars today is not a million dollars in ten years. It’s not even close. At just three percent annual inflation, which is roughly where we are right now, that million dollars has the purchasing power of about $740,000 in a decade. You didn’t spend a dime or make a bad investment; you just let it sit there where it shrank.

There’s a concept I come back to often from one of the best books ever written on long-term investing. The idea is simple but uncomfortable: inflation is the silent toll that gets charged on every dollar you have, whether it’s invested or not. The difference is that money sitting in cash, CDs, or bonds is just absorbing that toll with almost nothing to show for it, while money invested in equities has historically been the only reliable way to outpace it. The choice isn’t between risk and safety, it’s between two different kinds of risk, and the one most people overlook is the slow, invisible loss of purchasing power that comes from doing nothing.

This hits differently when you’re approaching retirement or already in it. During your working years, your income generally keeps pace with inflation. Your earnings are a living, breathing thing that adjusts over time. But the day you retire, that escalator stops. But your expenses keep rising. The cost of food, healthcare, property taxes, home maintenance, even your favorite local bagel, none of it cares that you’re on a fixed income. Inflation doesn’t give senior discounts.

And this is the part that tends to surprise people the most: retirement isn’t a five-year plan. If you retire at 65 and you’re in good health, you could easily be managing your money for another 25 or 30 years. That’s not a short ride. That’s a second career’s worth of time during which inflation is compounding against you. The purchasing power gap between year one and year twenty-five of retirement is enormous, and it catches people off guard because the early years feel fine. The pool still looks full. But the crack is there.

So, what does this actually mean in practice? It means that the instinct to play it safe with your money once you stop working, to move everything into cash or bonds or whatever feels like it won’t move is potentially dangerous. Not because those things are bad, but because “safe” has a hidden cost. If your money isn’t growing at least enough to keep pace with inflation, it’s not staying safe. It’s evaporating. Slowly, invisibly, but surely.

I’m not saying everyone needs to be aggressive with their investments. That’s not the point. The point is that doing nothing is a decision, and it’s one that comes with a price tag most people never calculate. The question isn’t whether you can afford to invest; it’s whether you can afford not to.

The next time you see an inflation number on the news, don’t just wince and scroll past it. Think about what that number means compounded over ten, twenty, thirty years. Think about that swimming pool. And ask yourself whether your current financial plan accounts for the crack you can’t see. n

Jack Strulowitz is a Financial Advisor at Bernath & Rosenberg in Cedarhurst, NY, where he helps high–net worth individuals and families manage their investments and build comprehensive strategies for retirement, tax, and estate planning. For questions or to schedule a consultation, please contact [email protected] or 847-962-3352.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.