The stock market increasing is not the same thing as inflation. What you're saying makes sense only if you are referring to stock market valuation... strictly retiring because inflation is high makes no sense.
Inflation does incentivize spending, yes. Would you rather have 100 kilos of rice today, or wait and have 99 kilos of rice tomorrow for the same price?
All inflation incentivizes is finding an asset class that isn't devaluing. If that is what you mean by "spending" then we align. But does inflation incentivize spending money on depreciating assets? Only for fools.
Inflation doesn't push people towards non-devaluating assets, it pushes people to get rid of currency by any means they have available.
OBVIOUSLY if you absolutely HAVE to spend money because your life depends on it (ex: hot water) then you're going to be incentivized to spend it sooner rather than later in an inflationary market.
I'm referring to discretionary spending. Eating out. Buying a new laptop. Traveling. Etc.
This statement: "it pushes people to get rid of currency by any means they have available." is just flat out wrong. If you're draining your bank accounts on discretionary purchases right now, that's your mistake.
I would include retiring before you absolutely have to as "discretionary". Now is not the time to make a decision like that, when the alternative is a smarter financial decision (work, save, invest in assets that aren't devaluing at the same rate as currency).
Peak COVID it was obvious inflation was going to hit hard in some sectors. So I loaded up on durable goods like HVAC, hot water heater refreshes, major appliances, and even pushed some home maintenance forward where labor and materials were likely to skyrocket.
I certainly made a bet, and a lot of it had to do with "lifestyle" - in that I wanted upgrades of most of those things either way over the next 5 years. I just pushed the spending forward by a whole lot since money was going to be rapidly worth less and those specific goods I predicted were going to outpace generalized inflation. I also wasn't certain my income was going to be secure for the long haul so I'd rather spend the money while it was still regularly coming in vs. being stuck later.
Same went for looking at laptops late last year. Since I'm in the IT industry it was obvious memory and flash storage prices were going to go parabolic, and consumer pricing was lagging the market at the time. If you saw this happening you'd be pretty silly to sit and wait on it for another 6mo.
And the same goes for investment class assets. As those outpace wage growth by multiples, your salary becomes less and less important. Once your salary is in the low double digits of your total income in a given year I'd say it's probably time to take a hard look at continuing to work. The juice no longer becomes worth the squeeze. And asset price inflation means this decision point is brought forward years - perhaps decades - for some people.
It obviously doesn't mean go YOLO in your 20's. But if you're 58 years old and were thinking you'd work another 8 years - perhaps it's time to reevaluate the situation. Adding another 3% a year to your dragon hoard via wage savings might not pencil out how you think it will.
Food. Clothing. Shelter.
For most people in the world, all or nearly all (or, in some cases, more than all!) of their annual earnings go toward these absolute necessities.
The way you talk here makes you sound incredibly out of touch, as if you think everyone has vast amounts of disposable income they can just chuck toward whatever investment opportunity looks best at the time.
So, yes, on a long enough time frame, land also goes down in value, because human population is likely to at some point go down.
>I could guarantee you 1% a year returns if you give me money, but no one would do that because that's less than inflation
What do you mean, "no one would do that"? If you're guaranteeing that ROI, someone who's investing with you instead of holding currency at 2% inflation would see their savings depreciate by only half as much, at no risk, perhaps with just some liquidity loss depending on what your terms are for pulling out. I assure you there's people out there who would take that deal.
That comment is unnecessary and has the effect of making people feel bad.
I think the rationale is that wages are stagnant in comparison to investments (stocks) and costs (inflation). So there's decreased incentive to focus on wages as a form of income, and more incentive to focus on investments.
I've definitely felt this personally, as my income shifts towards investments, my will to work for a wage has decreased. That shift has increased because I've accured more investments, but also because investments have grown kind of ridiculously compared to my wage.
That's been the case for a while now, and is steadily getting worse. But the issue is, workers usually rely on their wages to live. It's not a choice for the vast majority of people.
And it's unsustainable. You can't build a society of exclusively parasites that feed on the work of fewer and fewer hands.
It makes perfect sense if the decision to work is based on real, after-tax income. Change the comment to say "the tax rate keeps climbing so I quit working" and it would not occur to anyone to challenge it.
Once you have enough saved to generate income covering the very basics (probably somewhere around $30k/year in a LCOL area in the US) it becomes a question of whether selling a 40-hour block of your time on a weekly basis is worth it. For this individual, it is not.
Um, what?
Many people would challenge that, because it's absolutely bonkers.
The only way it could possibly make sense is if you're already wealthy enough to be able to retire. Which cuts out nearly everyone, even on this hopelessly-skewed forum.
You'd expect this to happen with a couple of reasonable assumptions, like stock prices being somewhat based on real value most of the time, no wide-scale long-term economic collapse, and new companies replacing incumbents over many years rather than very quickly. If the real value of a company stays constant, then the stock price should, on average over the long term, rise at a pace that matches inflation.
You and he are in different language games. His is an existential philosophical one, yours is the financial planning one.
Both make sense. I'm trying to transition to his, but I'm not ready yet.
What's the Point? is exactly the question we should be asking ourselves.
I take issue with the phrase "makes 0 sense". Maybe it's just a common refrain these days?
Because you then explain how it could make sense. So it wasn't really zero, just required a narrow interpretation?
It feels more likely your investment account gains are driving your decisions. Stock gains are also driven by inflation though!
I can sort of understand the feeling though, I just recently got a 2.5% raise for "inflation", which hardly feels like it's making a dent.
I think OP means that once their investment returns starts exceeding their wage income, their motivation for continuing to work drops.
Which, I kinda get. If you don't really like what you're doing, it's harder to stay motivated at continuing to work when your bag of money makes more money than you do.
It sounds like OP is already planning on some amount of return to work, which may be necessary because that exact point (investment returns > wage income) isn't necessarily a safe point to retire. But it might be, depending on how much you spend, and what your not-employer-funded healthcare costs are.
Absolutely absurd, but if you got the upswing between 2010-2020, you might be in an upper class while still living in lower class, meaning your 401k is all you need to survive on while the billionaires continue to pump the market as a defacto monetary instrument and leave the dollar for the poors.
Think of it like bitcoin, but instead of owning electronic worthless hashes, you own LLCs that own stocks and take out loans on behalf ot he LLC against those stocks.
Then you just trade those LLCs around as tokens of wealth.
Welcome to the great new oligarchy.
Not sure if you intend it, but the struggle to reverse course from rich to poor is bloody and not always effective.
UK has very high taxation now so working full time doesn’t bring in as much as a decent portfolio.
The logical point here doesn't make much sense to me otherwise.
What jobs have the wages gone up 30% in that same time period? I’m sure a few, but not many.
The problem is that is now over, and so wages are back to being suppressed again.
Maybe you are the strawman consumer that skeptics point to in guaranteed basic income debates, who just stops working because they get a check.
Unless you're maybe one of the few specialists in deep learning, CUDA, etc.
There's been mass layoffs and downward pressure on compensation all over.
If my retirement account was making more than my salary, then I'd also be asking myself 'what is the point' -> Regardless of inflation.
Add high taxes to this and working is even less attractive when they take 50% from you. No wonder many highly qualified people decide to pass on that deal and just do the bare minimum which in OP case is nothing.
Sorry to be a downer but there is no certainty on the future especially with the level of chaos being sown in the western world as a function of a few key people.
The stock market often aligns with inflation. After all if the companies growth is not beating inflation what exactly is the point really? But that also comes at the expense of not paying people their due worth and incrementing below inflation rate.
But past returns do not guarantee future results. Stock markets ebbs and flows. It will take a blip, not even a crash, to impact those retirement accounts.
IMO this is a risky idea especially if there are jobs available.
Regardless of your skill and reputation, time off can quickly put you below the bar for even getting a call-back, and you lose access to relevant lessons.
You'll be shocked at how irrelevant you become, and how quickly the retirement accounts will give up the gains of the last 3 years (particularly when this 2026 IPO summer terminates US equity markets).
The feeling of "What's the point" might have little to do with work, and more to do with (finally) losing faith in ambition. If so, don't worry: the best comes after we put aside dreams.
I used to get paged at 1am to mess with downed webservers, now I hang out in a shack with no running water in rural CO.
I'm 48 and have a chunk of cash that made more last year than I've ever been able to make in a single year doing salaried labor as a programmer.
I quit 3 years ago when my kiddo graduated college and have been just living on that and my small A/V production business.
It's great.
I do a lot of work; I have done first aid at one music festival, paid sound at a bluegrass festival, and sat around doing random volunteer stuff at another. I can give the local music school and the local civic orchestra really good bids on doing sound for them. I am going to get an EMT cert because I have a friend who contracts to do first-aid at festivals.
I'm not at all worried that my (pre-LLM) programming skills and connections are going away- I've replaced them with mandolin skills and much happier.