Sometimes I think there’s no point in planning for retirement. I think it would be better just to save everything humanly possible and hope for the best. Today’s announcement in Ontario of the new (increased of course!) hydro rates are just one example of why planning for retirement seems pointless.
My Cost of Living Increases Always Exceed “Their” Cost of Living Increases
Every time I read one of those articles in the Star, the Globe or the Post that review someone’s finances and their retirement readiness, I see them use “2 %” for inflation. When I look at the government of Canada’s monthly inflation updates (courtesy of the Big Cajun Man) I see numbers around 0.7-2%.
So why when I flip open the newspaper do I read that Ontario’s hydro rates for all 3 times of use are going to increase by 0.5 cents per kilowatt hour starting November 1?
According to the Toronto Star that’s about a 3% increase in the cost of hydro for that never-seen-like-Bigfoot “average” customer.
That’s 1% over the planned inflation for the *year.* And this is not the only increase we’ve had this year. The rate for off-peak went up 0.2 cents in May, mid-peak went up 0.5 cents, and on-peak went up 0.6 cents. Yes, that’s right: off-peak rates are up 14% since Nov 1 last year!
No problem, you are probably thinking. I’ll just move even more of my electricity usage to the “off peak” time period. That almost looks like the worst thing you could do.
According to that same article, the price of off-peak power is increasing 7.5%, versus 4 and 4.8% for on-peak and mid-peak. (OK, you’re right. On a total $$ paid basis, it’s still much better to use power during the off-peak times. Beware of percentages: they may not be telling you what you think they are saying.)
Hydro Increases are Not the Only Ones that are “Above Average”
It’s not just hydro that does this to me.
- Property taxes are up 4 % this year.
- Water is up 6.9% even though we’ve used the exact same number of m3. (We pay for waste water and infrastructure based on how much water we use.)
Since Planning for an Actual Cost of Living in the Future Is Almost Impossible, I’ll Save More
Given that I can’t predict or control the increases in cost for the things I more-or-less have to buy to survive, I won’t even try. I’ll just ramp up our savings a little bit higher and hope for the best.
What’s your strategy to deal with this kind of mis-match between actual inflation and the government’s published rate of inflation? Please share your views with a comment.
- Budgeting for Retirement: My Personal Rate of Inflation
- Ontario Energy Board Historical Time of Use Power Rates