Retirees beat costs

Inflation does not necessarily cause retirees to suffer a severe, irreversible loss of purchasing power throughout their lives, says a study by Towers, Perrin, Forster & Crosby, management consultants.

"Most retirees will see their purchasing power drop somewhat in the first few years of retirement," said Philip M. Alden Jr., vice-president of the firm. "But as long as social security benefits are tied to the consumer price index, purchasing power for many will actually rise in later years."

Most experts agree that the CPI overstates inflation by 2 to 5 percent a year.

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