How inflation is messing with benefits and pensions
The Decibel
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Indexation: Adjusting Values for Inflation
Indexation refers to linking the value of an asset or benefit to inflation rates, ensuring that its purchasing power remains stable over time. For example, if a government benefit of $100 is fully indexed and inflation rises by 5%, the amount adjusts to $105 in the following year. This mechanism plays a crucial role in personal finance, impacting how individuals and businesses maintain their financial well-being in the face of rising costs.
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