Inflation?

[John Jabson]

This is such a basic question, but I don't quite understand the basics of it.

If my income increases by 3.5% per year (that's my current raise per year per our contract) and inflation has been between 3-5% per year, how can my standard of living ever legitimately increase?

Obviously some people increase their standard of living as their career advances. I observe people who have gotten 3% raises throughout their life and they live better at age 50 than they did at age 30. There's the argument that they've paid off debt. Even with that being the case, if inflation is indeed 3-5% per year an electric bill in 2013 that is $100 will be close to $200 by 2030. So even while paying off debt, other expenses are increasing. How does anyone improve their SOL?

When I say SOL I am referring to more disposable income and less debt-income ratio, etc.

[J Scott]

If your income only increases at the rate of inflation, your standard of living *won't* increase...that's why you're going to want your income to increase faster than inflation... :-)