How Is Inflation Affecting Your Retirement?

Jun 20, 2023

Hi, my name is Ed Moy, and I served as the director of the United States Mint from 2006 to 2011. I'm also the senior IRA strategist for U.S. Money Reserve. When people find out who I am, some of the questions I get asked the most are: What are the long term effects of inflation on the U.S. dollar? How will that impact a retirement portfolio? And is there anything that can be done to protect retirement investments against inflation?

Let's start with the definition of inflation. Simply, inflation is when prices go up for the same good or service. Another way to look at this is when the purchasing power of money goes down, and as a result, it takes more money to buy the same thing.

Inflation in America reached a recent high in June of 2022, when it peaked at just slightly over 9%. Today, a year later, inflation has dropped to 4%. That means, on average, for something that cost a dollar last year, it will cost $1.04 this year. But 4% inflation is still twice as high than the 2% goal of the federal government.

The government believes that 2% inflation is a sign of a healthy economy, where people want to buy slightly more things than what is available. That means that if the government accomplishes its goal for the American economy, the purchasing power of the U.S. dollar will go down by 2% a year. Most people don't take this into consideration when they plan how much money to have when they retire.

They assume that prices will say the same in the future. But the reality is that prices will go up, especially if your retirement is years away. That might not mean much if you're retiring next year, but if you're retiring in 25 years, you'll need to have at least 50% more savings to have the same standard of living as you do now.

So if you want to make sure you have enough money for your retirement, you should consider strategies to deal with the problems caused by inflation. One time tested strategy is to diversify your retirement portfolio to include investments that will retain their purchasing power during times of high inflation. And few investments have held their value better and longer than gold.

For example, the data comparing gold and inflation shows that gold outperforms inflation by an average of 3% a year over the last 40 years. Ever since Congress made it legal in 1997 for people to put gold into their retirement accounts, precious metal IRAs have become increasingly popular. I have one and mine is from U.S. Money Reserve. If you're interested in exploring this option to protect your retirement investments for the potential negative impact of inflation, call 1-866-646-8465. That's 1-866-646-8465 and ask to speak to a U.S. Money Reserve IRA specialist.


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