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What Inflation Has Done to America’s Retirement Plans

Jun 4, 2024

Hi, my name is Ed Moy, and I served as director of the United States Mint from 2006 to 2011. I'm also the senior IRA strategist for U.S. Money Reserve. How does inflation impact American's retirement plans? It's an important question because inflation today hovers around 3.4%, which is much higher than the US government's goal of 2%.

The good news is that today's inflation is much lower than the recent high of 9.1% in June of 2022. The bad news is that compared with the period before inflation started taking off, prices have increased 20% since January of 2021. For example, groceries are up 21%. Shelter costs are up 18 and energy prices are up a whopping 38%.

There are several ways that this impacts retirement plans. First, if you didn't budget extra retirement funds to cover these increased prices from inflation, what you saved may not be enough to be able to retire. For example, most Americans believe that you need $1 million in your retirement account to be able to retire comfortably. But if you retire today instead of three years ago, you would need $1.2 million to have the same buying power.

This would mean that you would have to retire expecting a lesser standard of living than you had planned, or you might have to postpone your retirement and work longer to make additional money to retire at the level that you'd want. Second, if you didn't budget for inflation, then chances are you didn't build a retirement portfolio that could help protect your hard earned savings from the impact of potential inflation.

One of the easiest ways to do this is to diversify your retirement with a gold IRA. Since January 2021, the value of cash savings has gone down by 20%, while the value of gold has risen 26% from roughly $1900 to $2400. As you can see, this would help balance a retirement portfolio. Of course, there are many factors that contribute to gold prices, but over the long term, gold prices correlate well with inflation, which means gold prices tend to rise when inflation rises.

This is why many consider gold to be a hedge against inflation. It's only one of the purposes behind gold, but it's a good one when you're talking about inflation. And for those who are saving and investing for retirement, it's so hard to predict what inflation might be when you're ready to retire.

That's another reason why diversifying your retirement portfolio can make a lot of sense. My retirement portfolio is diversified, with physical gold held in an IRA. This is also known as a gold or precious metal IRA. Mine is from U.S. Money Reserve.

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