President Joe Biden’s economic policies are wreaking havoc on retirees who have been forced to take massive stacks of cash out of their savings in order to keep up with prices, which has increased the risk they will have to start digging into their nest eggs. The current regime will not be happy until they have totally destroyed the middle-class and erased it from existence. Of course, it’s far easier to control the population when everyone is dirt poor and totally dependent upon the federal government for all of their needs.
According to MSN News:
The rise in spending since 2021 shows how pernicious inflation can be for those in or near retirement, especially since higher prices can also erode the value of the cash and fixed-income investments many plan to live on in the near future, according to a study Boston College released Wednesday.
“High inflation later in life is often harmful to retirement security,” Laura Quinby, a senior research economist at Boston College’s Center for Retirement Research and co-author of the study, went on to say.
Though inflation has cooled from the 9.1% pace it set for the 12 months ended in June 2022, it remains above the Federal Reserve’s 2% annual target rate. Prices rose 3.4% in April from a year earlier, according to the latest Labor Department data released Wednesday, compared with an annualized 3.5% pace in March.
Higher withdrawals are one reason Boston College projects that inflation caused a 14.2% decline in the financial wealth held by middle-income retirees between 2021 and 2025. (If rising interest rates trigger a recession, their wealth would decline 16.6%.)
The survey revealed that almost a quarter of retirees and those close to retirement have been changing their withdrawal rates between 2021 and 2023, which gave a boost to distributions by an average of $1,810 during each of those years.
Quinby then did an analysis of both economic data and a survey conducted in November 2023 of 1,501 older adults in order to forecast how skyrocketing inflation would impact the purchasing power and wealth of individuals who were either already retired or getting ready to do so.
While Social Security is increased annually to account for a higher cost-of-living, there is generally no inflation adjustment for the pension income many retirees receive from former employers in the private sector.
The study projects that inflation will reduce the financial wealth of retirees in the top third of the wealth distribution by an average of 4.3% by 2025. Those in the bottom third, who rely more heavily on cash and bonds in their retirement savings, are likely to experience an 18.8% reduction by 2025 due to inflation. The wealthiest Americans tend to invest more heavily in stocks.
One silver lining of inflation is that households with fixed-rate mortgages benefit, since their monthly payments stay the same, while their wages tend to rise with inflation over time.
The study also revealed a bad outlook for those who are between the ages of 55 to 61 years old who are still working.
For the years 2021 to 2023, a total of 39 percent of those who participated in the survey stated they ended up saving less money because of inflation and almost a quarter revealed they had spent far more money from their savings than they normally would have.
This lower savings is one of the major factors that lies behind a projected 21.7 percent plummet in financial wealth by the year 2025 for those who are considered to be in the bottom third of those close to retirement.
People still in the labor force could compensate by working longer, Quinby said, though that isn’t always an option. About 4% of near-retirees said they would extend their working lives, according to the survey.
Retirees, on the other hand, have fewer options, she added. “Our big concern particularly for retirees is they have a lot less opportunity to make up for this.”
The risks multiply when high inflation sticks around for longer, as was the case in the 1970s.
The worst 30-year period in which to retire started on Oct. 1, 1968, according to Bill Bengen, architect of the 4% retirement spending rule-of-thumb, which calls for spending 4% of a nest egg in the first year of retirement, and then adjusting that amount annually to keep pace with inflation.
He revealed that the year 1968 wasn’t really the issue, but the years that came after. There was high inflation for a lot of the 1970s and back to back bear markets in 1969 and 1973.
So you can thank Biden for squandering away all the hard earned money you tried to save back in order to take care of yourself during your retirement years. This is why he needs the boot later this year.
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