You’ve heard me touch on the enormous amount of money the government has been spending over the past four years, shelling out billions like there’s no tomorrow – funding overseas wars and non-citizens who have set up camp in our country, and so on. Well, now it’s all coming to a head, and the average American citizen is paying the price with retirement plans seeing large losses after being adjusted for inflation. This may sound straightforward, but the truth is that most Americans don’t even realize their nest egg is actually worth less than they thought.
U.S. Retirement Plan Balances Hit by a $2.5 Trillion Loss
Ok, let’s break the numbers down a bit…the average 401(k) shows a growth of $11,000 from 2021 to 2024. That’s fantastic, right? On the surface, it appears to be, but when you sit down and take a look at the hard numbers, what you see is a 9.2%, $12,000 loss once inflation is calculated into the mix.
As for pension plans, rare as they are, a similar loss has occurred during this same time frame. There was an increase of $2.3 trillion in total pension plan balances, but once adjusted for inflation, there was actually a decrease of $2.5 trillion. These are people’s life savings we are talking about here, funds that many older Americans will need to depend on to make ends meet when they are no longer able to work.
Reckless Government Spending to Blame for Retirement Accounts Losing Value
The national debt has grown beyond $36 trillion and represents the government’s spending sprees and excessive, irresponsible borrowing. This number equals the total GDP of Japan, India, China, Germany, and the United Kingdom combined, which is a troubling conclusion. All this has effectively eroded confidence in America’s financial stability, devalued the U.S. dollar, pushed inflation to a point that’s making it difficult for families to put food on the table, and has successfully diminished the value of retirement accounts across the nation.
In a U.S. Government Accountability Office report released in February, it was stated that “The federal government faces an unsustainable long-term fiscal path. We project that debt held by the public as a share of the economy will more than double over the next 30 years and will grow faster than the economy over the long term if current revenue and spending policies are not changed.” This statement doesn’t reflect good news for retirement account holders and should be seriously taken into account.
The National Debt 1993 – 2024
Related Article: A Ticking Time Bomb – National Debt Growing by $1 Trillion Every 100 Days
In addition to the national debt, the Heritage Foundation’s Finance Economist, E.J. Antoni, comments on the fact that the government has been draining the Treasury’s cash reserves: “So, not only do you have the overspending in terms of the increased debt, you have the overspending in terms of the decreased saving. So, [when] you put all this together, the government has essentially overspent by $9 trillion in four years. That’s a quarter of the entire federal debt. So, I think that kind of puts in perspective when we talk about the spending problem just how bad it has gotten under the Biden-Harris administration.”
Now that the current administration is coming to a close, will the nation’s economic and retirement problems begin to turn around? I can’t say for sure. I don’t think anyone can, especially with all the economic volatility we’ve experienced so far.
Related Article: America’s Retirement Crisis – Have We Passed the Point of No Return?
Protect Your Retirement from Government Influence
The government has used the power it holds to empty the wallets of American citizens and devalue their retirement accounts – maybe not intentionally, but certainly irresponsibly. The people of the U.S. have worked hard to build up their nest eggs to enjoy the comfortable retirement they deserve, only to find their plans have been turned upside down. Some will have to continue working, and others will have to cut spending.
The truth is that most retirement accounts, such as the 401(k), are attached to Wall Street, which is volatile in itself. Social Security is running out of money, the U.S. dollar is losing value, and government spending has retirement account values on a downward trend. This all creates an unsafe avenue for growing your savings. It’s just not worth keeping your money in the risky environment a traditional retirement account presents.
Related Articles:
- Retiring on Rental Income vs Social Security – A Financial Comparison
- Why Investing in Rental Real Estate VS Stocks is a Smart Strategy
Invest in Hard Assets that You Control Not Washington
If you’re not willing to “wait and see” what happens to the economy and your retirement funds, then there’s the option to get in the driver’s seat so you hold the power to how much money you’ll have once you retire. This can be done by investing in assets that are not attached to the government, the economy, Wall Street, or the U.S. dollar.
Real estate and gold are what individuals turn to when they want to safeguard their funds. Think about it, what has the housing market been doing over the past few years while the economy has been in shambles and retirement accounts are tanking? The answer is that houses have been surging in value, and rents have been rising along with them. This being the case, who benefited more financially over the past few years, traditional account holders or rental real estate investors?
While others are forced to delay their retirement, property investors have experienced increased rental income and cash flow, as well as surging equity, which provides them with more funds to invest so they are able to increase their net worth. This scenario is more stable and lucrative than keeping funds in traditional retirement accounts that will decrease in value every time Wall Street has a bad day.
Invest in Rental Real Estate to Protect Your Retirement Funds
If you’re seriously thinking about safeguarding your retirement savings, you’ll want to consider investing in real estate through a self-directed IRA. The money you may have sitting in an unprotected 401(k) or traditional IRA can be easily transferred or rolled over, or in some cases, borrowed from, and placed in an SDIRA where it can be used to purchase a cash flowing new construction rental. The best part is that the tenant pays off your mortgage for you and rental income flows in like clockwork every month.
Once everything is locked into place, it doesn’t matter how much wasteful spending the government does, or how many times Wall Street tanks, your investment is safe. On top of this, when inflation does hit, your investment will only go up in value.
Related Article: Borrow From Your 401(k) to Invest in Real Estate – A Secret Wealth Building Strategy
If this has sparked your interest and you’d like to get on a safe and secure investing path, feel free to schedule a free 30-minute call with Morris Invest. We have new construction properties in locations that offer a high demand for rentals as well as a booming economy. In addition to this, we take care of all the details for you, including assigning a property manager and placing a tenant in your rental.
In the meantime, you can kick-start your investment journey by diving into our resources below:
- The Financial Freedom Academy
- Freedom Number Cheat Sheet
- 90-Day Financial Empowerment Bootcamp
- Morris Invest & SDIRA Program Overview
Before you go, bookmark this related article, How to Retire Early Using Real Estate Investing, and then grab a cup of coffee and watch the following video that discusses how the 401(k) is heading downhill:
