American retirees are in debt.
Between 1999 and 2019, the total debt burden of Americans over 70 increased 543% to $ 1.1 trillion according to data compiled by the Federal Reserve Bank of New York. Debt rose 471% over the same period for those in their 60s and totaled $ 2.14 trillion at the end of last year.
Retirement is often more expensive than expected. As a result, retirees are turning to credit cards to make ends meet.
Surprisingly, many seniors are also burdened with student loans. In recent years, Americans between the ages of 60 and 69 have seen their student debt increase by 71.5%. Some took out student loans later in life to earn graduate degrees, but many took on debt to help their children attend school.
It’s easy to think of the financial difficulties of retirees as just bad planning. And there is certainly a part of it. According to data compiled by Northwestern Mutual in 2018, one-third of Americans had less than $ 5,000 in retirement savings. Twenty-one percent – almost a quarter of Americans – had zero retirement savings. Thirty-three percent of baby boomers – the generation now entering retirement – had on average between $ 0 and $ 25,000 in savings.
But even retirees who have planned for retirement and saved well can struggle as the rapidly rising cost of living collides with their fixed incomes.
Inflation eats away at savings and is likely to get worse in the future. The Federal Reserve is intentionally targeting an inflation rate of 2%. It doesn’t sound like much, but it adds up year after year.
This is because the Fed government’s monetary policy devalues our currency, which means less purchasing power for you and me. Simply put, when the government depreciates the currency; a dollar no longer buys the same amount of things as it once did. Quantitative easing devalues the currency and the Federal Reserve has been engaged in this practice for years. And they put it on hyperdrive in response to the coronavirus pandemic.
Inflation will likely become an even bigger problem on the road now that the Fed has shifted its inflation targeting targets to allow prices to rise to an even faster level.
So, when planning for retirement, it is important to include inflation hedging. One option is to add physical money and gold to your IRA. Self-directed IRAs allow you to invest in physical gold, silver, platinum, and palladium coins and bars, as long as they meet certain standards. Self-directed IRAs, including precious metals, will help you achieve two important retirement goals. They combine the wealth preservation power of ultimate safe haven assets with the tax benefits of an IRA.
For more information on investing in precious metals through an IRA, click HERE.
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