Americans’ retirement funds have taken a huge hit under Biden Regime
Have you taken a peek at the balance in your 401(k) retirement accounts lately? Here’s our advice: Don’t bother. It will ruin your whole day, week and month.
Here’s why: We’ve now had seven straight months of 8%+ inflation. A year ago we were assured by the White House economic wizards that these rapid price increases in everything from groceries, to rental cars, to gasoline at the pump, to health insurance were merely “transitory.” Whoops.
The most immediate sticker shock from Bidenflation, of course, has been to shrink real take-home paychecks of workers. We have calculated that over the past 20 months, this rise in consumer prices over wages means that the average family in America has lost nearly $6,000 in purchasing power. This from the Lunch Bucket Joe president who promised to help boost the incomes of the middle class. When, exactly?
But this pay-cut effect on family incomes is only part of the curse of runaway inflation.
We’ve just completed an analysis of how the highest inflation rate in almost 40 years has impacted the retirement funds of ordinary Americans. Here is what we found.
Not surprisingly, since President Biden took office, monthly savings have collapsed, falling 83%. (We could never understand how Biden could say with a straight face that Americans are saving more. His “transformation” of the US economy has had just the opposite effect.) Many millions of Americans who are living paycheck to paycheck just don’t have the money after paying the inflated bills to save much.
But to add insult to injury, even what has been already saved and invested by older Americans over past years and even over several decades has been erased from these accounts.
Thanks to the thief of inflation.
Most of the 150 million Americans with one form or another of retirement savings have invested the majority of those tens of thousands of dollars in stocks. The major stock indices are all way down since Biden came into office. Here are the returns as of Oct. 10, according to the Federal Reserve Bank of St. Louis.
Dow Jones Industrial
S&P 500: -6%
These negative returns don’t even take account of inflation. Doing so adds roughly another 13% or so to these stock losses. Inflation also hurts returns from bonds — which typically account for between 20% and 40% of retirement fund investments. That is because, as we are now seeing, higher inflation means higher interest rates, which lower the value of the bonds you own.
Little guys hurt
Tie it all together and we calculate that since the start of this year, 401(k) plans have suffered $2.1 trillion in losses. The average 401(k) plan had over $135,000 at the start of this year. Today, those assets have shrunk on average to about $101,000.
In other words, the average 401(k) plan is down about $34,000 — more than 25% in less than one year!
(In terms of purchasing power, inflation also has brought the “real value,” in 2021 dollars, of the average 401(k) down another $5,000, from $101,000 to $96,000).
Let’s say you are doing a little better than average financially and you have a 401(k) plan with $300,000 saved up. You’re still far from “rich.” Your nest egg losses this year are likely to be above $75,000.
There goes the down payment on that retirement home or condo in Florida or Arizona.
But these numbers don’t even take account of losses in other pension/retirement accounts.
More traditional pension funds also are getting flattened by inflation. At the beginning of this year, pensions in the US had $27.8 trillion in assets. Now, it’s under $24 trillion, a drop of about 15% that has wiped out the last two years’ worth of gains — nearly $4 trillion.
Many union and government pension funds were already facing financial shortfalls to be able to pay promised benefits. The combination of high inflation and a bear market in stocks means insolvency is a real threat. Some may need bailouts or will have to sharply cut promised benefits.
A year ago, the White House insultingly tweeted out that inflation is merely “a high-class problem.” Wrong. The victims of ever higher prices at the store and the gas pump are not the millionaires, but the little guys — and, in particular, older Americans — whose paychecks and savings accounts get walloped.
It’s not exactly the same as a bank robber with a gun stealing a quarter of the money in your bank account. But at the end of the day, Bidenflation has had the exact same unhappy result.
More at: NYPost.com
Study: Americans Families $6K Poorer Thanks to Joe Biden’s Inflation, Up from $4.2K
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