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economics Economy

Retirees lose 1/4 buying power

For decades, the returns that one can expect from the stock and bond market have dictated how much a retired person can withdraw from their retirement savings without fear of running out later. That rule of thumb has been 4% per year. That is, a person with $400,000 in retirement savings could withdraw $16,000 per year and be comfortable knowing that their nest egg would last for the rest of your life (well, at least 30 years, which for most of us is the same thing).

Not anymore. The lower performance of the market has reduced that rule of thumb to 3.3%. This means that every retired person in the country just saw their retirement income drop by nearly 18%. That person with the $400,000 retirement fund can now only afford to withdraw $13,200.

Now couple that with inflation, officially at 6.22% for the 12 month period ending October 2021, and you see that the retired person with the $400,000 retirement savings now has seen the $16,000 they had to spend last October only able to buy $12,400 worth of stuff. That’s right, retired people have just lost a quarter of real purchasing power in just a year.

3 replies on “Retirees lose 1/4 buying power”

The inflation’s tendency to kill retirees is a feature not a bug. It’s made worse by having these Modern Monetary Theory idiots believing dollar creation won’t create inflation.

The dollar has to collapse because there’s no other way to deal with a total debt (to include “unfunded liabilities”) that exceeds the GDP of the entire world. We don’t need balanced budgets; we’d need surpluses for the next hundred years.

I’m sure you’re familiar with the observation that all paper currency eventually returns to the value of the paper. The complication here is that the entire world is on fiat paper currency. The entire world is headed for collapse.

This is where the Great Reset comes in. “You’ll own nothing but you’ll be happy.” Just not as happy as the people who collect your rent payments on everything you need in life.

My family operates our old family farm in the mountains east of Sacramento.
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Each time I cross the southern Oregon border into California, my purchase power instantly decreases by an additional twelve or fifteen percent because of purchase taxes.
Accordingly, I never purchase anything in California.
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I fill my auxiliary fuel tank in Oregon at a couple dollars less than the identical product would cost in California.
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Compounding the issue, I am not a California resident, so I cannot vote against paying their taxes.
Compounding the issue, I am not a California resident, so I receive zero-zero-zero value from paying their taxes.

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