This is not your father’s retirement environment.
Private firms, following the military and civil service, began offering formal pension plans almost 150 years ago. In 1875, American Express is said to have been the first to do so.
The plans were not a case of disinterested philanthropy. They helped companies attract and keep valuable employees, and even helped show them to the door as they aged, and their skill sets diminished.
There was a cliché about working 30 years and only getting a gold watch, but a more comfortable retirement was a nice bonus for many.
Today, however, we’re coming around full circle. It’s estimated that in the 1980s, almost 60% of employees had access to pension plans. Today that has fallen to 14%.
Once again, people need to tend to their retirement savings for themselves. It doesn’t help that the currency, no longer anchored to gold, isn’t what it once was.
This chart (on the right) shows the hemorrhaging of the U.S. dollar’s purchasing power since America’s halcyon years of growth and prosperity in 1950.
Even if the Federal Reserve were to get control of inflation, it only hopes to bring it down to 2%. But at that rate, it still cuts your purchasing power in half in 36 years.
That’s not a great reason to save in U.S. dollars for your golden years.
Meanwhile, a pension crisis is looming at every turn. Here are a few examples:
The year-end 2022 State of Pensions report from the Equable Institute, a bipartisan, nonprofit organization that focuses on retirement promises for public workers, has some troubling news. It found that the funded ratio for U.S. state and local retirement systems declined from 83.9% in 2021 to 77.3% in 2022.
The result is $1.45 trillion in unfunded liabilities for the 2022 fiscal year.
In the middle of October last year, a pair of Heritage Foundation economists published a New York Post article estimating that between stock market losses and Biden inflation, the average American’s 401(k) was down 25%.
Now one of the report’s authors, Stephen Moore, has passed along the final numbers from Fidelity Investments showing that the average balance fell from $130,700 at the beginning of the year to $97,200 at the end of the third quarter—a loss of 26%.
It took a sudden year-end bailout of $36 billion from the Biden administration to keep the 360,000-member Central States Pension Fund afloat. This is the fund that Forbes described in the old days as being a “slush fund” for the late Jimmy Hoffa, the Teamsters boss who vanished under mysterious circumstances in 1975.
Social Security is on a bankruptcy track. A new report from the Congressional Budget Office projects that, as scheduled, the Old-Age and Survivors Insurance Trust Fund would be exhausted in 2033, and the Disability Insurance Trust Fund would be exhausted in 2048. If the trust funds were combined, they would run out of money in 2033.
As Congressman David Schweikert explained on the House floor just days ago, on Social Security’s present track, the poverty of senior citizens will double in 10 years.
To recap, we are subjected to a currency of declining value; individual retirement accounts have taken substantial losses; taxpayers are called upon to support underfunded pension funds; and Social Security is headed for the rocks in a few short years.
It makes a comprehensive case for building a dependable retirement with gold and silver.
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The opinions, beliefs, and viewpoints expressed in this article do not necessarily reflect the opinions, beliefs, and viewpoints of Red Rock Secured LLC or the official policies of Red Rock Secured LLC. Red Rock Secured LLC is not a financial advisor, is not licensed to provide investment advice and neither provides investment nor financial advice. Red Rock is a product specialist that can help evaluate your precious metals purchase options.