Failing Government Threatens Retirement
As the national debt spirals out of control, the U.S. is teetering on the edge of a government shutdown. A critical question is being raised: Can you rely on Social Security to support you when you retire? Social Security is projected to be unable to pay full benefits in just eight to nine years. If no action is taken, a significant portion of future retirees could face a crisis in their golden years.
The National Debt Crisis and Government Shutdowns
The federal government is once again on the brink of a shutdown. In recent years, both political parties have failed to address the ballooning national debt. Congress may soon pass a short-term stopgap funding measure. But the cycle of crisis management will continue. If the government doesn’t shut down in September, it will face this dilemma again in December. Such shutdowns are not merely administrative inconveniences. They undermine the stability and reputation of the US government.
At the same time, the rising national debt threatens the solvency of Social Security. Currently, government spending is outpacing revenue. There are growing concerns about the ability of the U.S. to meet its obligations to fund Social Security.
The Congressional Budget Office projects that interest payments on the debt will continue to rise as a percentage of GDP over the coming decades. They could surpass Social Security expenditures by 2051. 1
These calculations are taking into account expected rate cuts. Lower interest rates might temporarily reduce the government’s daily interest payments. They could go from $3 billion to $2.5 billion with a 1 percentage point cut. Yet, this relief is minimal when compared to the sheer size of the national debt. It is now over $35 trillion as of September 2024. 2
As a larger portion of the federal budget is diverted to servicing the debt, less money is available for programs like Social Security. This increases the risk of reduced benefits or funding shortfalls for future retirees.
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The Looming Retirement Crisis
Research conducted by economists paints a sobering picture of retirement in America. Nearly half of all Americans approaching retirement age have little or no savings. Many will rely solely on Social Security to fund their later years. According to a Federal Reserve survey 2022, households aged 50 to 65 in the middle 70% of the income distribution have a median retirement account balance of just $86,000. The problem is they also have a median debt of $89,700. Faced with those numbers, their retirement funds could be gone by their mid-70s.4
If Social Security becomes insolvent, millions of Americans could be left with little to no income in retirement. An entire generation could potentially plunge into poverty.
The Devaluation of the Dollar and Inflation Risks
Adding to the retirement dilemma is the specter of inflation and a devalued dollar. Recent interest rate cuts by the Federal Reserve could have the unintended consequence of reigniting inflation.
As inflation rises, the purchasing power of retirement savings diminishes. This is particularly dangerous for those already struggling to save enough for retirement. Retirees may be facing a double blow – reduced benefits and eroded savings.
Conclusion
The future of Social Security, inflation, and the national debt is steeped in uncertainty. It’s becoming crucial to take steps to protect your retirement. Gold has long been a reliable hedge against inflation and economic instability. It maintains value when paper assets like stocks and bonds falter. As national debt skyrockets, relying on government programs alone may not be enough. Contact American Hartford Gold at 800-462-0071 to learn how physical precious metals in a Gold IRA can secure your retirement.
Notes
1. https://www.pgpf.org/analysis/2024/09/higher-interest-rates-and-the-national-debt
2. https://fortune.com/2024/09/07/us-debt-crisis-daily-interest-expense-3-billion-fed-rate-cuts/
3. https://www.pgpf.org/analysis/2024/09/higher-interest-rates-and-the-national-debt
4. https://www.forbes.com/sites/teresaghilarducci/2024/09/22/the-us-retirement-system-will-fail-most-future-retirees/
