Inflation causes Americans to stop saving
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There’s another thing about inflation. It makes people do things that they don’t wanna do. Inflation really whacked retirement savings in 2022. Here’s the latest data here that I got ahold of. This is from the George Washington University Global Financial Literacy Center and the personal finance industry that they put out.
Historically, high inflation forced a quarter of Americans to slash their retirement savings and a full 12% to quit saving entirely over the past year. Steep drop, 40%, already have 40% of Americans already don’t have enough saved for retirement. Many families are gonna have to work harder to achieve a secure retirement. When somebody reduces how much they save for retirement.
It may not be just a one-time cut. Many employers match what their employees say for retirement, so reduction in an individual savings will also turn into reduced matching contribution. It also means missing out on the compounding wealth. Okay, this was all on Fox Business. All right, again, one of the things I’ve talked about for years is people miss out on billions of dollars every year left on the table, because people don’t contribute to their retirement plans when their bosses.
actually provide matches for them. I get it though. I do understand that sometimes people’s budgets get whacked. And one of the first things to go is, oh, you know what, we’ll hold out on savings. And people start justifying things in their mind, saying, well, the markets are weak anyway, so it’s not that big of a deal. No, it’s a huge deal. It really is.
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I’ve tried to suggest to people all the time, if you’re gonna make some cutbacks, you need to make some cutbacks, okay, but do not stop. Because what happens is once people stop, they don’t go back. They don’t go back. And I’m here to tell you, inflation not really going anywhere. We’ve gone over that here on the program. You’re gonna have to make do, I know. I’m…
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I always sound like I’m lecturing people here. I’m telling people what they don’t wanna hear, but it’s what you need to hear. You have to make changes elsewhere in your life. You do. The reality is, especially if you’re younger, especially if you’re younger out there, you’re in your 20s, 30s, even 40s. I mean, okay, I’m in my 50s. I’m in my 50s. And the…
The advances that we’re seeing in medicine, if you take care of yourself, they’re pretty extraordinary. They really are. You better plan. Plan your 20s, 30s, 40s, plan on living to 100. Plan on living to 100. Now, if you think you’re gonna retire at 62, 65 years old and have enough money, well, God bless you. You better be saving a ton.
But that’s what you should, that’s what we’re looking at right now. And the fact that people are just saying, hey, you know what, inflation is too high, I’m pulling away. I hate to see that happen. You make more money spending time in the market. There’s a old saying, you make more money spending time in the market rather than trying to time the market. And when markets are down or they’re churning,
We’re in a bear market. Is this an extended bear market? I don’t know. I don’t know, but all I do know is when stocks are down, I want to accumulate because you’re buying high quality companies that are on sale. And eventually things turn. It’s actually interesting. Peter Lynch is being interviewed today from the Magellan Fund way back when. I think he started the Magellan Fund. I’m trying to remember when he started that thing, but it was like.
20 million bucks, he turned it into 14 billion over time. Obviously more money piling into it and he’s got the concept of invest in what you know. But he made the same comment that I make all the time. Explaining that stocks are long term investments. If you’re putting money in something, you better expect two years out. You’re not taking it or taking it out for two years, at least, okay, if not longer. Would that be?
being said, when you are not saving, when times are tough, it’s going to set you back. And oftentimes it can set you back decades. Maybe this weekend on the radio show, I’ll get into it again. I love talking about the power of compounding and a compounding calculator. Again, when I talk to kids, when I’m trying to teach young people about savings, the importance of saving and understanding money.
playing around with the compounding calculator. I do. The formula, I couldn’t tell you. My brother Matt can explain it to you. But in essence, you can show by regular savings, regular putting money away on a regular basis over time, getting a certain rate of return on average over regular basis, what you’re going to have. And it’s again, Albert Einstein’s man’s greatest invention. Again, it works on the flip side too.
Okay, it works against you. You could get a credit card bill, you say, oh, now they have to put it on credit card statements. Yeah, if you don’t pay this off at a certain period, this is how much money you’re gonna be paying in interest over this time. Okay, that’s why you don’t put things on credit cards you can’t afford. But with that being said, I would highly encourage everyone out there. And listen, I get it, I know. Okay, I don’t think I recognize too, you don’t think I see.
What things cost? I mean, it’s obscene. It is, but make adjustments. Make adjustments. I mean, I get it if you have to, okay. I can’t afford to put the amount I was paying in. Remember the whole concept of paying yourself? One of the financial planning things we try to get across to people here, part of Markowski Investments Financial Independence Top 20.
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You have to keep putting money in. You have to keep paying yourself every single month. Don’t quit. Watchdog on wallstreet.com.
