45% of savers aged 18 to 35 say there’s no point saving for retirement until “things get back to normal,” according to a survey by Fidelity. Memo to you kids: Things never “get back to normal.”
Inflation just hit its highest level in 40 years. Future inflation expectations have risen by a third in 12 months. And the federal government’s own “inflation protected” bonds, which were designed to help protect us from this eventuality, will now pay you less than inflation well into the 2040s.
The results come in the new 2022 State of Retirement Planning report from the fund management and 401 giant. OK, so the prices of other things have risen by much less than the overall inflation rate. Among them, apparently, are booze, medical expenses and tuition. But the main thing keeping the official inflation rate down to just 7.9% is that more than half the entire calculation is based on the cost of housing, and the government number-crunchers think those costs have risen by just 4.5% a year in the past 12 months.
Ordinarily this is where TIPS bonds, or Treasury inflation-protected securities, are supposed to come in. But they have become so expensive that one can hardly call them inflation-protected. Most are guaranteed to pay less than the inflation rate, year after year. Only those lasting nearly 30 years are even guaranteed to keep up with consumer prices.
Other assets hedged against inflation may include land and real estate—which may simply mean REITs for most investors, as well as your home—and the stocks of companies that produce natural resources such as oil and gas, iron, coal, copper and so on.
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