How Covid is still wrecking American retirement funds

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Americans dipped into retirement savings to make ends meet during the pandemic’s peak. More than two years later, many can’t afford to replenish those funds.

 

Inflation in the U.S. is the highest it’s been in four decades. After watching their dollars’ value shrink, workers expect to outlive their savings.

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Last week, Anytime Estimate released a survey of more than 1,000 Americans. Pollsters from the online real estate research group found most are contributing significantly less to their retirement savings than before COVID-19.

Most workers dipped into their retirement funds during the pandemic. To make ends meet, 1 in 6 had to withdraw at least $15,000 from their nest egg.

 

Prior to the pandemic, the majority (93 percent) were paying into their retirement funds. Since? Only 30 percent are able to save for their golden years.

Income: the No. 1 barrier

Because inflation is rising much faster than most Americans’ income, it’s hard enough for families to keep up with bills, let alone their savings.

 

Experts recommend that people have about three times their annual income saved for retirement by the time they’re 40. Anytime Estimate says that people making around $36,800 a year should save about $572,800 before they retire.

 

Unfortunately, 27 percent of survey respondents said they have less than $50,000 saved for retirement. And further research shows 1 in 4 Americans don’t have $1,000 set aside for an emergency car repair or hospital bill.

 

Those closest to retirement aren’t doing much better than the rest of the population. Older Baby Boomers have less than half of the recommended amount saved, and since they’re so close to retirement age, they’re running out of time to make up the difference.

 

Anytime Estimate isn’t the only group that sees this. The U.S. Census Bureau reported that about half of adults aged 55 to 66 don’t have any retirement savings.

 

Find out: Can You Tell Me How to Save Money on a Low Income?

Retirement saving help wanted

Because it’s so hard for most people to save, employers are often expected to help out through 401(k)s and matching their employees’ contributions. That isn’t always the case, though.

 

“Providing a retirement savings plan and matching worker contributions is one of the best ways employers can help their employees save for retirement,” the survey says. “However, nearly 1 in 3 (31%) retirees say their company didn’t offer a 401(k) plan or pension, according to a recent survey of retired Americans.”

 

Betterment, an investment management site, surveyed hundreds of Americans and found that the majority think 401(k) plans make a big difference when considering a job offer. One with a matching benefit shows the company “cares about employees’ financial well-being and are willing to make an investment in their future,” Betterment said.

 

But nearly 1 in 3 said their employers don’t offer a 401(k) or pension plan. And even those who do have a work-sponsored retirement fund say their employers aren’t doing enough.

 

Americans are pulling from their retirement funds and depending on their credit cards to get by, so the answer to their savings deficit isn’t as simple as “save more!”

 

Find out: How to Get the Most out of Your 401(k)

 

This article originally appeared on Debt.com and was syndicated by MediaFeed.org.

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9 smart investments to hedge against inflation

 

It’s no secret that inflation has arrived and is here to stay. To protect yourself from the adverse effects of inflation, it’s essential to invest your money in smart ways.

 

 

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A few things can cause inflation, but the most common is when the government prints more money than there is demand for. Printing more money causes the value of each dollar to go down, and it becomes more expensive to buy goods and services.

 

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Inflation can have a lot of adverse effects on the economy. When the value of money goes down, people tend to hold onto their cash instead of spending it.

 

Not spending money can lead to a decrease in demand, which can cause businesses to lay off workers or even go out of business.

 

 

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Inflation can also affect asset values. A decrease in the value of money can lead to a decrease in the value of these assets. For example, when the value of money goes down, it can be more expensive to buy stocks and other investments.

 

 

marchmeena29 / istockphoto

 

There are a few things you can do to protect yourself from inflation. One is to invest your money in assets that will maintain their value over time. Another is to keep up with current events and make sure you know how inflation affects the economy. Finally, make sure you’re not taking on too much debt, as inflation affects this.

 

Here are nine investments that can help you protect your savings from inflation.

 

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TIPS, or Treasury Inflation-Protected Securities, are a type of bond issued by the U.S. government. The value of these bonds increases as inflation rises, so they can be a great way to protect your money from the harmful effects of inflation.

 

The downside of investing in TIPS is that they tend to have a low yield, so that you won’t earn a lot of money on your investment. However, the security of knowing your investment is protected from inflation makes them a wise choice for anyone looking to shield their money from rising prices.

 

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Bonds are another investment that can help you protect yourself from inflation.

Bonds can be a great way to make sure your money is safe and will maintain its value even if inflation rises. When you buy a bond, you’re lending money to a government or company in exchange for regular interest payments over a set period of time.

 

The downside of investing in bonds is that they can be risky if the company or government you’ve lent money to goes bankrupt. So, it’s essential to do your research before investing in bonds and know exactly to whom you’re lending money.

 

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Gold is a popular investment during times of inflation, as it tends to hold its value even when the dollar falls. The preservation of its value makes gold an excellent option for anyone looking to protect their money from price fluctuations.

 

The downside of investing in gold is that it can be expensive, and there’s no guarantee that the price will go up over time. So, it’s essential to do your research before buying gold and make sure you’re comfortable with the risks involved.

 

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Real estate is another asset that often performs well during times of inflation. When prices rise, people tend to invest in real estate to earn a higher return on their investment. The earning potential can make real estate a wise choice for anyone looking to shield their money from inflation.

 

The downside of investing in real estate is that it can be risky, and it can take a long time to see a return on your investment. So, it’s essential to do your research before buying property and make sure you’re comfortable with the risks involved.

 

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Commodities are items like gold, silver, oil and wheat used as investments during times of inflation. They are used as investments because they tend to hold their value even when the dollar falls.

 

The downside of investing in commodities is that they can be volatile, and it’s difficult to predict how prices will change over time. So, it’s essential to do your research before buying commodities and make sure you’re comfortable with the risks involved.

 

NiseriN / iStock

 

Mutual funds are a type of investment that allows you to invest in various assets, including stocks, bonds, and commodities. Mutual funds can be a great way to spread your risk and protect your money from the adverse effects of inflation.

 

The downside of investing in mutual funds is that they can be expensive, and it can take a while to see a return on your investment. So, it’s essential to do your research before buying into a mutual fund and make sure you’re comfortable with the risks involved.

 

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Stocks are another option for protecting yourself from inflation. When you buy stocks, you’re investing in shares of a company. Investing in these shares means that you become part-owner of the company and stand to earn dividends if the company does well.

 

The downside of investing in stocks is that they can be risky, and it’s difficult to predict how prices will change over time. So, it’s essential to do your research before buying into stock and make sure you’re comfortable with the risks involved.

 

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Silver is a type of commodity that often performs well during times of inflation. Silver performs well because it tends to hold its value even when the dollar falls.

 

The downside of investing in silver is that it can be volatile, and it’s difficult to predict how prices will change over time. So, it’s essential to do your research before buying into silver and make sure you’re comfortable with the risks involved.

 

alexis84 / istockphoto

 

Floating-rate bonds are a type of bond that has a variable interest rate. Having a variable interest rate means that the interest rate will change depending on how the economy is doing.

 

The upside of investing in floating-rate bonds is that they offer a higher return than regular bonds and are less risky than stocks or commodities.

 

The downside of investing in floating-rate bonds is that they can be volatile, and it’s difficult to predict how prices will change over time. So, it’s essential to do your research before buying into a floating-rate bond and make sure you’re comfortable with the risks involved.

 

JJ Gouin / istockphoto

 

Inflation can be a severe threat to your financial security. However, by investing in the right assets, you can protect yourself from its adverse effects. So, before you invest your money, make sure you understand how inflation can impact your portfolio and choose investments that will help you stay ahead of the curve.

 

This article originally appeared on MaxMyMoney.org and was syndicated by MediaFeed.org.

 

 

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