Baby Boomers Retiring Stokes More Inflation Fears

Inflation is a constant pressure and is discussed ad nauseam by the media. The main culprits usually discussed are Russia's invasion of Ukraine and out-of-control government printing. Russia's invasion increased energy prices, and global governments printed unprecedented amounts of money responding to Covid. Both ideas have significantly contributed to global record-high inflation. However, there is another silent culprit the Fed won’t be able to control with interest rate policy. 

The culprit is Baby Boomers retiring from the workforce. The Baby Boomer generation reshaped world demographics for 70 years. Baby Boomers were born between 1946-1964. The 2020 census estimates there are around 73 million Baby Boomers. Now, the Baby Boomers are retiring and shifting the workforce demographics. Approximately 10,000 people per day are turning 65. By 2030, 100% of all Baby Boomers will be older than 65.

Changing demographics make constant inflation tug-of-war through the years. The natural supply and demand cycles show that working-age adults create downward price pressure. The young and the older populations put inflationary price pressures upward. For decades, the Baby Boomers were the largest demographic in the workforce, heavily weighing down inflationary pressures. However, as more Baby Boomers retire, the inflationary pendulum is swinging the other way. 

Another concern is that people are living longer. People didn't live into their 80s and 90s when social security began. The average time people collect social security is around 19 years. In 1935, the average life expectancy was significantly less. The government expected people to collect social security for approximately 11 years max. The following charts are from a statistical study by the Social Security Administration (SSA) conducted about life expectancy. The first chart shows an increasing life expectancy. The second chart shows the number of years people will live beyond 65 years old. These two charts show why politicians are so nervous about social security. The   government has an agreement it can’t afford. 

Think of it this way. Suppose you have a 30-mortgage on your house for $300,000 at 4% interest. Without taxes, insurance, or other escrow additions, the total amount paid over 30 years would be $515,608.52. Now imagine in year 15, the bank calls you and says the loan terms are now extended by ten years or 33% of the fixed payment term. Instead of paying $1432.25 for thirty years, you now will pay $1432.25 for forty years. Your new total is $687,480 for your $300,000 house. What is your reaction? “Hey, I didn’t agree to that. You can’t just add 33% to my mortgage.” 

Following our example, the government has 330 million “mortgages.” Instead of eleven years to pay off each mortgage, all mortgages got extended by 72% to 19 years. The government says they need help to afford where the adjustable rate and term social security mortgages are going. Either the government will default on its social security mortgages or need to borrow and print insane amounts of money. Either way, there is enormous inflation and a rapid collapse of trust in the U.S. government to pay its bills. The result will be disastrous for any asset denominated in Dollars. Starting in 2034, the SSA will not be able to pay full benefits. The change in demographics is a ticking time bomb for the Dollar.

The problems of unfunded government promises are common but are accelerating. If something doesn’t drastically change, the U.S. could default on its debt to its citizens within the decade. Defaulting to the U.S. citizens would be game over for the Dollar. There is an uncomfortable truth we need to face. The government views the math as a population and demographics problem, not a fiscal mismanagement problem. If the problem is an unbalanced population and unmanageable debt, the solution is not raising or lowering interest  rates. 

You may be very disturbed to hear what Dr. Ezekiel Emanuel said about not how much medical care anyone should receive after age 75. He doesn’t believe any interventions that could prolong life should be issued to anyone over 75. Emanual isn't just talking about pacemakers, chemotherapy, or bypass surgery. He talks about everyday interventions like flu shots, antibiotics, and annual screenings. Horrifyingly, his primary arguments are about the quality of life and economics. Without trying to sound like too much of a conspiracy crackpot, there must be some reason CNN gave this doctor a microphone and T.V. time. 

Retirement should be about enjoying the fruits of your life’s labor. No one wants to spend retirement worrying about money. 1 in 3 Baby Boomers relies on social security as their primary income source about 5.5% of the U.S. population. As inflation rages on and market losses continue, that number will probably increase significantly. 

Suppose retirement planning should protect long-term purchasing power. In that case, the most logical thing in the world is to look at the long-term economic realities. In about a decade, social security will reach a breaking point for the U.S. Dollar. Social security will be bankrupt by 2034. In ten years, retirees will face an unprecedented crisis. Social security will not exist with adequate funding, or the U.S. will default on its debt. Most people will pretend the situation isn't real, but it is. You don’t have to be a victim, but you do need to take action to protect yourself.

Call the U.S. Gold Bureau today to learn how to protect your retirement with physical gold and silver.