How to Interpret New Inflation Report – for IRA/401(k) Owners Although inflation affects all economic sectors, retirement savers have a special interest in how it could change the value of their money. If inflation drops the value of the dollar, some savers will have little time to recover losses. That’s why Americans close to retirement must understand the impact of December’s Consumer Price Index (CPI) report. [1] Many say the report signals further inflation deceleration after declining from 7.1% in November to 6.5% in December. However, all may not be what it seems. First, although the 6.5% year-over-year inflation metric represents deceleration, it’s still nowhere near the Fed’s target of 2%. The Fed may continue hiking the federal funds rate and performing quantitative tightening, which will place more downward pressure on markets in 2023. The 0.6% month-over-month drop-off represents a modest decline from 7.1% to 6.5%. At this pace, it’s going to take the rest of the year or longer for inflation to cool to 2%. In other words, the headline-grabbing 6.5% figure isn’t all it’s cracked up to be. Other reasons retirement savers may be concerned: [2] Food inflation is rampant. Aggregate food prices rose more than 10% over 12 months. Services inflation is stubbornly high. During the fourth quarter of 2022, this ran an elevated 6.1% annual rate. Housing prices were up 7.5% year over year. That’s a 0.8% increase from the previous month. [3] And rents rose 8.3% year over year – one of the biggest inflation drivers. The problem is that even low inflation can eat away at retirement account purchasing power. Forbes explains: “Even 3% (inflation) over 25 years means the price of goods would roughly double during that span. The buying power of someone who retires on a fixed income at 65 would be cut in half by age 90.” [4] Fortunately, retirement savers can diversify with assets that have a track record of holding value during inflation and recession. Americans often choose gold and silver IRAs for this, because precious metals IRAs provide tax advantages AND effective diversification. The key is to find a gold IRA company with a reputation for educating customers on economic issues – and providing stellar, transparent service. Many consider Augusta Precious Metals to be the nation’s top gold IRA company, with hundreds of top customer reviews and thousands of 5-star ratings. It was named Money magazine’s “Best Overall” Gold IRA Company. It’s the same gold company recommended to hall of fame quarterback Joe Montana by his financial team* and endorsed by top conservative podcast and radio talk-show hosts, such as Mark Levin. Augusta Precious Metals offers FREE educational one-on-one web conferences to help you
protect your IRA or 401(k). If you have at least $100,000 saved, sign up to learn: How inflation and economic turmoil can affect savings How to fight the negative effects of Fed actions Why it’s important to gain effective diversification using physical assets like gold How to open a gold IRA Go here to register for your FREE one-on-one Augusta Precious Metals gold & silver web conference designed by their on-staff, Harvard-educated economic analyst. Take a few minutes now to help protect your retirement! ------------------- [1] www.cnbc.com/2023/01/12/consumer-prices-fell-0point1percent-in-december-in-line-with-economists-expectations.html
[2] https://www.brookings.edu/2023/01/12/6-key-takeaways-from-the-january-cpi-report/
[3] https://www.bls.gov/news.release/pdf/cpi.pdf
[4] www.forbes.com/advisor/investing/inflation-outlook-2023/
[5] www.cnbc.com/2023/01/11/cpi-inflation-is-expected-to-have-declined-in-december.html | 