Bidenomics is postponing Americans’ retirement dreams for YEARS

Americans trying to retire in the last two years felt that Charlie Brown was ready to take up football.

They think their nest egg is big enough, but then another round of monthly inflation data shows that the cost of living has risen again.

Then President Joe Biden yanks the football away and soon-to-be retirees realize they can’t stop working just yet.

Biden’s economic leadership has been flawed, to say the least.

When he took office, the economy was growing at a rate of $1.5 trillion annually and adding an average of half a million jobs per month.

Inflation was just 1.4%, below the Federal Reserve’s 2% target.

Just 18 months later, Biden managed to push inflation to its highest level in 40 years, with prices rising in a single month about as fast as they did in the entire year before he took office.

At the same time, the economy contracted for two quarters in a row – what we used to call a recession.

While inflation has slowed from this rapid pace, it is accelerating again and economic growth has been anemic.

There is still a shortage of between 4.5 and 5.5 million workers in the labor market, meaning employment is well below the pre-pandemic trend.

Taking all of these absent workers into account, the unemployment rate is over 6%.

It’s ongoing inflation that’s really hurting those hoping to retire.

If you were a soon-to-be retiree and planned to leave your job with $1 million in savings and investments, you would have had to radically adjust that calculation because prices have risen about 17% on average since Biden took office.

That means you’ll need an additional $170,000 in savings to have the same actual value in your emergency fund.

However, this assumes that inflation returns to its low pre-Biden levels – which will not happen any time soon: government spending, borrowing and money creation remain high.

Higher inflation will deplete retirement savings faster, so you’ll need a larger portfolio to cover your living expenses.

Even in the unlikely scenario that government spending falls again and inflation returns to 2%, the soon-to-be retiree in our example will still need to come up with at least an additional $170,000.

Otherwise, he will have to accept significant losses in his quality of life in retirement.

Finding such additional savings is a major challenge. The median annual income for those ages 55 to 64 is less than $62,000.

If a would-be retiree somehow manages to save a whopping $31,000 a year – half of their income – they would need another five years of work due to inflation over the last two and a half years.

Under normal circumstances it would be difficult to save that much, but inflation makes it even more difficult: today’s higher cost of living means there is less left over to save and invest at the end of the month.

Since Biden took office, monthly savings have fallen 82%.

The savings rate fell from 19.3% of disposable income in January 2021 to a meager 2.7% in June 2022.

The latest data shows that it is still very low at just 3.9%.

Before Biden’s term, savings rates hadn’t been this low since the depths of the Great Recession in 2008.

Even if a would-be retiree managed to achieve a savings rate 10 times higher than average, they would put away less than $24,000.

It would take more than seven more years to save the $170,000 needed to cover the inflation Biden is overseeing.

This doesn’t even take into account the fact that most people convert their nest eggs into bonds as they near retirement, and that inflation has eroded the income from those bonds.

Worse, savers are stuck with their bonds because higher interest rates have reduced the selling price of the bonds.

For soon-to-be retirees, there is no escape from the financial woes of Bidenomics.

They must hope that the next government changes course – or plan to continue working for many years to come.

EJ Antoni is a public finance economist at the Heritage Foundation and a senior fellow at the Committee to Unleash Prosperity.