The Government Doesn’t Understand Your Retirement Needs

The Government Doesn’t Understand Your Retirement Needs
Rising costs and falling portfolios are pushing Americans to rethink retirement—many are now eyeing Europe for relief.|©iStock/RelaxFoto.de

How are your retirement savings doing? US Treasury Secretary Scott Bessent seems to think they’re just peachy.

That’s certainly not what attendees at our recent Fast Track Europe Conference in Portugal told me. People are petrified of the impact of recent US policy developments on their retirement savings.

Even as US and global stock markets are plumbing depths last seen at the beginning of the COVID crisis, Bessent claimed that, “Americans who want to retire right now, the Americans who put away for years in their savings accounts, I think they don't look at the day-to-day fluctuations. In fact, most Americans don't have everything in the market.”

Secretary Bessent is wrong on both counts.

First, about 62% of US adults have investments in the stock market. The only group where a minority holds stocks are those earning under $40,000 a year. But 65% of middle-class Americans own stocks, and 87% of the wealthy do. Given that most of those people are heavily exposed to stocks through retirement savings, saying they “don’t have everything” in stocks is like describing someone as “a little bit pregnant.”

Second, by all accounts, people with money invested in stocks through 401(k)s, IRAs, and other retirement instruments are in a flat panic right now.

In fact, according to Allianz Life’s 2024 Annual Retirement Study, 63% of Americans are worried about having enough money to survive retirement. And that was before the US stock market plunged into bear territory.

Regardless of one’s political leanings, Bessent’s statement suggests those in charge of the US economy are out of touch with the reality facing older Americans.

I call the five years before and five years after retirement the “Red Zone.” If your retirement portfolio faces a steep decline like the one that's happening right now during that period, you have little chance of being able to recover before you need to start selling stocks to fund your living expenses. Selling stocks in a down market means you won't have as much value left to recover, leaving you permanently behind.

And don't forget that if your retirement funds are in an IRA, you are required to take distributions whether you want to or not.

The bottom line is that older Americans are facing an unprecedented economic crisis.

At the same time that their retirement savings are being hammered by a stock market freefall, inflation is expected to rise to double digits within the next 12 months as the impact of tariffs on foreign goods hits home. Less money combined with higher prices is rarely comforting to those embarking on their golden years.

I think that's why the attendees at our recent Fast Track Europe Conference were so laser-focused on presentations regarding the cost of living, taxation, and investment opportunities in Europe. For example, I showed a slide that demonstrated that the overall cost of living in Portugal’s Algarve region was nearly 70% less than a coastal US city. The gasps from the audience were audible.

Given the topic, most of the attendees had not yet made their move abroad. But through conference presentations and direct engagement with IL subscribers through my consultation service, I've heard from plenty who have. Those who have taken my advice and shifted their exposure away from the US economy and the dollar are breathing a lot easier right now.

For most of our history here at International Living, we've emphasised the lifestyle opportunities of a life abroad. Of course, we've also spoken about the lower cost of living in other countries, but this hasn't been the main topic.

That equation has been turned on its head. By all means, keep looking for the ideal foreign home for yourself. But you don't have to wait to make that move to begin getting your money out of harm's way in the US economy and financial system. I've helped hundreds of people do just that, and I'd love to help you, too.

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