All of our retirement money is in cash and real estate. At 3% inflation, it was enough to support 30 years of retirement. At 20% inflation, we'll burn through it in 10. But if this inflation lasts that long, none of us will want to be alive 10 years from now.
So I'm currently losing 20% a year to the government theft known as inflation. That still seems preferable to losing 20% to the Wallstreet Casino on top of 20% to inflation.
The thing that makes me mad is that I'm still barely making 0.1% interest in my money market account, while mortgages are at 6% and credit cards are at 18%. Government/Banking corruption like that is why America no longer works. For the 100 years prior to the Wall Street bailout, any fool could get 4.25% on a passbook savings account at any bank, even through the Great Depression and the Carter Inflation. On the day I retired and moved my life savings from a 401K to an IRA, I did the math, and realized that after bumbling my way through three stock market crashes, my life savings would be twice as much if I could have just kept my money in a 4.25% savings account the whole time. But, of course, that option hasn't existed since the government abolished it in 2008.
Annuities? If you hold an annuity 55 years, you've beaten the actuary's statistics, along with my cash scenario. Congrats on your longevity! Not many people manage that.
In fact, an annuity ought to be the perfect investment for the average joe. Basically, you're accepting a lower rate of interest to let the professional investors at an insurance firm invest your money -- and the firm has the longevity to survive market booms and busts. On top of that, it's literally a survivor's game. Unless you choose a return-limiting rider on the policy, the fund even gets to keep your investment when you die. With a deal like that, you'd think any insurance company would be tickled to guarantee more than half the Market's average rate of return for the use of your money. But they don't have to. Unfortunately, there seems to be an endless supply of math-challenged folks who will fork over their life savings for a guaranteed monthly check, thinking the percentage represented by the ratio of their monthly check to the total investment is the investment's "return" -- which ignores the time value of money. In reality, an insurance company rarely needs to grant a real return that even matches the inflation rate.
But with inflation running at 20%, maybe it's possible to lock in that rate now with an annuity, and keep it after government comes to its senses. Maybe. And pigs might fly. I think you'll find that the math wizards at the insurance companies have already factored that possibility into their contract, but you might be able to squeeze 3-4% out of them.
Which would still be a heck of a lot better than I'm doing in cash.
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