Are We Experiencing a “Silent Recession?”

Are We Experiencing a “Silent Recession?”

Ever since the COVID-19 pandemic caused stocks to slump, economists around the world have been predicting a recession in the United States that could spread to affect the entire world. While the U.S. did technically meet the criteria for a recession in June 2022 after two consecutive quarters of negative GDP growth, many analysts were unwilling to call it as such at the time. In any case, the economy has since recovered, leading to a great deal of optimism over the past year. Unfortunately, tough economic times are about more than just numbers on paper. Even if Wall Street brokers aren’t concerned, Americans all over are still feeling the pinch, and those in retired years are hurting more than anyone else.

As we approach the end of 2023, some analysts believe we are in a “silent recession”. Here is more about the silent recession and how it is making life difficult for baby boomers this holiday season.

What is a Silent Recession?

Although the economy has grown slowly since the pandemic and numbers from the government and Wall Street show low unemployment and calming inflation, millions of American retirees are still struggling. In a silent recession, certain segments of the population face the hardships of a recession, even if its effects haven’t reached the majority of the population. The main factors that characterize 2023’s silent recession are inflation, market volatility, and asset depreciation. With millions hitting the stores to prepare for the holiday season, these difficulties are more prominent than at any other time of the year, and they disproportionately affect retirees.

Inflation

You may have heard that inflation has gone down since its peak in June of 2022, but the method used to calculate inflation figures does not accurately reflect reality. Because inflation figures are calculated based on prices from the previous month, they can make it seem like inflation is going down when prices are still rising. What lower inflation numbers mean is that inflation is not increasing as rapidly as it was in previous months; prices still remain higher than they were a year ago. It’s also important to note that inflation numbers do not include many of the items retirees depend on the most, like gas, certain food items, drugs, and medical expenses.

What this means for those who are in their golden years is that the goods and services they need to have a comfortable retirement cost significantly more than they did before the pandemic. This becomes more evident during the holiday season. The cost of a Thanksgiving turkey dinner is still higher than it was in 2021. Data from the American Farm Bureau’s annual Thanksgiving dinner survey puts the price of a turkey dinner for 10 at $61.17 – the second highest in the survey’s 38-year history – up from $ 53.31 in 2021 The price of holiday gifts this year is also bound to put a strain on anyone living on a fixed income. A survey by the International Council of Shopping Centers shows that 80% of consumers are expecting to spend more on gifts in 2023 than they did last year and that 42% attributed that expectation to inflation and the higher cost of holiday items.

Market Volatility

Retirees who have put their savings into risky, securities-based investments like stocks, bonds, and mutual funds depend on the stock market to rise continuously if they hope to capitalize on their investments. Of course, market conditions have been far from stable throughout history, and 2023 is no exception. When investments are tied to the value of the stock market, a crash can be devastating, and even relatively minor fluctuations mean the income you’re depending on might not be there month to month. That type of volatility is something no one who worked a lifetime should have to accept in their investment portfolio.

It’s also impossible to predict when crashes and fluctuations will occur. If you’re already retired, a market crash or downturn could come at any time and wipe out countless dollars in value and force you to accept a lower income than you expected. If you’re still saving for retirement, a crash could mean rethinking your entire strategy, potentially requiring you to retire later than you planned to.

Asset Depreciation

Inflation and market volatility combine to depreciate the value of any assets a retiree has saved. When goods and services cost more, it severely impacts a retiree’s buying power. Higher gas prices, increasing food costs, and skyrocketing energy bills mean that a dollar doesn’t go as far as it used to. Market volatility can also mean that a retiree doesn’t have as much money available to them as they thought they would. Even investors who are seeing gains in their securities-based portfolios aren’t experiencing real growth; inflation, fees, and taxes are quietly draining their nest egg every second of the day.

Preparing Your Retirement for a Silent Recession

If you are in or near retirement during today’s silent recession, don’t lose hope. There is something you can do to stop its negative effects immediately and ensure you have a secure financial future no matter what happens with the economy. The first step is finding out how you can decouple your retirement investments from the volatile stock market.

Financial vehicles like the ones used in the Crash Proof Retirement System are based in the financial life insurance industry, meaning their value is not tied to stock market performance. When the stock market takes a downturn, Crash Proof Vehicles protect you from losing a penny of your principal. In addition, these vehicles have the potential to credit interest at rates comparable to those achieved by securities-based investments. Once that interest is credited, it becomes part of your principal and it can never be lost due to a stock market crash. 

The Crash Proof Retirement System even contains inflation fighters, which allow you to withdraw funds from your system every year with no penalty. This extra layer of security allows our consumers to take more income when goods and services cost more without depleting their nest egg, helping them regain the buying power they lost due to inflation.

Crash Proof Vehicles achieve all these goals without any up-front or ongoing fees, unlike mutual funds and other popular retirement investments. When you consider the significant fees associated with securities-based investments, switching to a Crash Proof Retirement System prevents you from being forced to hand over your hard-earned savings to advisors and money managers who can’t even deliver the gains they promise.

If you want to find out more about the Crash Proof Retirement System, it’s time to schedule your complimentary financial checkup today or attend a Crash Proof Retirement Educational Event. Our licensed independent educators will be happy to answer any questions you may have about investing during a silent recession. You can also view Retirement Media, Inc.’s groundbreaking documentary “America’s Retirement Dilemma: A Documentary of Wall Street’s Rigged System,” being screened exclusively at our Crash Proof Retirement Educational Events in Montgomery County, PA and surrounding areas. Visit our events page to reserve your seat at our next screening.