Financial Expert: Government Fueled Inflation Is Killing Retirements

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Stubborn inflation continues to hurt by reducing consumers’ purchasing power, but the impact could be greater as the high cost of living upends Americans’ plans for their golden years, an expert warns.

Dr. David Phelps argues in his latest book, “Inflation: The Silent Retirement Killer,” that decades of uncontrolled government spending coupled with Federal Reserve actions have made current inflation inevitable, and warns investors must adapt and prepare for the long term.

A customer orders food at a butcher shop in Louisville, Kentucky on August 23, 2022. Food costs rose 11.4% year-over-year in August. (Luke Sharrett/Bloomberg via Getty Images/Getty Images)

While the Labor Department’s latest consumer price index shows the cost of consumer staples rose 8.3% year over year in August, Phelps told FOX Business that the actual impact on Americans’ wallets was probably double. What’s worse, he says, is that he sees inflation persisting because federal spending has gone crazy, the central bank can’t do much to contain it.

Phelps predicted soaring inflation last fall when he started writing his book, saying he was reading the tea leaves as the government continued to print billions of dollars to fight the pandemic with programs such as unemployment benefits “on steroids”, stimulus payments and the long-extended pause on student loan repayments. But he says the writing was already on the wall that inflation would swell — COVID spending is only speeding it up.

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“Even before COVID, we had years and years of growing budget deficits and national debt — it just keeps piling up, piling up, piling up,” Phelps said. “The fact that the government was able to throw the box on the road was going to break.”

Yet endless “pandemic” perks like student loan forgiveness continue to further fuel inflation, with no end in sight.

David Phelps

Phelps expects the U.S. economy to be anemic over the next decade, which he says is a game-changer for many people who rely entirely on a 401(k), a model that relies on the conventional idea that the economy will always grow.

“People thought they were going to have this nest egg which, according to the financial parameters, would be enough,” he says. “So I think the red flag is to understand that it’s not going to be the same. We’re in a completely different time now…they’re probably going to need more than they thought they were going to need, which is not good.”

Now, he says, people need to protect themselves, and warns that fixed income streams like annuities won’t be able to meet the lifestyle needs of people who depend on them years down the line.

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Phelps is a firm believer in investing in tangible assets like real estate or a business, which he believes have the best potential to keep pace with inflation. And he has a track record to prove it.

He’s a former dentist whose daughter – now healthy 30 – was blindsided by epilepsy, late-onset liver failure and leukemia when she was just 12. In order to care for her during her health crisis, Phelps sold her practice. and invested the proceeds in real estate so he could support his family on passive income.

David Phelps

Dr. David Phelps (Dr. David Phelps)

Phelps’ colleagues in the dental industry soon began asking him how he was making ends meet, and he began offering advice. Before long, he had so many inquiries that he became an official coach and now leads an investor community called Freedom Founders.

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He says the main question Freedom Founders members have when they join the group is whether they have enough savings to slow down and retire. But as dentists, they tend to have higher incomes than the average American.

“That’s the question I think everyone is going to ask – regardless of where you are in the economic line – everyone is going to worry about it,” Phelps said. “Social Security isn’t going to cover it…so the majority of retirees are going to struggle.”

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