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Will the amount people are saving via 401(k) drive up inflation? |
I ran the numbers and if my wife and I save the maximum amount per year until she retires at 52 (with a gov't pension, no SS) and I retire at 58 (I am 6 years older than her, no pension but SS) we will have something in the order of 30 million dollars with a modest return on our investments. People always think my questions are crazy at first. Why is that? I think I think differently than most... First I thought your question was crazy, then I read it. Funny, I think your thought is, that if everyone is rich (30 millionaires) then prices will go up to reflect a millionaires purchasing power. You thinking of the greed. You know as I type this and think, I realize I don't know. But what I do know is, competition drives prices down. Maybe there could be an effect within a region, like NY city vs. the rest of the country, but as a whole our country competes on a world level and there are far more poor people than rich in that scenario. I doubt I need to say this, but don't stop saving just because you think you might be contributing to inflation, it's your savings that will shelter you from the angst of high cost. I really don't think this will have an impact on inflation (purchasing power). Government spending seems to be the primary factor. Right now, we are so much in debt. It is pretty worrisome. We savers won't spend it. I save about half my pay but in retirement will not be spending much more no matter how big the balances. Interesting idea, if everyone was rich then . . . no one would be rich. hmmmm . . . I believe you would be correct. However the fact still remains most people aren't saving for retirement at all. And less than 10% are saving enough to retire comfortably on. So essentially your scenario should never happen. |
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