U.S. Path to Insolvency!

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·       Federal government debt increased 7.4 percent at an annual rate in the third quarter of 2024, up from a 6.3 percent annual rate in the previous quarter.  www.federalreserve.gov

·       Real gross domestic product (GDP) increased at an annual rate of 2.3 percent in the fourth quarter of 2024, according to the second estimate. In the third quarter, real GDP increased 3.1 percent. The increase in real GDP in the fourth quarter primarily reflected increases in consumer spending and government spending that were partly offset by a decrease in investment. Imports, which are a subtraction in the calculation of GDP, decreased.  www.bea.gov

·       7.4% increase in annual fed. gov. debt – 3.1% in annual GDP = 4.3% annual deficit

What does this mean?

·       This means that the U.S. will become insolvent in a little over 23 years at this currently unsustainable rate on negative growth!

U.S. Insolvency Attack Plan A

·       Cut the United States federal government spending below our Growth Domestic Product (GDP), so the U.S. can remain solvent with growth going into the future.

U.S. Insolvency Attack Plan B

·       Raise the United States taxpayer’s taxes 4.3% per annum on average for the next 23 + years.

·       This will effectively make $100 saved, spend like $0 in just over 23 years later!  “Wow”!  This is faster than the current U.S. inflation rate in 2025 at 2.8% annually which you would see the value of $100 erode to the spending power of $0 in almost 36 years. www.usinflationcalculator.com

·       4.3% avg. tax raise per annum + 2.8% current 2025 inflation rate per annum = 7.1% erosion of your United States spending dollar annually.  This means that your $100 saved will spend like $0 in just over 14 years!  “Ouch”!

So, in translation, at the current rate the U.S. economy is going at, you can have $1 million saved at retirement, & if you live longer than 14 years, your $1 million will effectively spend like $0 potentially forcing you out of retirement if you don’t have the proper investment & money growth vehicles that are preferably yielding you north of 7.1% per year. 

For more helpful, complimentary information on taxes & finance go to www.SolidTaxServices.com/tax-tips & www.SolidTaxServices.com/blog Thank you.

In Trust,

                    Ashley Thomas, CEO, EA