How Inflation In America Is Destroying Your Retirement & How You Can Fix it

Summary

The video discusses the impact of inflation in America on retirement savings and offers strategies to mitigate its effects. It highlights that corporate profits, rather than labor or material costs, are a significant driver of current inflation, as illustrated by the example of McDonald's increasing profits per share. The creators, who are currently in Japan, compare the cost of living, including dining at McDonald's, between the US and Japan, noting that prices in the US have risen significantly. They suggest that investing in stocks, which tend to follow corporate profits, and becoming location independent can help combat the erosion of purchasing power due to inflation. The video emphasizes the importance of having multiple options for retirement planning and explores the concept of 'greed inflation,' where corporate greed is identified as a cause for rising prices. It concludes by encouraging viewers to consider different paths for retirement, such as investing in US dollars and spending in foreign currencies, and to take advantage of global cost differences to stretch their retirement funds further.

Takeaways

• 📈 Inflation in the US is significantly impacting retirement savings, with corporate profits driving up costs rather than traditional factors like labor or material costs.
• 🍔 McDonald's is used as an example to illustrate corporate profit increases, with earnings per share rising from $7 to projected $14, contributing to inflation.
• 🌏 The ability of McDonald's to raise prices without losing customers in the US is contrasted with their more cautious approach in international markets where customers are more sensitive to price increases.
• 💲 The cost of a Big Mac meal in Japan is significantly lower compared to the US, highlighting the differences in pricing power and the impact of inflation on American consumers.
• 💰 The concept of 'greed inflation' is introduced, suggesting that corporate greed is a primary driver of inflation, rather than supply and demand economics.
• 🤑 Early retirement and travel are becoming more attractive as living costs in the US rise, with the potential to save money by spending US dollars in countries with a lower cost of living.
• 🌐 The strategy of earning in US dollars and spending in foreign currencies is recommended as a way to maximize savings and invest the difference back into profitable US companies.
• 🏦 Investing in stocks, particularly those of companies with rising profits like McDonald's, is suggested as a long-term strategy to combat inflation.
• 🏡 Becoming location independent is emphasized as a way to diversify income sources and reduce dependency on a single location, allowing for more flexibility in where and how money is spent.
• 📊 The importance of having multiple options and paths for retirement is highlighted, rather than following a single traditional formula.
• 🌟 The video script encourages viewers to explore various avenues for income generation, such as online platforms like YouTube, especially for those without access to traditional retirement savings options.

Q & A

What is the main topic of discussion in the video?

The main topic is how inflation in America is affecting retirement savings and what individuals can do to mitigate its impact.

What is the current trend in corporate profits in relation to inflation?

Corporate profits have driven 53% of inflation costs in recent quarters, compared to only 11% in the previous 40 years, indicating a significant shift.

How does the speaker describe the recent increase in McDonald's corporate profits?

The speaker notes that after a period of stagnation, McDonald's profits have been increasing exponentially, with a projected increase in earnings per share from $7 to $14 over a few years.

What is the term used to describe the current inflation in the US, as mentioned in the video?

The term used is 'greed inflation,' which suggests that corporate greed is a significant factor in the rising inflation.

Why does the speaker believe that investing in stocks can be a strategy to combat inflation?

The speaker believes that as long as corporate profits continue to rise, which they expect due to ongoing price increases, stock prices will also increase over the long term, providing a hedge against inflation.

What is the concept of 'location independence' as discussed in the video?

Location independence refers to the ability to earn an income and manage assets without being tied to a specific geographic location, which can provide more flexibility and cost-saving opportunities.

How does the speaker suggest using savings from spending less while traveling abroad?

The speaker suggests investing the savings back into US companies, such as buying stock in McDonald's, to profit from the same corporate profits that are driving inflation.

What is the significance of the speaker's experience with McDonald's prices in Japan compared to the US?

The experience highlights the disparity in pricing and the impact of inflation on the US market. It also demonstrates the potential savings and investment opportunities available to those who can take advantage of lower prices in other countries.

Why does the speaker think that retiring early and traveling can be an attractive proposition for Americans?

The speaker believes that traveling and living in different countries can be more cost-effective than living in the US, especially considering the lower cost of goods and services in many places abroad.

What is the 'ultimate retirement formula' proposed by the speaker?

The ultimate retirement formula proposed is to earn money in US Dollars, spend it in foreign currencies in other countries, and invest the savings back into US companies.

How does the speaker address the concern of people asking if they can afford to travel full-time?

The speaker points out that when compared to the cost of living in the US, particularly in areas with high inflation, traveling can actually be a more financially sound decision.

Outlines

00:00

📈 Inflation's Impact on American Retirement

The video discusses how inflation in America is affecting retirement plans. The creators, who are planning to return to the US, have noticed the rising cost of living and how it's causing their financial targets to shift. They delve into an article from Fortune Magazine that attributes 53% of inflation costs to corporate profits, a significant increase from the historical average of 11%. Using McDonald's as an example, they illustrate how corporate earnings per share have been increasing, leading to higher prices. The video also compares the cost of a Big Mac meal in Japan to the US, highlighting the stark differences and the impact of corporate pricing strategies on consumers.

05:00

💵 The Reality of Fast-Food Pricing and Greed Inflation

The video highlights the high cost of fast food in the US, with the most expensive Big Mac meal reaching $17, contrasting it with the much lower prices in Japan. The creators express their surprise at the cost of living in Japan, which is often perceived as expensive, but in reality, offers better value for money. They discuss the concept of 'greed inflation', where corporate greed is identified as a driving factor behind inflation. The video also touches on the idea of early retirement and traveling as an attractive alternative due to the cost savings possible when spending US dollars in countries with a lower cost of living.

10:01

🌍 Becoming Location Independent to Combat Inflation

The video suggests strategies to mitigate the effects of inflation, such as investing in stocks, which historically follow corporate profits. It emphasizes the importance of becoming location independent, which means having the flexibility to work and live anywhere, thus being able to take advantage of lower costs of living in different parts of the world. The creators share their personal experience of being location independent and how it has allowed them to travel and live more affordably. They also discuss the benefits of earning in US dollars and spending in foreign currencies, using the savings to invest back in US companies.

15:04

🚀 Diversifying Retirement Strategies in the Face of Inflation

The final paragraph focuses on the various paths to retirement in the current economic climate. The creators of the video started their YouTube channel as a demonstration that there are multiple ways to achieve financial independence. They share their success with YouTube as an alternative for those who may not have access to traditional retirement funds like a pension or 401K. The video encourages viewers to explore different options like investing, consulting, or creating passive income streams to secure their retirement. It concludes by emphasizing that while inflation presents challenges, there are still many avenues to pursue a comfortable retirement.

Keywords

💡Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling. In the video, it is discussed as a significant factor affecting American retirement savings, with prices seemingly going up uncontrollably, affecting the cost of living and retirement planning.

💡Retirement

Retirement refers to the time when an individual stops employment from their career. The video emphasizes how inflation in America is impacting the retirement plans of many, as the cost of maintaining a certain lifestyle increases over time due to inflation.

💡Corporate Profits

Corporate profits refer to the net income that a corporation earns from its business activities. The video script mentions that corporate profits have driven a significant portion of inflation costs, with companies raising prices to increase profits, contributing to the inflation issue.

💡Location Independence

Location independence implies the ability to work and live anywhere without being tied to a specific geographic location. The video encourages viewers to consider becoming location independent as a strategy to mitigate the effects of inflation by potentially spending money in places where the cost of living is lower.

💡Investing

Investing involves allocating resources, such as money, with the expectation of generating an income or profit. The video suggests that investing in stocks, such as McDonald's, can be a way to combat inflation, as stock prices tend to follow corporate profits, which are increasing due to inflation.

💡McDonald's

McDonald's is a multinational fast-food chain used in the video as an example to illustrate the impact of inflation on pricing. The company's ability to raise prices without losing customers is highlighted, and its stock is recommended as an investment to profit from corporate earnings.

💡Greed Inflation

Greed inflation is a term used in the video to describe a situation where corporate greed is the driving factor behind inflation. Companies are accused of increasing prices not due to increased costs but to boost profits, which is leading to higher inflation rates.

💡Early Retirement

Early retirement is the concept of leaving the workforce at an age earlier than the traditional retirement age. The video discusses how the cost of living in the U.S. is rising, making early retirement more challenging, but also presents alternative strategies like location independence and investing to make it more feasible.

💡Dollar Cost

Dollar cost refers to the amount of money required to purchase a good or service. In the context of the video, the rising dollar cost of items like a Big Mac meal in the U.S. is compared to the cost in other countries, highlighting the impact of inflation on consumers.

💡Exchange Rate

The exchange rate is the value of one country's currency in terms of another's. The video discusses the impact of exchange rates on the cost of living abroad, showing that despite perceptions of high costs in places like Japan, the actual cost of dining at places like McDonald's can be significantly lower when compared to the U.S. prices.

💡YouTube Channel

A YouTube channel is a platform for sharing videos on YouTube. In the video, the creators discuss their YouTube channel as an alternative path to generating income, which can be a strategy for individuals to achieve financial independence and potentially early retirement, especially for those without access to traditional retirement savings options.

Highlights

Inflation in America is significantly impacting retirement savings, with prices seemingly out of control.

Corporate profits have driven 53% of inflation costs in recent quarters, a stark increase from the previous 40-year average of 11%.

The rapid increase in corporate profits, exemplified by McDonald's, is a key factor in the current inflation.

McDonald's has increased its earnings per share (EPS) steadily, indicating a strategy of raising prices to boost profits without losing customers.

The strong business model of companies like McDonald's allows them to raise prices without customer loss, contributing to inflation.

In Japan, McDonald's prices are significantly lower than in the US, with tax-inclusive prices providing better value for consumers.

The most expensive Big Mac meal in the US costs $17, which is more than the combined price of two meals in Japan.

The perception of high costs in Japan is contradicted by the actual lower prices of goods and services compared to the US.

The term 'greed inflation' has been coined to describe the current inflationary situation driven by corporate greed in the US.

Investing in stocks, which follow corporate profits, is suggested as a strategy to combat inflation in the long run.

Becoming location independent is crucial, allowing for the diversification of income sources and spending power across different regions.

The concept of early retirement and traveling is becoming more attractive as it can be cheaper than living in the US.

Earning money in US dollars and spending it in foreign currencies can maximize savings and investment potential.

Owning stock in profitable companies like McDonald's can provide personal profit alongside corporate gains.

Location independence is emphasized as a key factor before financial independence, offering more flexibility and options.

Multiple paths to retirement are available, including investing, using 401Ks, pensions, and even creating income through platforms like YouTube.

The importance of having a plan and being open to different strategies is highlighted as crucial for achieving retirement goals.

Inflation presents challenges, but with the right strategies and options, it's still possible to achieve a comfortable retirement.

Transcripts

hey guys welcome back to the channel

today we are talking about how inflation

in America is killing your retirement

and how you can fix it so you know we've

been planning out our return to the US

this fall and we're starting to see the

reflection of that and looking at some

of those numbers and we are hearing from

a lot of you in our comment section as

well about uh you know the price of

everything going up and inflation just

seems to be kind of getting out of

control yeah and all those things that

you've targets you've had they keep

moving because the prices keep seemingly

going up so we wanted to dive into a

little bit of why and what we're doing

to combat that and how you can kind of

offset that yourself too so it's

interesting looking at an article here

from Fortune Magazine just from this

month and it is saying that corporate

profits drove 53% of the inflation costs

during the second and third quarters of

this year uh where as the previous 40

years corporate profits only drove 11%

of the cost so what that means is

basically it's not cost of Labor it's

not cost of materials cost of you know

hamburger patties and buns it is just

companies wanting to make more money

which is having the price go up uh

exponentially in some cases so that is

kind of shocking to see uh but it does

make sense when you look at how fast the

prices have gone up we're going to take

a look at McDonald's here it's a company

we tend to Look a Lot at because they

are you know an international company

and in this chart here you can see the

orange line is their corporate profits

you can see the years on the bottom of

the screen their earnings per share this

EPS down here at the bottom we'll Circle

that for you uh in 2018 they made $7 per

share in 2019 also $7 2020 it dropped

down to $6 uh for obvious reason reasons

2021 though they said let's kick this up

a little bit $9 then 2022 $10 then $111

then this year $12 next year projected

at 13 and the year after $14 per share

so you can see they were kind of

stagnating 776 and then all of a sudden

it was just like okay we're just going

to make profits and that is where you're

seeing these corporate profits go up and

that is why uh inflation is is happening

all over the place and another article

we read uh in kind of an investing

sphere that we're in uh says this

McDonald's ability to raise prices

without losing customers underscores its

strong business model so they know they

can do it they know that we'll pay it

and that's why they're doing it uh but

that last line is the key without losing

customers because as long as companies

in America won't lose you as a customer

they'll keep raising prices but the same

companies outside of America outside of

the US where they can't raise the prices

without losing customers guess what they

don't raise the prices as much yeah we

have been in Japan for for a while now

for a little over a month and uh one of

the places where we started out well

where we started out was in Tokyo and we

wanted to head up at McDonald's we do

that from time to time um when we're

looking to you know have a break from

the local food and we popped into

McDonald's and I usually get the Big Mac

and Rob usually gets the cheeseburger

meal the double cheeseburger meal um and

we we looked up the prices we always

wanted to kind of see the exchange rate

we kind of have a running number in our

head but then if it's different than the

number that we have in our head then we

look it up so we looked up the exchange

difference it was going to be 750 Yen uh

for the Big Mac meal which turned out to

be about

$485 and Rob's double cheeseburger meal

was 700 Yen which is about $4

53 that is mindboggling because those

are kind of the prices that we think of

like uh you know 20 years ago uh when

you think about it um so we we went to a

McDonald's in a train station which we

thought well you know maybe it was going

to be a different price or whatever but

once we did this exchange a we were like

wow this is amazing so think of like if

if you bought uh you know uh these meals

in a McDonald's in say like uh Chicago

Union Station or something like that um

think about how much that would cost in

comparison to what we paid $485 and

$453 and that's for the whole meal so

that's for the burger fries and a drink

as well which is really just kind of

blows my mind we are you know kind of

wondered how much you know uh Burger

cost we started thinking about it when

we did that conversion we got our meal

we were like well like how much does it

cost in the US we've been gone for a

while now and we started to look it up

and saw that the highest the most

expensive Big Mac meal in the US is

$17 $17 $17 that's unbelievable that's

more than we paid for both of our meals

together we could get them twice two

meals each for the price of one uh it

does pretty much average out though uh

just over 10 $1 though which is still

outrageous that's still paying for both

of the meals that we got here in Japan

um you know we've heard for so many

years we stayed away from Japan thinking

oh it's so expensive everybody's always

talking about how expensive it is in

Japan especially in Tokyo you know their

biggest city and it just has not been

the case yeah um we just have been kind

of Blown Away by the differences

especially when you're looking at those

you know American chain restaurants that

they have lots of here um the price

differences are just blowing our mind

yeah it is crazy and those prices in

Japan were with tax included so even

more so and I just think that is true

across the board every time we walk out

of a restaurant we're spending 15 1670

for a very nice dinner and we always

like remark of well that would have been

three times that at home and it just is

the case that that

prices have gone up drastically at home

they have not gone up as much in the

rest of the world and you may not kind

of realize it as much when you're there

because they kind of creep them up

slowly on you but when we come back

we're always just shocked at the pricing

increases every year aren't we we are

we're pretty Blown Away it it kind of

you

know kind of launches that reverse

culture shock for us too is the sticker

shock uh as well when we come back we're

like gosh I don't remember these being

this expensive were they I feel like

every single time we go back we have

that same conversation you know in the

grocery store in you know when we're

looking at hotel prices when we're

eating out at restaurants or ordering

food it's just mindboggling even like

the you know food ordering apps and

things like that it's just like wow so

crazy how many fees are tacked on um and

you know a$7 8 burrito ends up being

like $30 which is really really crazy

this is actually this whole phenomenon

that's taking place in the US is

actually being it has a term attached to

it they're cing calling it greed

inflation um which is really kind of

crazy but it's you know that corporate

greed is really what's driving up the

the inflation yeah so we're interested

in knowing how much does a big ma meil

cost in your area if you can look it up

for us tell us where you're at how much

it costs it'd be interesting to see

different parts of the country what it

is because we also looked up this was

the most shocking thing we looked up a

hash brown like what we like to get

sometimes $6 for a hash brown who is

paying $6 for a hash brown at McDonald's

uh that was more than our Big Mac meal

in total so just crazy uh to do that but

this really underscores why the idea of

retiring retiring early and traveling is

so attractive for Americans uh we found

it to be way cheaper to travel the world

than to just live where we were living

in Atlanta in America and that is

something that a lot of people are just

now catching on to because we're always

taught to think well if you're going to

travel that's super expensive you'll

you'll run out of money you're actually

saving tons of money by traveling just

because everything is a quarter of the

price and most of these countries we're

in Tokyo we're in Japan it's one of the

more expensive countries when you get

outside of here when you go to Vietnam

these meals are $2 $3 uh not $4 so

you're saving even another 50% off of

that but uh that's making this

attractive so the ultimate retirement

formula uh which we've come up with for

maximizing your money is to earn or get

your money in US Dollars then spend it

in foreign currency in other countries

and then take the savings and invest

that back into US companies which are

obviously profiting uh very well which

is what we've done right we've so we own

McDonald's stock and that's what we're

doing with the savings on our Big Max is

we're buying the stock in McDonald's so

that when they profit we profit yeah and

it's so funny because um for a long time

we've been doing traveling full-time for

over 6 years now and since the very

beginning you know people have said

things like oh my gosh did you win the

lottery you're traveling full-time how

can you afford to do that and it's like

you know just kind of crazy when you

look at the actual numbers of traveling

compared to sitting in one place in

America and spending your making your

money there and spending your money

there you're going to spend way more

than if you do it someplace else and

even in some place that's perceived to

be as expensive like you know Tokyo

Japan um really turn turns out to be

such a great deal and the thing about

McDonald's and why we have owned it for

such a long time also is you know we've

seen this company in every single

country that we've ever been in and

we've been in over 60 countries five

continents and we have seen them and

every single time we see it it is full

and not foreigners it's full of locals

we had the hardest time trying to find

someplace to sit in McDonald's we had to

wait for someone to clear out a table

and then we went and grabbed it as soon

as someone got up somebody else went and

sat down it was that full and there were

probably in the entire McDonald's shop

maybe five to six foreigners including

us yeah so this strategy is

interestingly pretty obvious to locals

locals outside of the US because and not

so much to people in the US because they

don't really understand the pricing

differences and what inflation has done

to the US uh cuz we talk to people all

the time uh when we're traveling and

inevitably conversation always leads

back to how much do things cost in

America right exactly and we actually

had this conversation recently with uh

one of our tour guides and we were just

kind of you know chatting it up and uh I

forget what he was explaining something

to us we were like oh that's a really

good price and he was like whoa I think

that's expensive we're like well for

he's like yeah of course you guys you

know are coming in with us dollars so

your money is worth way more here he's

like you guys are smart to make your

money in the US and come and spend it

here you're going to be like you know

Rich Live Like king and queen here so

that was kind of wild to think you know

even somebody local in you know some

place like Vietnam is seeing that uh

also yeah so what can you do about this

because that is the problem in a

nutshell there are ways to get around

this the first action plan is to invest

what you can stock prices follow

corporate profits in the long run uh so

if profits keep going up which they will

because they're going to keep raising

those prices stock prices will keep

going up over time we're talking in a

period of years not on a daily uh chart

uh so if you just have extra money you

do want to be investing that uh if you

don't know anything about investing we

have links in the description on how we

invest what we use to invest and there's

videos on the channel about that but the

second thing and maybe more important

for people starting this is to focus on

becoming location independent that

doesn't mean you have to move but it

means you're starting to move some of

your assets outside of a location that

you're dependent on being in there so

for instance we lived in Atlanta if we

worked in Atlanta she worked a job in

Atlanta that she had to wake up every

day go to that office and get that

paycheck my job was always uh as a

photographer I could basically live

wherever I wanted to and do the same job

so we were already 50% of the way there

just because the career choice we made

but it's important to start to move as

much of that income as you can away from

having to be in one city because then

you can spend your money uh basically

anywhere and you can do this through you

know once you get your IRA uh your 401k

if you get a pension those are all

things you can take anywhere and that's

what's the beautiful thing about it so

you can start to do that if you're doing

consulting or anything like that you can

start to move that uh that those

finances away from one city and get them

where you can use them anywhere yeah I

think that is such a huge key is that

location Independence even before the

financial Independence that location

Independence is what's key because

that's what's going to help you to take

the money that you're making

and spending it someplace else yeah now

it won't mean you have to leave the us

but it will mean you have the option to

and I do want to stress this is not an

easy thing to do this is a difficult

thing that's probably going to take a

while to accomplish but it can be done

there's tons of people doing this and

they've all set out a plan uh and right

now retirement is all about options and

everyone out there everyone watching

this video has different options

available to them is not black black and

white anymore where you have to do this

and everyone does the same thing there's

tons of different paths there's no

longer one formula for you to get there

so look at everything available you know

we've demonstrated one of the reasons

that we even started this channel was to

demonstrate that YouTube is one of those

options for people it's not going to be

for everybody some people will get there

through investing some people through uh

their 401K some through a pension some

people don't have that option though and

so we've already demonstrated did last

month we made over $5,000 on this

YouTube channel and we started it less

than a year ago so that's an option for

people uh that don't have some of those

other things available to them exactly

and uh you know actually a lot of people

after we we do broadcast obviously our

income on this channel we've been

sharing it uh monthly along with our

budget and so many people you know come

back and ask us like okay well now I'm

interested like I'm intrigued uh because

they are looking for options and they

they did come to that understanding that

it's not black and white for everyone

and that it isn't Just One path there

are lots of different ways there and

more and more people keep you know

asking like hey is YouTube really like a

thing that you know people do we did put

a course together there is a link down

in the description if you want to look

at that but as Rob said there are so

many different ways um you know to do

this uh whether you have a pension

you're using that 401k or you're using

you know your um your investments in

other ways uh definitely lots of options

for people yeah so that's the flow you

want to get into you want to get into

investing spending uh in other

currencies and uh just having all your

money be location independent we've

heard from a lot of people that this is

just something that really intrigues

them because they know

they're not going to make that big

number that's out there and like we knew

we knew we weren't going to make it uh

if we just stayed in Atlanta and you

know whether you're looking at needing

to get a million two million three

million to just kind of retire the

oldfashioned way if you're sitting on

$5,000 that seems like a world away and

it seemed like that for us but the great

thing now is for those people there's

other things you can do and that has

just opened up a whole world to many

people so it's an exciting time to be

thinking about retirement even though

this inflation problem is happening

there's still things that can be done

yeah you got something you know that

definitely can work positively that's

the great thing is there's really no

right or wrong there's just options and

you pick what works best for you and the

path that you know is going to work in

in a good manner for you and to give you

what it is that you're looking for in

that retirement St stage yeah so we hope

this is encouraging to you no matter

what stage you're at and give you some

information on what it will be like if

you go travel and how possible that is

for you so uh please give us a like on

the video subscribe if you haven't and

we will see you on the next one