Federal Reserve delivers warning to all Americans with a savings account: ‘There will be a reckoning.’ Are you ready?

Photo by Andrew Harnik / Getty Images Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below. Your savings account is supposed to be the safe place for your money. But a warning from the Federal Reserve raises an unsettling question: What if the danger never shows up on your bank statement? On Sept. 16, Fed Chair Kevin Warsh delivered (1) a blunt assessment: “The plain fact is that inflation is too high, and has been for too long.” Top Picks His words came as the Fed raised its benchmark interest rate from 3.75% to 4.00% — the first hike in three years. The vote was unanimous. Higher rates could offer better returns for savers, but banks still set their own deposit rates, meaning that if your account earns less than prices are rising, the balance can grow while its buying power shrinks. Warsh isn’t the only Fed official sounding the alarm. Asked about U.S. debt surpassing $40 trillion, Richmond Fed President Tom Barkin warned (2), “There will be a reckoning on this as it goes forward. No one can tell you when.” He added that investors would eventually stop buying the government’s debt. Barkin was speaking about U.S. government borrowing. But Ray Dalio, founder of the world’s largest hedge fund, Bridgewater Associates, has described how this debt crisis could reach American savers. “There won’t be a default — the central bank will come in and we’ll print the money and buy it,” he told CNBC (3) last year. “And that’s where there’s the depreciation of money.” In other words, the government may never technically run out of dollars — but those dollars can lose value fast. The long-term loss of buying power has already been stark. According to the Inflation Calculator (4) put out by the Federal Reserve Bank of Minneapolis, $100 in 2026 has the same purchasing power as just $11.61 did in 1970. That’s right. $100 became less than $12 — despite decades of efforts by the Fed to keep rising prices in check. For people keeping much of their nest egg in savings accounts, the danger is clear: If the interest they earn fails to keep pace, inflation can steadily erode the value of their money. That’s why Warsh’s warning matters to savers. The good news? Throughout history, savvy investors have found ways to shield their wealth from inflation’s bite, whether the central bank succeeded in containing it or not. Here’s a look at three time-tested strategies. Own something the Fed can’t print When it comes to preserving wealth and fighting inflation, few assets have stood the test of time like gold. Its appeal is simple: Unlike fiat currencies, the yellow metal can’t be printed at will by central banks. This inherently limited supply can arguably help it store its value. Gold is also considered the ultimate safe haven. It’s not tied to any one country, currency or economy, and in times of economic turmoil or geopolitical uncertainty, investors often flock to it — driving prices higher. Dalio has repeatedly highlighted gold’s role in a resilient portfolio. “People don’t have, typically, an adequate amount of gold in their portfolio,” he said in the same CNBC interview. “When bad times come, gold is a very effective diversifier.” Other prominent voices see further potential. JPMorgan CEO Jamie Dimon has said that in this environment, gold can “easily” rise to $10,000 an ounce. In fact, as inflation continued to chip away at the purchasing power of the dollar, gold has climbed around 150% (5) over the past five years. You can combine the recession-resistant properties of the precious metal with the tax advantages of an IRA by opening a gold IRA with the help of Newport Gold. Even better, you can get free setup, shipping and storage for up to three years with Newport Gold’s Liberty bundle to minimize some of those upfront costs. Plus, you can roll over an existing IRA or 401(k) into a precious metals IRA completely tax- and penalty-free. Newport Gold also offers a streamlined buyback program with no fees, ensuring you can liquidate your holdings whenever needed, along with best-price assurance. If you want to read more about their services, you can download their gold guide for free and get up to $20,000 in complimentary silver upon making a qualifying purchase. Just keep in mind that gold is typically best used as one part of an otherwise well-diversified portfolio. Read More: Vanguard reveals what’s coming for U.S. stocks — and it could be bad news for this group of investors A time-tested income play Gold isn’t the only asset investors turn to during inflationary times. Real estate has also proven to be a powerful hedge. That’s because when inflation rises, property values often increase as well, reflecting the higher costs of materials, labor and land. At the same time, rental income tends to go up, providing landlords with a revenue stream that adjusts for inflation. Over the past 10 years, the S&P Cotality Case-Shiller U.S. National Home Price NSA Index (6) has jumped by 87%, reflecting strong demand and limited housing supply. Of course, high home prices can make buying a home more challenging, especially with mortgage rates still elevated. And being a landlord isn’t exactly hands-off work — managing tenants, maintenance and repairs can quickly eat into your time (and returns). The good news? You don’t need to buy a property outright — or deal with leaky faucets — to invest in real estate today. Platforms like mogul provide an easier way to get exposure to this income-generating asset class. This real estate investment platform offers fractional ownership in blue-chip rental properties, giving its investors the monthly rental income, real-time appreciation and tax benefits of owning a property — without the need for a hefty down payment or late-night tenant calls. Founded by former Goldman Sachs real estate investors, the team handpicks the top 1% of single-family rental homes nationwide for you, letting you gain access to institutional-quality offerings for a fraction of the usual cost. Each property undergoes a rigorous vetting process, requiring a minimum 12% return even in downside scenarios. Across the board, the platform features an average annual IRR of 18.8%. Their cash-on-cash yields, meanwhile, average between 10% and 12% annually. Offerings often sell out in under three hours, with investments typically ranging between $15,000 and $40,000 per property. Sign up for an account and browse available properties here to start investing today. Diversify your real estate portfolio Another option is to leverage multifamily real estate investing. The advantage of investing in multifamily real estate — which includes anything from duplexes and triplexes to apartment buildings — is that it can generate multiple income streams from one asset, offering a potentially more resilient cash flow. In a report (7) prepared by JPMorgan, Al Brooks — the firm’s vice chair of Commercial Banking — said, “I think multifamily housing is absolutely where you want to be as an investor.” Accredited investors can now tap into this opportunity through platforms such as Lightstone DIRECT, which gives accredited investors access to single-asset multifamily and industrial deals. Lightstone DIRECT’s direct-to-investor model ensures a high degree of alignment between individual investors and a vertically-integrated, institutional owner-operator — a sophisticated and streamlined option for individual investors looking to diversify into private-market real estate. With Lightstone DIRECT, accredited individuals can access the same multifamily and industrial assets Lightstone pursues with its own capital, with minimum investments starting at $100,000. Warren Buffett’s inflation playbook Investing legend Warren Buffett knows a thing or two about navigating inflation, having managed Berkshire Hathaway’s stock portfolio through the double-digit inflation of the 1970s. It would be fair to say he has developed plenty of insight into the types of businesses that can hold up when consumer prices surge. In his 1982 letter to shareholders (8), Buffett pointed to two characteristics that can make a business especially resilient in an inflationary environment: the ability to increase prices easily and the ability to handle more business without requiring large amounts of new capital. In other words, companies with strong pricing power and relatively modest capital needs can be better positioned to protect their profitability as costs rise. That helps explain why the right stocks can serve as a long-term hedge against inflation. But Buffett has also made clear that you don’t need to be an expert in picking stocks to participate in the market’s growth. “In my view, for most people, the best thing to do is own the S&P 500 index fund,” Buffett has famously said (9). This approach gives investors exposure to 500 of America’s largest companies across a wide range of industries, providing instant diversification without the need for constant monitoring or active trading. The beauty of this approach is its accessibility — anyone, regardless of wealth, can take advantage of it. Even small amounts can grow over time with tools like Acorns, a popular app that automatically invests your spare change. Signing up for Acorns takes just minutes: All you have to do is link your cards, and Acorns will round up each purchase to the nearest dollar, investing the difference — your spare change — into a diversified portfolio. With Acorns, you can invest in an S&P 500 ETF with as little as $5 — and, if you sign up today with a recurring investment, Acorns will add a $20 bonus to help you begin your investment journey. What To Read Next Get Warren Buffett’s best investing lessons, free. Join 250,000 readers getting Moneywise’s sharpest money reporting every week. Subscribe and we’ll send you our guide to the ideas that built Buffett’s fortune as a welcome gift. Article Sources We rely only on vetted sources and credible third-party reporting. For details, see our ethics and guidelines. CNBC (1), (9); Bloomberg (2); YouTube (3); Federal Reserve Bank of Minneapolis (4); Goldprice (5); S&P Global (6); JPMorgan Chase (7); Berkshire Hathaway (8) This article provides information only and should not be construed as advice. It is provided without warranty of any kind.