Posted on 02/11/2023 9:05:50 PM PST by SeekAndFind
Ugliness awaits most boomers nearing retirement, not only have they been lied to, but they also have to deal with rigged markets, corruption, and incompetent advisors. Boomers make up the second-largest generation in American history, it consists of over 72 million individuals. Those that haven't already retired are getting ready to. A big problem is most have little in the way of savings.
Adding to this problem is that the generations following the baby boomer generation are even worse off and America's economic picture is less than rosy. It does not help that Americans have been encouraged over the years to spend and incur debt rather than save. This encouragement comes from politicians hooked on the idea consumer spending creates a strong economy.
This results in many people retiring with little savings and dependent on a government already deep in debt to care for them in their older years. Those of us that have studied the numbers come to shaking our heads in horror, simply put, something has to give and most likely promises will be broken, When words like unsustainable and insolvent have been muttered they simply get brushed aside by daily life.
For years those in power have hidden and sheltered Americans from the harsh truth that the numbers simply do not work but history shows politicians would rather kick the can down the road than deal with reality. To the many people that have been looking forward to a comfortable and leisurely life in their older years. The fact that things could be worse is not something that will cause most retirees to leap with joy.
An example of what we face is evident in healthcare. this is a sector of the economy that Washington has pledged to fix and even claimed it has. The chart put out by Statista shows the U.S. has the most expensive healthcare system in the world.
You will find more infographics at Statista
This matters if you consider it as a tax on the American people and realize that healthcare is a major expense for people as they age. This hits medicare directly in the heart meaning as cost soar for the program something will have to be done. That something generally comes in the form of cutting benefits and charging recipients more.
While there is more to life than money, few people choose to live in poverty. Unfortunately, even most Americans that have saved over their lifetime and done the right thing are in peril.
Over the years, the Fed has inflated the money supply and in doing so it also inflated asset prices, including stocks, bonds, and real estate. Much of this is the result of ballooning debt. Make no mistake about it, the government has fed at the debt trough and it has made our future less promising. Yes, we are roughly 33 trillion in debt, not counting the unfunded liabilities of social security, medicare, and Medicaid.
While This Is An older Chart, Little Has Changed. Reality Is Not Pretty
With the current trajectory of economic policies and inflation running above the return savers can earn from safe investments things will only get worse for retirees and those close to retirement age. Considering the amount of debt already amassed, the government is going to have a difficult time putting together generous new aid packages to come to the aid of those dependent upon its programs. This will result in conflict as both the young and the old are forced to fight over the few scraps it can provide.
All this has created a situation where if the money supply now contracts a huge number of defaults will occur and both businesses and investors will incur big losses. This threat to 401Ks and pension plans is real and would make many boomers collateral damage in any effort they make to correct the mess they have created. Those in or nearing retirement should make an extra effort to reduce risk and keep their savings safe.
Not sure of how that is relevant that to the Trinity Study. The folks making $45K who left for Chapala understood the study.
What does free mean, btw, when money is a substance created from thin air by the Federal Reserve? How can something that comes from nothing be free or rather, not free?
The biggest change that can be made would be to reduce the Medical Industrial Complex to something nearer 10% of the economy.
> Our entire problem is Democrats.
No, there’s lot’s of rent seeking Republicans also. The problem is the UniParty.
Same here. I got into financial planning long before I retired.
Credit and debt is not money.
>> Not sure of how that is relevant that to the Trinity Study.
What the hell gibberish is the “Trinity Study”, Owen? That’s not even mentioned in the OP.
My husband and I wwre screwed. Medical bills took us down and kept us down for a long time. We have about $250K in retirement, a house worth about $500K, and less than $4 in fresh medical debt. I’m currently bringing in an average of $10K after taxes per month and we are socking it away, but it still won’t be enough.
The good news is I’m insured to the hilt and thanks to COVID-19 destroying my lungs, my life expectancy is down to just a few years. I’ll work till I die and leave my husband with a few hundred thousand in insurance to carry him into retirement.
Bittersweet, actually. I was really looking forward to spending more time with him. Now all I care about is making sure he lives well after I am gone.
The Trinity Study was the first presentation of the 4% rule for retirement portfolio management. Which is what the article is about.
The classic study used stock and bond returns going back to 1880 and did a portfolio split of 50/50. Then for 30 years of those historical returns, it was found that withdrawing 4% in year 1 of the 30, and inflation increase it each year after year 1, 95% of 30 year segments would see the portfolio survive.
Of course, that meant that if living expenses exceeded 4%, you would fail and be out of money before out of life. So to get expenses down inside 4%, Chapala.
Very hard to see anything that can replace the USD in the next 10 years.
Crypto? Maybe a small possibility.
China? Sorry, that is not serious.
No one is clamoring for Chairman Xi and the Chinese Communist Party to regulate international finance.
Also, per capita GDP in the USA is $75,000.
In China, per capita GDP is $21,000, and that is AFTER China stole, copied, or imported 100% of USA technology.
Hitting a lot of nails on the head, here.
“I think a lot of these stats don’t take into account the net worth people have in their homes.”
They don’t take into account that 37% of the homes in America are owned free and clear of debt. They don’t take into account that liberal govt policies have caused the upper and lower classes to grow, while shrinking the middle class.
I get the impression most people on this site are white collar who make quite a bit of money.
Death panels.
90% of expected lifetime US HC costs are last nine months of living.
The reality is 5% of every of US HC bill is R&D. The US pays for 45% of all new medical drugs, procedures and equipment annually. The nations listed above pay next to nothing. All of Asia is second on the list. Often touted HC systems like Frnce, Germany, UK etc.... come to next to nothing. Bayer’s main revenue is still derived from aspirin.
We are subsidizing the universe and for it we pay the most for everything.
Consider this-a kid built an MRI machine in a garage with $10,000 in parts. These cost $2million plus installed.
This spiral never ends. The subsidies need to stop but never will while the calls to mirror the lagging edge crap will never cease either.
Home value should not be counted because we all have to live somewhere.
The chart put out by Statista shows the U.S. has the most expensive healthcare system in the world.
The effect of the ACA on the middle class was to send most of their health care money to the insurance companies and make it unaffordable to do more than very minimal or very expensive treatment. The money spent by the middle class on actual health-care dropped significantly while their spending rose.
You will find more infographics at Statista
Avg working Euro lives in 660sq ft 1br, 1ba and owns 1/2 car, pays $20 pizza and a coke and has decimated military spending for the sake of social welfare but does get free lagging edge HC.
Avg poverty US lives in 990 sq ft, 2 br, 1 1/2 ba, owns 1 1/2 cars and is obese.
There is zero comparison here on real earth.
(it is mind numbing how the global perception to the contrary even exists)
They invented the Euro to take down the USD and WOW here we are decades later and the USD share of global commerce has barely dropped.
Want free HC????? Downsize and go buy it instead of subjecting the whole nation to VA care for all. Which is about where we are now. Avg sole GP needs to see 20 patients a day to break even. The wait time for specialists is approaching UK like. ACA saw Johns Hopkins best and brightest suddenly take lab jobs instead of seeing patients.
it is not quite single payer but Uncle Sam dictates pricing and has made it unbelievably unattractive to provide anything but McHealthcare.
I can guarantee you that if you did nothing more than institute a "pay yourself first" program where 15% of every paycheck goes into savings and investing you would be living on your investments at retirement and SS would be icing on the cake.
And, you will never miss that 15%. Within a few months you would be used to a standard of living that met your expectations completely.
The place where the authors start to go wrong is when they talk about "safe" investments. A "safe" investment is the most dangerous thing you can do with your money. Governments live on debt, and inflation is the debtor's friend. Never bet against inflation.
Index funds and carefully chosen real estate will allow anyone to get rich slowly. Get rich quick schemes will separate you from your savings.
The 4% number comes from the 100 year collection of 30 years segments.
You start at 1880 and get stock returns and bond returns for that year. Your 50/50 portfolio grows by that year’s historical amount. Withdraw 4%. Then get the 1881 numbers and repeat, but that original 4% number of dollars increases by inflation before it is extracted from the total.
Do this for 30 yrs to 1910.
Then start over beginning 1881 for 30 yrs. Then 1882 as start of 30.
95% of those 30 year durations do not have the total go below 0 if the starting withdraw is 4%. They fail maybe 50% of 30 year segments at 5% withdraw.
Go to firecalc.com and study it carefully to help understand what I just typed.
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