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Guest Post: Retirees No Better Off Than In 1999
Submitted by Lance Roberts of Street Talk Live,
ICI recently released their retirement plan data through Q3 of 2012. The chart of the day shows the real (inflation adjusted) total retirement market assets per working age citizen in the U.S. This includes IRA's, defined contribution plans, private defined benefit plans, state and local government pension plans, federal pension plans, and annuities.
The good news is that the liquidity induced rally over the last four years has finally, along with plan matches and contributions, recovered much of the lost value that occurred during the financial crisis in 2008. The bad news is, as shown below, that on average each working age person has roughly only $79,651 saved up for retirement and is no better off today than they were in 1999.
There are two major problems that arise from this. The first is that for individuals trying to save for their retirement they have lost 14 years of irreplaceable time to do so. In 1999 an individual with 15 years to retirement had plenty of time to get there. That is not the case today as they stare retirement in the face and come to the realization that working through their golden years will have to be seriously considered.
Secondly, consumption makes up roughly 70% of the overall economy. With incomes stagnant, and personal savings rates below 3%, the spread between the cost of living and incomes continues to widen. In turn, consumption is crimped keeping economic growth weak which exacerbates job creation, income increases and overall prosperity. With the average income at roughly $55,000 per year - retirees have little margin of error with only 18 months of incomes saved up in retirement plans.
While pundits pound the table exclaiming the return of the next great bull market - the economic underpinnings are sorely lacking. For retirees - the biggest danger is another recessionary draw down that once again puts them further back from their retirement goals.
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Now if real inflation were reported.....
The good news is that the liquidity induced rally over the last four years has finally, along with plan matches and contributions, recovered much of the lost value that occurred during the financial crisis in 2008
Clearly Ben's goal. "Wealth effect", by hook or by crook.
They are really going for it. They are shooting for the greatest mind fuck of all time. Things ARE better. LOOK at our data. STOP seeing reality. TRUST us. It's better. BELIEVE us. It's all good.
It's gooing to go down as the dumbest fucking idea in recorded history.
Hang on a minute --
Let me get my handy dandy TI Business Calculator out --
OK,
PV = 23,000
i = 0.0000001
FV = 100,000
Solve for years ...
The calc is still busy. I'll get back to you in a few minutes.
TRIPLE TOP BREAKDOWN, BITCHEZ
It looks like the sheep are coming due for another shearing.
Here let me fire up the 12C... damn, batteries been dead for years. By hand it looks like
14,696,760.42684643 years
if compounded annually.
JP Morgan & The Squid are very long cat & dog food.
More Americans delaying retirement until age 80 - Oct. 23, 2012
By Blake Ellis @CNNMoney October 23, 2012
As a result, there's a huge disparity between what people need and what they have saved. While respondents said they will need a median of $300,000 in total savings to support themselves in retirement, **the average amount saved is only $25,000.
America's Retirement System Is Failing Us: Economist
**The majority of Americans (75 percent) nearing retirement age had less than $30,000 in their retirement accounts in 2010. For the poorest Americans in the 50-to-64-age bracket, the average amount saved for retirement was $16,034.
Why You Might Not Want to Be an “Average” American | CIF
December 6, 2012 5:24 pm
Even scarier is the report from LIMRA that indicates ** half of Americans aren’t saving for retirement. At all. That means that the average American isn’t even saving for retirement. Those in the younger age bracket of 18 to 34 aren’t really saving, either: 56% are not saving at all. Only about 1/3 of Americans starts putting money aside for retirement in their 20s, according to a report from Bankrate.
But Zero Hedge reported on all this a few months ago, in bullet-item form:
Retirement: The Scary Actual Numbers Behind The Soothing Lies ... - Zero Hedge
And when they finally get around to looting Social Security and Medicare, as everyone seems to accept, these people will be truly fucked.
They will be catfood, Go long soylent green.
-- the Squid*.
*we do God's work.
Off topic but did anyone see this? Put a smile on my face...
http://www.talkingbiznews.com/1/anti-cnbc-ad-runs-on-cnbc/
http://www.youtube.com/watch?v=JDyYruFwlo4
How brilliant is the look on that woman's face after she sees that, coming back from commercial!
The good news for CNBC is - with most of their viewers gone, nobody saw them get punk'd.
Keep turning those paper promises in for physical assets folks, this isn't going to end anytime soon. The earth is Japan times a few quadrillion.
Buying stocks is not "saving" It is participating in a pyramid scheme. Nothing more, nothing less
So, you're saying the study that was published today which factually and with much credible data illustrates that those who bought into the "stocks for retirement planning" Ponzi scheme, who not only are now back at 1999 levels of "wealth" (meaning that $1 invested in 1999 would be $1 + inflation [arguably] - fees - commissions - taxes [churn tax on mutual funds is a bitch] - other expenses) are not only not "better off," but "worse off" for buying the Wall Street Brokerage Bullshit?
Indeed.
I'd go further, and have, and I'd argue that this study, if anything, DRAMATICALLY OVERSTATES the value of this basket of "stock investments" over the "lost 14 year holding period" referenced, since the government massively understates inflation, and even more critically, the deep rape that is survivorship bias (see also "backfilling" and "self-selection"), which is critical for Wall Street Anal-Cysts to cover up as much as possible, since it's one of the dirtiest scams the sell-siders deploy.
There will be a line as far as the eye can see of baby boomers fighting for the coveted Walmart smock.
I'm going for the "stocker" job at Wal-Mart [so, with nothin to stock, I can just sit in the back room & smoke joints all day until I punch out]
I did that when I was 18 and there was actually stufff to stock.
Hopefully a job like that today would put you in the front of the line for ammo...
What will these retirees do with 0.01% return on their hard earned savings? How about their company pensions struggling to get 3% when all their predictions were based on 8% (at least)?
It's going to be long and painful I'm afraid.
"retirement" LOLOLOLOLOLOLOLOLOL
You work your whole life and only save up 80k? That's it? Do these people just think money is going to appear out of thin air? Oh right, it is. It's going to come from MY account. How could I forget.
It's like those reports where it's estiamted a child, from birth to 18, will cost $250,000.
That's LOWBALLING....especially if you want to raise a kid the right way, with basic amentities, and this isn't even counting college costs down the road 18 years from now (could be in the millions). I'd say you'd probably need at least 500K to raise a kid...probably even more.
Wall St is dilusional. So is the government. Only the people who live and work on a day-to-day basis actually know what the fuck is going on.
Retirement? That in itself is an entitlement attitude and maybe needs some historical perspective.
Me thinks retirement is a modern day contrived theory that exists only for the machinations of Wall Street, aka 401k's, IRA's, pensions and their related fees.
It's all about balance - living today while you still have your health knowing that a comfortable and enjoyable retirement is somewhat remote given the fragility of life.
+100
A good read on this topic is the recently published, "Pound Foolish" by Helaine "I have no friends on Wall Street" Olen.
Exposing the Dark Side of the Personal Finance industry. As in the Dark Crystal and the Muppets who ride unwillingly on that train wreck that American finance has become.
Modern retirement is likely a consequence of the demise of the extended family.
thank god for social security when we retire!
<sarc>
this is per capita: so surpressing the numbers are higher unemployment and the fact that anyone graduating college the past 10 years probably can't afford to save for retirement. less upward mobility in companies as wel as the boomers stay longer. Not that the point of the chart is any less correct.
No worries. Uncle Ben will provide. And Uncle Sam. And Uncle Cracker.
Retirement. Doesn't the government pay for that?
It does for mine.
Everyone should have become firemen and cops. And then put in for lifetime disability when hitting to top salary level in 5 years or so.
they're the only fuckers around here that have any disposable income
My grandfather (retired deputy-chief) made a middle-class retirement on his Federal ~80% match from the mid-70's through the early 90's... now thanks to the recent police-state bloat he collects ~$150k/year retired. This doesn't count his Navy retirement or SS. He gives most of it away to charity/family, but even he admits that things are insane. No lifetime disability required.
Imagine what's going to happen to the stock market when all those boomers go to sell the portion of their retirement they have invested in it so they can eat.
Imagine when Goldman and JPM realize it before they try to do it.
Wake the fuck up. The average boomer does not have shit for investments in the "market". Goldman and JPM are the fucking Fed, they could care less.
God, morons everywhere.
Yeah, I'm a boomer that doesn't have investments in the market! I liquidated our IRA and bought precious with it.
I know a few who cashed out in 2007 (they learned from the 2001 drop) and bought land/apartments/PMs. They very comfortable now managing their revenue-generating assets (the land was arable so they leased it to farmers).
Welcome to the "rentier" society, good luck.
Ditto here, GW.
Got my IRA of the market 2003, sold my 3 paid for rentals pre-2006, and put it all in physical, which has more than doubled, and we don't even consider using. Keep 100k or so in fiat around in couple banks and cookie jar.
Wife's state pension, my SS and a monthly payment from some land we sold and hold the note on provides us with as more income as we pre-retirement.
Home/farm paid for, few monthly expenses, and we're enjoying the whiz out of ourselves on our little farm.
Life is damn good out at our place.
Sorry, didn't see your post but had the same Idea and posted after you. I know a lot of boomers depending on the market to go to the moon. And that's after they took a beating and got out in the crash. They're gonna be in for another surprise when they want to cash in.
What? All the commercials on TV show retirees fishing in Alaska, shopping in Paris, visiting the Pyramids, or on a safari in Africa. A more realistic depiction would be a commercial showing ma and pa crawling into a dumpster for tonight's supper....
Once again, the elitist keynesians and liberals dont care about the middle and lower classes. They sell them the populist rhetoric and phony concern about their plight, to garner their vote.
And then when their selfish evil agenda breaks the market, they blame the greedy evil capitalists for the destruction of the savings that were in fact caused by the socialists, and the sheep believe them. The socialist elites are devouring their lemming constituants on a routine basis. But dont so much blame the predator. I blame the prey for being so gullible. The sheep/most people, are just a bunch of Mcfly's. There really is nobody home.
'Hello! (knock,knock,knock) Anybody home? Don't be so gullible Mcfly!'
I don't believe these George and Georgette Mcfly's will ever hit back. They will washing and waxing Biff's beamer for many years into their retirement.
The left is very good at projecting. They blame the other side for the events which they themselves are guilty of causing.
I dont feel sorry for the sheep. My parents are a prime example of most Americans. They cant retire at 67. They still need to work because the principle they had in 99 is much lower when you adjust for inflation. But, they still dont get it. I was an average student all my life, but it is true as the ancient Chinese, Greek and biblical philosophers saw it. "Education is not intelligence", 'A persons intelligence is not measured on what one knows, but on how one thinks.'
There are two forms of intelligence. Academic and Logic/Reason. My parents are exceptional academics, but they have infantile logic. I have tried to help them with their finances for years and they just dont get it. I believe that the early philosophers are correct. Logic/wisdom is more important than academics. You need the academics, but when your schooling is done it is up to you to exercise and strengthen your intellect.
As Twain said,
"I never allowed my schooling to get in the way of my education."
Retirment Plan: Invest in your family, both younger and older. They took care of you when you were young and may take care of you when you're older. Money cannot buy the important things.
$70,000 saved up? Buy stocks now! They're cheap, cheap, cheap!!!
The stacks of gold and silver I've had since 1999 are MUCH better looking today!
And doods, if gold crashes to $1200 or $800, don't freak. Don't sell. Just keep it tucked away (and buy more.) I bought at $350 and $400 and got a little uncomforatable when it went to $275, but I was saving it for today, and tomorrow, so I just kept it stashed away. Wish I bought more when it was $275, damn me!
Same here. Wish I had bought a lot more.
I'm saving it for tomorrow, when paper might not buy my next meal
What happens to the stock market when all the boomers have to sell their equities to live on? No one talks about that. TPTB are more than happy to sell them some of this booming cheap market but when they all need to take it out, opps, sorry pal, too many sellers and not enough buyers!
Then TPTB will buy the crash and start all over again with the next generation.
That 70 percent consumption figure is a crock. If you eliminate, starve to death 85% of the poorest people it doesn't change because poor people don't consume. They exist, and mostly on Government subsidies which they get no matter what anyhow. So you refer to 45-50 million people when using that stat. Can't use it against any other figure that includes a total.
Given the retirement savings situation, and the cratered value of houses, anyone who thinks social security will be cut is insane. It is all most people will have in retirement. It isn't happening barring a complete collapse.
Anyone who believes that the financially unsustainable Ponzi scheme known as Social Security (sic) will be able to avoid significant cutbacks in the years ahead is insane.
Financial reality does not give a hoot whether or not "it is all most people will have in retirement". In the years ahead, most people will have significantly less, period.
Is that why the government is buying armored personnel carriers for police departments, surveilance drones, and millions of rounds of ammunition. Do they know what is coming?
Would a shotgun bring down a drone?
If the politicians want to survive, they'll ditch medicaid/medicare to save the social security system. Most people will put up with broken healthcare promises as long as they can afford their Fancy Feast and section-8 apartment.
Unsustainable? If more funding is needed, you'll pony it up. You'll do with less.
A large percentage of Americans are receiving government largesse whether thru welfare or government employment or government spending. And it's increasing. The idea that a modest retirement program that has been directly funded for generations is going away is absurd. All these other things will have to be cut first. To not face that reality is politically naive.