Plans! So many plans are made for the “Golden Years” when the kids braces are paid, first cars have been bought, tuitions have been paid, and the Age of Retirement has been attained. The “Nest Egg” of Retirement Funds, Savings, and Social Security should last a lifetime. A Lifetime can be a long time!
The GAO (Government Accounting Office) keeps track of the Retirement Statistics and reports startling findings:
A) 52% of Americans 55 and over have NO retirement Savings.
B) 48% that have Retirement Savings have a median amount of $109,000. This annuitizes to $405 a month.
C) 50% of Baby Boomers will be out of money within 10-20 years
D) The average Baby Boomer’s net worth is $34,760 with Income of $18,932.
These terrible facts have resulted in Seniors returning to the workforce in vast numbers distorting the employment statistics. Notice who is ringing up your groceries, stocking the shelves at the hardware store, or preparing your coffee. These retirees are not in the workforce for entertainment or to pass the time, they need to pay the electric bill, buy tires for the car, and pay for their prescriptions. In 2013, 9.6 million jobs had been recovered, 7.2 million went to those over 55. The trend has accelerated. Here is a Chart of age labor participation:
Retirees are Broke! The highest participation rate for 2017 is the 75 years old and up (10 years after retirement?) with a participation rate of 62%! Failure to plan is planning to fail. Those that planned have higher risks they may know.
There are so many Red Flags and Black Swans in the Global Economy; there should be none. Recessions are the final segment of the Business Cycle and they come with regularity. It has been 9 years since 2008; the cycle may be completing. Also, the average Baby Boomer’s wealth is parked in the Stock Market; typically 70% with 20% in Bonds. The regular, average Recession causes losses in Equities of 40%. At 65, you do not have time to wait for a rebound! A Recession is coming, no one knows when. What will happen to your Dreams, your Plans, your Security if you lost 40% or more? Still feel Wealthy? Still feel Secure?
It is not necessary to consistently place your Portfolio at Risk. In times of uncertainty, consider taking profits and going to CASH with a significant portion. Speak to your Financial Adviser about an Exit Strategy if the Market turns against you. Review your debt load and monthly obligations; reduce your costs. Consider other asset classes that do not correlate with Wall Street like very conservative rental properties managed by Professionals which will provide consistent, conservative Income for a portion of your portfolio. Remember to have fun, you earned it.