By SA For FAs :
The good news according to BlackRock is that current retirees are doing just fine. In an article called " The Unexpected Resiliency of Retirement Assets ," most of a cohort of retirees under study still have 80% of their retirement savings intact two decades into their retirement.
I assume everybody will appreciate, however, that those who have been in retirement for 20 years now, i.e., today's 85-year-olds, are in a different class from those at or near retirement today. This former group was born in the Great Depression and were lifelong savers. What's more, as the BlackRock article points out, 42% of those studied were beneficiaries of a pension plan, so their employer put money away for them and they are using that income, plus Social Security, and hence leaving their retirement assets mostly untouched. I don't know what their retirement travel was like, but my sense is that that generation has been less venturesome than their boomer children.
In other words, we cannot infer from the success, such as it is, of current long-term retirees that newer retirees will do just as well. Indeed, BlackRock offers numerous reasons why we should not so assume, including the near total absence of DB plans among the new retirees, expected cuts in Social Security benefits, poorer expected future investment returns, lower relative savings, and longer lifespans.
The unfortunate fact that U.S. life expectancy is now starting to decline , for the second year in a row, apparently as a result of opioid drug overdoses, according to the Centers for Disease Control, does not change the basic picture.
Looking at the above list, we can't fall back on a private pension we don't have, nor shore up Social Security ourselves, nor assume mean reversion in returns will not occur. Savings alone will save us.
Please share your thoughts on this in our comments section. Meanwhile, below please find links to other advisor-related content on today's Seeking Alpha.
- Charlie Bilello presents 2017 in charts .
- John M. Mason: China is ahead of the U.S. in creating a cashless society .
- Jeff Miller's Stock Exchange panel discuss how long tax cuts will fuel stocks higher.
- Jeff Miller preps you for the spin you'll hear on Friday's jobs report .
- For more content geared to FAs, visit the Financial Advisor Center .
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
