The coming retirement crisis

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wolf
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Re: Resources and recommend watching

Post by wolf » Tue Oct 30, 2018 2:23 pm

The coming retirement crisis with implications to the stock market and the FED balance sheet

jacob
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Re: Resources and recommend watching

Post by jacob » Tue Oct 30, 2018 5:11 pm

@wolf - +10 Everybody should watch that one. Probably requires its own thread to discuss.

Seppia
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Re: Resources and recommend watching

Post by Seppia » Tue Oct 30, 2018 5:21 pm

Good one.
I also saw a great pbs documentary on public pensions in Kentucky that was pretty cool (even if deeply depressing), take a look at that one too.

Edit: here's the link https://www.pbs.org/video/the-pension-gamble-hzokyh/


Today's pension / retirement plans across the western world should be subtitled "people against math"

We have the same issue here in Italy where our own genius populist government just decided to LOWER retirement age
Last edited by Seppia on Tue Oct 30, 2018 5:32 pm, edited 1 time in total.

jacob
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Re: The coming retirement crisis

Post by jacob » Tue Oct 30, 2018 5:29 pm

I took the liberty of moving this to its own thread.

10cents
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Re: The coming retirement crisis

Post by 10cents » Tue Oct 30, 2018 5:52 pm

Retirement age in current economy is hard topic. There are few capabilities of work for 60+ people in out fast changing world and computer oriented jobs. IT companies are very reluctant to hire 35+ staff. Where 60+ people can work and are welcomed?

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Re: The coming retirement crisis

Post by jacob » Tue Oct 30, 2018 6:01 pm

Nope, what they [boomers with few savings] have to do is sell out of their remaining equity and otherwise lower consumption thereby driving earnings lower. Therein lies the problem.

Alternatively, the Fed can try to buy/prop up the assets. Such programs already exist. For example, foreign central banks have bought US equities but the US central bank has only bought US debt. This open market action doesn't really do anything by shift around what the banks hold on their balance sheets. By making banks hold more cash, they either delever their own balance sheets (thus again reducing earnings) or lend it out to corporations to buy back their own stocks either directly or via higher dividends --- thereby levering up the corporations instead. Hot potato! This is what has happened the past several years.

classical_Liberal
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Re: The coming retirement crisis

Post by classical_Liberal » Tue Oct 30, 2018 6:23 pm

meh, interesting but... Not too much new information here for a forum participant actively monitoring macro trends. I think the overlays with inverse Fed balance sheet vs labor market participation is questionable due to the timing (ie massive QE/recession) of the data being presented.

Demographics is one of many contributors to the overvalued equity market. Personally I think lack of upside on more stable investments due to CB interference was/is a far greater contributor. I mean, who would invest in longer term US treasuries when yield was less than the S&P dividend yield with no upside?

Also, I think many fail to realize just how big the millennial generation is in the US.
Image

Whether or not millennial's will have lower consumption to their Boomer peers at peak earning ages due to student loan debt is a big demographic question mark. I also question whether the ever-spendy Boomers will lower consumption as much a previous generations did at retirement. Their consumption addiction very well may just have them working to earn for that consumption. This. of course, would have other ramifications on the labor pool.

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TopHatFox
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Re: The coming retirement crisis

Post by TopHatFox » Tue Oct 30, 2018 9:01 pm

Soooo....more people living more ERE style, holding more cash, and living with their parents? Maybe that’ll be a good thing for community.

Sucks that equity/bond modern portfolio theory may not work over the coming decades, although his idea of cryptocurrency and startup ventures as long term wealth builders seem like shitty lifestyles to me.

So what is there to do besides just buying more equities, bonds, and real estate as their value goes down, and then waiting for the (hopefully eventual) upswing? That and watching baby boomers suffer or work until they die...

All of this just reinforces that we should be aiming to live as close to our desired lifestyle as we want while working, because the next few decades are looking tumultuous at best.

SavingWithBabies
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Re: The coming retirement crisis

Post by SavingWithBabies » Tue Oct 30, 2018 9:16 pm

It's more the parents moving in and living with the younger people (as in, the younger people are paying the rent/mortgage). As far as I can tell, both my parents and my wife's parents are going to be okay. But I'm preparing for them potentially having to move in with us just in case. I would actually prefer them moving in sooner than later so at least we'd have some good years and they would have some buffer. But I don't think our parents are seeing this yet.

Are you ready for your parents to move in with you?

(only 1/3 way through so not sure if that comes up -- I'm also waiting for the foreshadowing that already happened that retired people spend money differently so such a large number of people retiring will lower demand in some segments creating disruption and opportunity)
Last edited by SavingWithBabies on Tue Oct 30, 2018 9:26 pm, edited 1 time in total.

ffj
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Re: The coming retirement crisis

Post by ffj » Tue Oct 30, 2018 9:19 pm

He makes a lot of assumptions and no, fast food isn't more cheap than going to the grocery store. I don't know if he is correct or not but he does make a good point how everything is tied to equities which is something I have noted for a while now. How diversified are you really if all of your investments are just different varieties of the same fruit?

I keep it simple:

-carry no debt
-invest in tangibles that allow for potential income or barter such as tools or marketable skills
- develop a wide ranging skill-set that decreases dependency. You don't need to eat out if you can cook or hire a roofer to replace a few shingles if you can swing a hammer for example.
- decrease spending, it's almost always a spending problem
- develop a strong social circle
-maintain your health for the issues under your control

The 2008 recession didn't affect my lifestyle at all other than watching the numbers on my investment statements take a huge hit. I can't see worrying about any of this until it's time to draw down in my final years or if I become incapacitated beforehand. According to this guy the next time will much worse due to the number of retirees and the inability of the millennials to absorb their equities. What about those of us right in the middle with strong numbers?

SavingWithBabies
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Re: The coming retirement crisis

Post by SavingWithBabies » Tue Oct 30, 2018 10:29 pm

I wonder about a couple of things:

- I agree there is likely more than just fast food that is going to come. That's one of the opportunities. It's probably small time opportunity with a resurgence of affordable mom and pop restaurants. Although I think he was hinting where you could potentially safely park some of your money during the shift. It will take time for the affordable restaurants to emerge so (relatively short term but multiple year?) upside in fast food. Growing up in the midwest, mom and pop restaurants were common but seem to have gotten squeezed in the last decade or two.

- I just left a contract at an ICO startup. I've also worked at a number of venture capital-based startups. I don't have a lot of faith in either however I could see ICO cleaning up and going legit (but right now...). His argument seems to be people will be pulling their money out of private equity (and I assume that includes venture capital) so that means he is talking more about bootstrapped businesses. If so, my bias is in that direction too. Although the only play I see there right now is being the founder/entrepreneur -- bootstrapped businesses seldom seem to offer non-founders equity like the VC-based startups do and for my line of work, the pay is lower too.

- My concern with crypto is "the king has no clothes" and/or "the queen is dead, long live the queen." The valuations are based on belief just like our current monetary systems now are but the current ones are embedded while crypto, like all things code, is easy to pick up and drop again. The more I learn about crypto, the less faith I have in current offerings. See the rate limit issue in bitcoin. The GAS or price to do a transaction in Ethereum. Also the attack vectors for those seeking to disrupt transactions. My core issue is Bitcoin seems to be the closest to the "one true crypto" but we're so early into the adoption phase of crypto that I doubt it will still be a player by the time we get to mass adoption. Cheaper and better blockchain currencies will come along and the valuation in prior currencies can just evaporate, right?

- Trailer parks are a hot investment area right now and I think have been for a while. A lot are being bought up and the lot rates are going up from say $200-300/month to $600+/month. The lots are also getting new investment in facilities (ie water distribution, etc) but it looks like older owners selling out to new investors (corporations/REITs and wealthy individuals) who are also wanting to extract more profit. If there really is a huge demand, perhaps we'll see zoning relaxed in areas that want more retirees and maybe another take on tiny houses? There are also coop-based mobile home parks and perhaps that model might take off more (not an investment opportunity but rather an offer of hope).

It is certainly a thought provoking presentation. If one buys into it fully, the bigger picture thing is that all of the opportunities are squeezed too, right? If the fast money is gone, there is going to be more focus on value. I don't think that is bad but it changes the dynamic from what we have today with the focus on growth.

CS
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Re: The coming retirement crisis

Post by CS » Wed Oct 31, 2018 7:13 am

Jeebus, that is scary.

@SWB
The investors coming in to extract more profit from the mobile home parks puts my teeth on edge. I hope the coop model takes off as much as possible. It is not the same thing, but I lost my dictation software due to investors coming into the company and cutting it off as not as profitable as the windows version - so off with its head!

I, too, am worried about my parents - or at least my mom. She has a considerable amount (most) in stocks. And she is sanguine she will be okay in a downturn. She wasn't last time and panic sold. It will be even harder this time now that she's been retired for more than a decade. I'm sending her this video, but she is incredibly stubborn and (to me) overconfident. My biggest hope is to get her to move more to cash now and not wait.

ThisDinosaur
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Re: The coming retirement crisis

Post by ThisDinosaur » Wed Oct 31, 2018 9:50 am

National CAPE still matters.

I dont follow his argument in favor of crypto. But the non-securitized business ownership makes sense.

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7Wannabe5
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Re: The coming retirement crisis

Post by 7Wannabe5 » Wed Oct 31, 2018 10:56 am

A couple nights ago, I was chatting with a young waitress who had just moved back to Northern Michigan from Colorado in part because she couldn't get decent day care for less $1400/month in Colorado. My "ex" who was raised by a nanny in Tehran, once told me that even if I find myself indigent in my 80s, I can still get work as a baby rocker :evil: :lol: My DD27's soon-to-be MIL gave them the down-payment on a very small 3 bedroom house, so I plan on providing them with a year of free daycare at some point. Somebody tried to recruit me as private nanny right off of the playground in an affluent school district recently, so I am not super worried about demand or age-discrimination in this field.

OTOH, my 63 year old ex-polyamour who resides in a house probably valued at close to 1M just retired as director of IT for a governmental body and recently wrote me that he may start driving for Uber, because his 62 year old wife has experienced a downturn in her career dealing with corporate mortgages. :roll:

OTOH, my 79 year old multi-millionaire friend who still works full-time running his business was just told that he has to spend $14,000/month on prescription meds to fight off minor/slow recurrence of cancer. Nothing to him , but devastating hit for anybody driving Uber part-time to cover the margin in retirement. My BF's mother (83) who is well-off but not uber-wealthy, was also prescribed $5000/month drugs for cancer recurrence, and she decided to just say no. I think this is where the rubber is going to hit the road for most people, so very important to come to rational decision about how much you will ultimately spend on medical towards marginal longevity before end game. I spend significantly less than my current $500 deductible at age 53, but that is mostly because I do not do what I am "supposed" to do. For instance, I barter for my emergency asthma inhalers within my social market, and I hoard antibiotics and steroids, and I did not replace a molar that failed, and I do my own lab tests with home kits, etc. etc. OTOH,I actually spend more on coffee than I spend on medical care, so I am not necessarily recommending my practice to others. Because I am still nominally fertile, I will probably live to be 90 along with a few female Hispanic peers even though we keep on eating too much pastry. Luck of the draw.

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cmonkey
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Re: The coming retirement crisis

Post by cmonkey » Wed Oct 31, 2018 12:25 pm

For those concerned by lower consumption by the boomers, invest in sectors that provide basic services. People need food, water, trash service, electric service, housing (maybe apartment REITS since millenials can't afford houses). Boomers will cut out the surplus budgetary junk before they go hungry or turn down the heat.

Depending on what the Fed does with rates in the coming years, start putting your money in 5-10 year brokerage CDs that pay out monthly. Stick with banks near areas that are doing well, not "Boonies Bank".

Or just invest in avocados.

jacob
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Re: The coming retirement crisis

Post by jacob » Wed Oct 31, 2018 12:40 pm

cmonkey wrote:
Wed Oct 31, 2018 12:25 pm
Or just invest in avocados.
Generally, more profit is made from selling the equipment and materials that support the underlying commodity, so I will invest in toast bread.

ThisDinosaur
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Re: The coming retirement crisis

Post by ThisDinosaur » Wed Oct 31, 2018 2:14 pm


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7Wannabe5
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Re: The coming retirement crisis

Post by 7Wannabe5 » Wed Oct 31, 2018 2:41 pm

@ThisDinosaur:

Exactly. That is why I maintain that I am special, unique, and one of a kind, and all the men I do or might date are indistinguishable units of Grumpy Old Man. Also, I commodify and devalue my competition by referring to them as "Women who wear $100 yoga pants while eating avocado toast in an expensive hotel." This method works so well, I have no trouble securing dates even though I no longer have a full complement of teeth, and I frequently make reference to "peak oil."

Jason
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Re: The coming retirement crisis

Post by Jason » Wed Oct 31, 2018 6:00 pm

Now I'm questioning my decision about giving up McDonald's. I mean, why would anyone want to live longer with this shit going on.

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Kriegsspiel
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Re: The coming retirement crisis

Post by Kriegsspiel » Wed Oct 31, 2018 7:39 pm

Die young and save yourself.

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