• Tag Archives Retirement
  • Predicting Dow One Million – Was Warren Buffett Being Bold or Overly Cautious?

    In a recent speech, Warren Buffett came down boldly on the side of optimism when it comes to both the economy and financial markets. What he said was “being short America has been a loser’s game… And it will continue to be a loser’s game.”
    And to throw down the gauntlet against some the current negative talk in the markets, Mr. Buffett boldly predicted something quite extraordinary – which was that in 100 years “the Dow will be over a million.”
    Is that even remotely believable, or is Mr. Buffett getting carried away by his own optimism?
    The Challenge by Buffett: Check the Math
    Warren Buffett knew as he predicted Dow One Million that this would seem unbelievable to many people or even ridiculous. Which is why he also said this “is not a ridiculous forecast at all if you do the math”.
    In this analysis, we will do that math using two key assumptions.
    First, we will use an absolutely average historical rate of inflation.
    We will also take a look at the Dow Jones Industrial Average in the same terms that Mr. Buffett was talking about – which is price changes in an index (but not including dividends). In the process we’re going to learn some valuable lessons with a great deal of real-world applicability not just going out 100 years, but also for the next 10, 20 and 30 years when it comes to retirement financial planning and other forms of long-term investment.

    This post was published at FinancialSense on 10/16/2017.


  • Kentucky Pension Crisis Goes Nuclear As Teacher Retirements Surge 64% Over Last Year

    As Kentucky’s Governor Matt Bevin and legislators attempt to design a pension reform bill that will save the state’s various public pension plans from literally running of cash in “three to five years,” or worse yet bankrupting their state, some teachers and other public employees have decided they’re not going to wait around to negotiate and instead turned in their retirements notices to lock in their current benefit structures.
    As the Carrier-Journal points out today, Kentucky’s Teachers’ Retirement System saw a 64% surge in teacher retirements YoY in the month of September. Meanwhile, system-wide retirements increased a staggering 37.4% in September and are up 23% so far in October.
    The number of public employees deciding to retire has surged in recent weeks as the governor and legislative leaders prepare to enact a pension reform plan this fall.
    The Teachers’ Retirement System has received applications of 120 members who have decided to retire on Nov. 1. That’s up 64 percent over the 73 members who retired on Nov. 1 of last year.

    This post was published at Zero Hedge on Oct 11, 2017.


  • 5 charts highlighting the epic housing crisis for Millennials – one third of young adults living at home with parents.

    Millennials are starting to realize that living at home may be a longer-term proposition. Moving back home is being motivated by heavy levels of student debt and jobs that simply pay a lower wage. These trends run directly into the current reality that rental prices are soaring and home values are once again near peak levels. So you are left with a situation where young adults who try to venture out on their own are finding a market that they cannot afford. So naturally, this has had an impact on marriage and when people plan on starting families. It has also created a big impact in terms of younger adults saving for retirement (most are not saving). What are the implications of this housing crisis for Millennials?
    Young adults living at home – a new trend
    It should be clear that this is a new trend in regards to young adults forgoing to venture out on their own and starting their own families and households. The figures highlight a unique situation and this will trickle down into a variety of segments of society including buying furniture, appliances, and all the trappings of home life.

    This post was published at MyBudget360 on October 10, 2017.


  • How to Work in Retirement and Love It

    Wall Street endlessly gushes about retirement. Its TV commercials show how wonderful life will be in our golden years – when we are old, yet still healthy and wealthy enough to go hang-gliding every day.
    Meanwhile, out here in the real world, most working-age Americans don’t want to talk or even think about retirement. Often this is because they know they aren’t saving enough and probably will have to work until they drop dead.
    This is the elephant in the room. 10,000 US Baby Boomers turn 65 every day. For most, life at that milestone won’t look much like the TV commercials.
    That sounds dire, but it doesn’t have to be. Let’s look at ways this problem could be solved.
    But first, some more facts.
    Retirement Shortfall
    Lately, I’ve been working with John Mauldin to research the huge public pension fund shortfalls. But it’s not just big funds that don’t save enough – most individuals are in the same position, or worse.
    Judging from the emails and comments I’m getting, Connecting the Dots readers are more financially sophisticated than the general public. You’ve probably prepared for retirement enough to live comfortably.

    This post was published at Mauldin Economics on OCTOBER 10, 2017.


  • Turning Point Nations On The Stage

    Many are the turning points with individual nations, once firmly in the Western alliance camp, but no longer. They are flipping eastward or in the case of China cutting the major cords. The Shanghai developments are by far the most important in the financial setting. The Petro-Dollar is seeing its last months after a 43-year reign as defacto standard. Its retirement will begin in the East, then spread to the decaying loyal Western nations. The entire geopolitical chessboard is becoming more aligned with the Eurasian Trade Zone, one nation after another. Its cornerstones are Russia, China, and increasingly Iran. It has gathered some Eastern European countries like Turkey, and will gather more. It has pursued the Middle East oil monarchies, and will succeed in lassoing them into the zone corral. Whether they deploy financial connections, or trade ties, or security links, these nations no longer see the United States and British (who walk the American dog with a monetary leash) as the leading global players any longer. The leaders are China with its financial and industrial might and Russia with its energy and commodity strength.
    As the global structure shifts in alignment, many nations will be involved in the shifts directly. It can be perceived as chess pieces in movement. The many bilateral connections are being altered, so as to fit within the new forces. The power center is moving from West to East, although certainly very slowly. Some call it a giant ship changing course, but the Jackass thinks of it more as a very large baby being formed with numerous umbilical cords, which requires a very long gestation period like that for an elephant. The Eastern centers must remove the vestiges of old colonial power links. It is a very slow process, whereby the East must accept losses from the uprooted stanchions. The Eastern leaders measure their risks, make the changes, and consider the losses as part of a reorganization much like done with the better observed structural changes done by IBM or Chrysler.

    This post was published at GoldSeek


  • Survey shows UK and US Pensions Crisis is Imminent

    Both UK and US drop in Global Retirement Security Rankings US falls due to sharp income inequality and reduced workforce to support retirees UK is two spots away from being in the bottom 10 for government indebtedness FCA’s Andrew Bailey says ‘clear risk’ that savings rate for retirement is too low UK’s retirement savings gap set to widen to 2.3trn due to automation of jobs UK expected to fall into major pensions crisis by 2028 The economics of retirement funding is at breaking point. Thanks to low interest rates, looming inflation rates and slow growth the future of our retired populations are at serious risk.
    Currently there are 600 million individuals placing pressure on already-established retirement systems. This is set to get worse as the results of the last decade of financial experimentation show themselves and ageing populations widen the cracks in our economies.
    Most pension schemes were formed in a time when manufacturing and traditional bricks and mortar business were the pinnacle of Western economies. This is no longer the case. Globalisation has seen countries switch to service economies. Our financial planning has failed to keep up.

    This post was published at Gold Core on October 7, 2017.


  • Study Of 10-Year State Pension Returns Highlight Full Extent Of Public Pension Ponzi

    A new study of public pension returns by Cliffwater LLC has found that the median U. S. state pension plan returned just 5.9% annually over the 10 years ended June 30, 2016. Meanwhile, as Pension and Investments notes, the top performing state pension, the $15.6 billion Oklahoma Teachers’ Retirement System, was the only fund that managed to eek out a return over 7% during the same period.
    U. S. state pension plans returned a median annualized 5.9% for the 10 years ended June 30, 2016, vs. 6.8% for the 10 years ended June 30, 2015, said Cliffwater’s most recent annual state pension performance report.
    The average 5.7% return for the 10 years ended June 30, 2016, fell within a wide range of individual pension plan returns (3.7% to 7.1%).
    Once again, the two top-performing state pension plans for the period were the $15.6 billion Oklahoma Teachers’ Retirement System, returning 7.1%, and the South Dakota Investment Council returning 6.8% for the $10.5 billion South Dakota Retirement System. In third place was the $7 billion Missouri Local Government Employees Retirement System, returning 6.7%. All returns cited are annualized figures.

    This post was published at Zero Hedge on Oct 4, 2017.


  • Marxism/Socialism Is On the Decline

    I have warned that we are in a period where SOCIALISM is collapsing – not CAPITALISM. The distinction is manifest in rising retirement ages, reduction in social benefits, and rising taxation. This is also evident in politics. The Democrats really have no face to put forward as their leader. Hillary lost and even Elizabeth Warren is way out of touch for the average American.
    ***
    Nevertheless, we are seeing this trend where socialists in politics are in a major decline. The Democratic Party in the USA has been declining ever since FDR won the first election in 1932. Each time the Democrats win, it has been with lower highs and the declines are always making lower lows. Looking at the map of Democratic states with governors, it is shocking to say the least. This is why the press is fighting so hard against Trump and the Democrats are desperate to keep the proposition that Hillary should be president and was prevented only by the Russians. Of course, there is no allegation that any of the emails released from the Democrats were forged. So the info was real regardless of who hacked the Democrats.

    This post was published at Armstrong Economics on Oct 2, 2017.


  • Global Retirement Reality

    Today we’ll continue to size up the bull market in governmental promises. As we do so, keep an old trader’s slogan in mind: ‘That which cannot go on forever, won’t.’ Or we could say it differently: An unsustainable trend must eventually stop.

    Lately I have focused on the trend in US public pension funds, many of which are woefully underfunded and will never be able to pay workers the promised benefits, at least without dumping a huge and unwelcome bill on taxpayers. And since taxpayers are generally voters, it’s not at all clear they will pay that bill.
    Readers outside the US might have felt smug and safe reading those stories. There go those Americans again, spending wildly beyond their means. You are correct that, generally speaking, we are not exactly the thriftiest people on Earth. However, if you live outside the US, your country may be more like ours than you think. Today we’ll look at some data that will show you what I mean. This week the spotlight will be on Europe.
    First, let me suggest that you read my last letter, ‘Build Your Economic Storm Shelter Now,’ if you missed it. It has some important background for today’s discussiion, as well as a special invitation to attend my Strategic Investment Conference next March 6 – 9 in San Diego. With so much change occurring so quickly now, next year’s conference is an event you shouldn’t miss.

    This post was published at Mauldin Economics on SEPTEMBER 30, 2017.


  • Peak Irony: Equifax Is (Finally) Hiring A “Fraud Monitoring Leader”

    Overnight, one day after the now former CEO of Equifax, Richard Smith, announced his “retirement” from the humiliated, and hacked company, but not before collecting an exit bonus as much as $90 million, his replacement, interim CEO Paulino do Rego Barros Jr. penned another apology, this time in the WSJ:
    On behalf of Equifax , I want to express my sincere and total apology to every consumer affected by our recent data breach. People across the country and around the world, including our friends and family members, put their trust in our company. We didn’t live up to expectations.
    We were hacked. That’s the simple fact. But we compounded the problem with insufficient support for consumers. Our website did not function as it should have, and our call center couldn’t manage the volume of calls we received. Answers to key consumer questions were too often delayed, incomplete or both. We know it’s our job to earn back your trust.
    And just to show how “serious” the company – which was entrusted with the personal, and highly confidential information of over 143 million Americans – is about “earning your trust”, as of yesterday the company announced it is hiring for a position which… it probably should have filled a few years ago, namely a Fraud Monitoring Leader who is “responsible for the management of a team of Fraud Monitoring Analysts. These analysts are responsible for monitoring; analyzing and investigating interactions to identify fraudulent access or attempted access to Equifax consumer facing systems in near real-time.” More:

    This post was published at Zero Hedge on Sep 28, 2017.


  • “There’s A Time For War”: Bannon Vows Full Assault On Republican Establishment

    Following Roy Moore’s decisive win in Alabama earlier this week (something we covered here), Steve Bannon has predictably seized on the momentum vowing that it is only the beginning of his “war” against the Republican establishment. Per McClatchy:
    ‘There’s a time and season for everything under heaven. And sometimes there’s a time for peace. And sometimes there’s a time for war,’ he told a raucous, religious revival-style crowd packed into a barn.
    ‘Yeah!’ a woman yelled back.
    ‘We’re not going to hug out our differences,’ he continued. ‘We’re going to have to fight for our differences.’
    With several seats opening up in the Senate in 2018, including Senator Bob Corker’s of Tennessee who recently announced his retirement, conservatives see no reason why they can’t beat out establishment Senators across the deep south.

    This post was published at Zero Hedge on Sep 28, 2017.


  • EU Unveils Plan To Resettle More North African Refugees, Support Project With 500 Million Euros

    Following Roy Moore’s decisive win in Alabama earlier this week (something we covered here), Steve Bannon has predictably seized on the momentum vowing that it is only the beginning of his “war” against the Republican establishment. Per McClatchy:
    ‘There’s a time and season for everything under heaven. And sometimes there’s a time for peace. And sometimes there’s a time for war,’ he told a raucous, religious revival-style crowd packed into a barn.
    ‘Yeah!’ a woman yelled back.
    ‘We’re not going to hug out our differences,’ he continued. ‘We’re going to have to fight for our differences.’
    With several seats opening up in the Senate in 2018, including Senator Bob Corker’s of Tennessee who recently announced his retirement, conservatives see no reason why they can’t beat out establishment Senators across the deep south.
    The hard-right’s fight for total control of Donald Trump’s Washington is just getting started. The victory of deeply conservative candidate Roy Moore in Tuesday’s hotly contested Alabama Senate primary has emboldened activists and potential candidates alike, threatening to set off a wave of tough GOP races and ushering in a new era of internecine Republican warfare that party leaders had hoped would end when they won control of the government.
    ‘There’s no doubt in my mind that this is going to be a determining factor for a lot of Deep South states, no question,’ said Mississippi State Sen. Chris McDaniel, who lost a hugely controversial primary contest against Sen. Thad Cochran in 2014 but is considering another Senate primary run in 2018. ‘If Alabama can send a true conservative to Washington, and Texas can send a true conservative to Washington, so can Mississippi and Tennessee and Florida and other states.’

    This post was published at Zero Hedge on Sep 28, 2017.


  • U.S. Retirement Market Ponzi Fueled By Record Concentration In Stocks By Young Americans

    For the U. S. Retirement Market Ponzi Scheme to continue, there must be a new group of suckers to pay for the individuals who are receiving benefits. Without a new flow of funds, the Ponzi Scheme comes crashing down. Such was the case for the individuals who invested in the $65 billion Bernie Madoff Ponzi Scheme that came crashing down in 2008.
    Interestingly, the U. S. Securities & Exchange Commission (SEC) that investigated Madoff Securities in 1999, 2000, 2004, 2005, and 2006, found no evidence of fraud or the need for legal action by the commission. The failure of the SEC to find any wrong-doing by Bernie Madoff should provide Americans with plenty of reassurance and confidence that their 401k’s are the highest quality sound investments in the market.

    This post was published at SRSrocco Report on SEPTEMBER 24, 2017.


  • There’s a Bubble in New York City Taxi Medallions

    It’s as old as time: taking on debt to fund a sure thing. Be it houses, stocks, cryptocurrencies, tulip bulbs or taxi medallions. Winnie Hu tells the current tale of woe brilliantly for The New York Times. Big city taxi medallions were once considered to be good as gold. Ms. Hu writes,
    Sohan Gill once saw his medallion as such a good investment – ‘better than a house’ – that his wife bought two more in 2001. Now they cannot find enough drivers for the cabs because business is so bad. And Mr. Gill, 63, who had retired from driving, had to go back on the road. ‘How many more years am I going to drive to take care of these medallions?’ he asked.
    That sounds so much like Las Vegas 2005. Why own one house? Buy two more. Now retirement is put on hold.
    A full blown medallion crash is unraveling in New York City as Ms. Hu explains.
    Since 2015, a total of 85 medallions have been sold as part of foreclosure proceedings, according to city records. In August alone, 12 of the 21 medallion sales were part of foreclosures; the prices of all the sales ranged from $150,000 to $450,000 per medallion.
    A medallion being essentially a license to drive a cab, $150,000 to $450,000 doesn’t seem like the bottom, however at the peak. 2014, a medallion went for $1.3 million. By the way, Uber was founded in 2009, but New York cab owners either didn’t get the memo, or didn’t understand the implications.

    This post was published at Ludwig von Mises Institute on Sept 22, 2017.


  • This $700 Billion Public Employee Ticking Time Bomb Is Only 6.7% Funded; Most States Are Under 1%

    We’ve spent a lot of time of late discussing the inevitable public pension crisis that will eventually wreak havoc on global financial markets. And while the scale of the public pension underfunding is unprecedented, with estimates ranging from $3 – $8 trillion, there is another taxpayer-funded retirement benefit that has been promised to union workers over the years that puts pensions to shame…at least on a percentage funded basis.
    Other Post-Employment Benefits (OPEB), like pensions, are a stream of future payments that have been promised to retirees primarily to cover healthcare costs. However, unlike pensions, most government entities don’t even bother to accrue assets for this massive stream of future costs resulting in $700 billion of liabilities that most taxpayer likely didn’t even know existed.
    As a study from Pew Charitable Trusts points out today, the average OPEB plan in the U. S. today is only 6.7% funded (and that’s if you believe their discount rates…so probably figure about half that amount in reality) and many states around the country are even worse.
    States paid a total of $20.8 billion in 2015 for non-pension worker retirement benefits, known as other post-employment benefits (OPEB). Almost all of this money was spent on retiree health care. The aggregate figure for 2015, the most recent year for which complete data are available, represents an increase of $1.2 billion, or 6 percent, over the previous year. The 2015 payments covered the cost of current-year benefits and in some states included funding to address OPEB liabilities. These liabilities – the cost of benefits, in today’s dollars, to be paid in future years – totaled $692 billion in 2015, a 5 percent increase over 2014.
    In 2015, states had $46 billion in assets to meet $692 billion in OPEB liabilities, yielding a funded ratio of 6.7 percent. The total amount of assets was slightly higher than the reported $44 billion in 2014, though the funding ratio did not change. The average state OPEB funded ratio is low because most states pay for retiree health care benefits on a pay-as-you-go basis, appropriating revenue annually to pay retiree health care costs for that year rather than pre-funding liabilities by setting aside assets to cover the state’s share of future retiree health benefit costs.

    This post was published at Zero Hedge on Sep 20, 2017.


  • Higher Interest Rates May Force Higher Inflation Rates

    Summary:
    1) Financial analysis of the three way relationship between interest rates, inflation and the U. S. national debt.
    2) Higher interest rates causing higher interest payments on the $20 trillion national debt would ordinarily cause soaring deficits over time.
    3) Detailed analysis of the “loophole”, which is that if inflation even moderately increases – then interest rates can rise without exploding the real debt.
    4) This simultaneous increase in interest rates and inflation would have a major impact on all markets, as well as long term retirement planning.
    5) The logical response to rising interest rates may be to sharpen one’s focus on how to better deal with higher rates of inflation over the long term.
    Because of the $20 trillion size of the total U. S. national debt, the Federal Reserve acting to increase interest rates would ordinarily create severe financial problems for the government over time, due to sharply rising interest payments on the debt. There is, however, a loophole for the federal government.

    This post was published at GoldSeek on September 14th, 2017.


  • Stanley Fischer’s Well-Timed Fed Exit

    Fed vice-chair Stanley Fischer’s surprise announcement of early retirement triggers the obvious question as to whether this could be the fore-runner to a serious market and economic deterioration ahead. Monetary bureaucrats, even if signally bad at counter-cyclical fine tuning, sometimes have a reputation for intuition about how to time their own career moves ahead of crisis. In this case, such suspicion may be wide of the mark given the personal circumstances. Even so, the exit of a Fed Vice-Chair, who in many respects has been the pioneer and the dean of the prevailing doctrine in the global central bankers club, is pause for thought.
    The Early Years When Professor Fischer published his famous paper ‘On Activist Monetary Policy with Rational Expectations’ (NBER working paper no. 341, April 1979), the fiat money world was well into the third stage of disorder following the collapse of the international gold standard in 1914. But things were at a temporary resting point where the skies seemed to be getting clearer. After the violent terminal storms of the gold exchange standard (early 20s to early 30s), and then of the Bretton Woods System, it seemed to many that the ‘monetarist revolutionaries’ had found a better practical monetary navigation route. The Bundesbank, the Federal Reserve, the Swiss National Bank, and even the Bank of Japan were pursuing an ersatz gold rule of low percentage increases in the monetary base or a related aggregate.

    This post was published at Ludwig von Mises Institute on Sept 10, 2017.


  • The Coming Run On Banks And Pensions

    ‘There are folks that are saying you know what, I don’t care, I’m going to lock in my retirement now and get out while I can and fight it as a retiree if they go and change the retiree benefits,’ he said. – Executive Director for the Kentucky Association of State Employees, Proposed Pension Changes Bring Fears Of State Worker Exodus
    The public awareness of the degree to which State pension funds are underfunded has risen considerably over the past year. It’s a problem that’s easy to hide as long as the economy is growing and State tax receipts grow. It’s a catastrophe when the economic conditions deteriorate and tax revenue flattens or declines, as is occurring now.
    The quote above references a report of a 20% jump in Kentucky State worker retirements in August after it was reported that a consulting group recommended that the State restructure its State pension system. I personally know a teacher who left her job in order to cash completely out of her State employee pension account in Colorado (Colorado PERA). She knows the truth.
    But the problem with under-funding is significantly worse than reported. Pensions are run like Ponzi schemes. As long as the amount of cash coming in to the fund is equal to or exceeds beneficiary payouts, the scheme can continue. But for years, due to poor investment decisions and Fed monetary policies, beneficiary payouts have been swamping investment returns and fund contributions.

    This post was published at Investment Research Dynamics on September 6, 2017.