Americans have no savings and with very good reason: housing, education, and health care have seen extraordinary inflation while wages are stagnant.

It has now become a daily ritual in which story after story of broke Americans plaster the web. Yet somehow on the mainstream press, very little is discussed about this topic. Americans are largely broke because inflation is vey real. Housing, education, and health care costs have soared out of control while wages have remained stagnant. The way Americans continue to pay for these items is by going into loan shark levels of debt. There used to be a pretense that ‘we’ actually cared about having a middle class but that is now thrown out the window. At this point, we are in a full on sprint towards low wage capitalism. Many people live on a paycheck to paycheck diet and are berated about saving more for retirement. The reality is, the new retirement model is working until you die.
In the land of no savings
Sunday morning, I wake up and take a stroll through the neighborhood. ‘Did you hear about Bitcoin? Wild right?’ I’m asked by a stranger at the park. ‘Sure seems wild. You own any?’ To which I get the following response, ‘I wish I had some money to even invest!’ I think we live in a world where most Americans are merely spectators to the wild gyrations of the market. They hear about investments too late or mistake speculation with actual investing.

This post was published at MyBudget360 on December 21, 2017.

Another Liberal Governor Demands His State’s Pension Abandon Fiduciary Duties, Sell Fossil-Fuel Investments

As if public pension managers around the country weren’t having enough difficulty digging themselves out of their massive $3-$5 trillion funding gap, the chorus of liberal governors suggesting they should recklessly abandon their fiduciary obligations to future retirees and choose investments not on their financial merits but rather based on the political preferences of clueless politicians is growing stronger by the day. As Pensions & Investments points out today, New York Governor Andrew Cuomo is the latest such politician to jump on the bandwagon after suggesting that the New York State Common Retirement Fund should “divest from all fossil-fuel holdings.”
New York Gov. Andrew Cuomo on Tuesday proposed that the New York State Common Retirement Fund halt all new investments “with significant fossil-fuel-related activities” and prepare a plan to divest existing fossil-fuel investments.
“New York has made incredible strides in securing a clean energy future for this state … yet the Common Fund remains heavily invested in the energy economy of the past,” Mr. Cuomo said in a news release.
“Moving the Common Fund away from fossil-fuel investments will protect the retirement savings of New Yorkers,” he said. “This proposal lays out a roadmap for the Common Fund to take responsible steps to divest from its fossil-fuel holdings.”

This post was published at Zero Hedge on Dec 21, 2017.

CalPERS Goes All-In On Pension Accounting Scam; Boosts Stock Allocation To 50%

Starting July 1, 2018 stock markets around the world are going to get yet another artificial boost courtesy of a decision by the $350 billion California Public Employees’ Retirement System (CalPERS) to allocate another $15 billion in capital to already bubbly equities. Of course, if this decision doesn’t make sense to you that’s because it’s not really meant to make sense.
As Pensions & Investments notes, CalPERS’ decision to hike their equity allocation had absolutely nothing to do with their opinion of relative value between assets classes and nothing to do with traditional valuation metrics that a rational investor might like to see before buying a stake in a business but rather had everything to do with gaming pension accounting rules to make their insolvent fund look a bit better. You see, making the rational decision to lower their exposure to the massive equity bubble could have resulted in CalPERS having to also lower their discount rate for future liabilities…a move which would require more contributions from cities, towns, school districts, etc. and could bring the whole ponzi crashing down.
The new allocation, which goes into effect July 1, 2018, supports CalPERS’ 7% annualized assumed rate of return. The investment committee was considering four options, including one that lowered the rate of return to 6.5% by slashing equity exposure and another that increased it to 7.25% by increasing the exposure to almost 60% of the portfolio.

This post was published at Zero Hedge on Dec 19, 2017.

Here’s How Much Retirees Are Spending To Support Their Adult Kids

At one point in time in America, living at home with mom and dad after crossing out of your teenage years and into your 20s was embarrassing and something that was generally avoided at all costs. And while hard times come and go, 20-somethings who were forced back into their parents’ care worked their tails off until they could save up enough money to once again regain their freedom.
But, these days millennials seem to be embracing the free room and board provided by their parents. According to a new study from the Census Bureau, roughly one-third of all millennials live at home with their parents and one-fourth of them can’t be bothered with enrolling in school or finding a job.
Of course, while living at home can help millennials cut down on costs, according to a new study from Nerd Wallet, it can also have a devastating impact on the retirement savings potential of their overly accommodating parental units…to the tune of a quarter million dollars. Here are some of the key takeaways from Nerd Wallet’s survey.
Parents could miss out on almost a quarter-million dollars in retirement savings by paying their adult kids’ expenses: According to NerdWallet analysis, a parent’s retirement savings could be $227,000 higher if they chose to save the money that would otherwise go to their child’s living expenses and tuition. Parents paying college costs could be missing out on almost $80,000 in retirement savings: More than a quarter of parents of children 18 and older (28%) are paying or have paid for their adult children’s tuition or student loans. The average parent takes out $21,000 in loans for their child’s college education, but the hit to retirement savings is almost quadruple that amount.

This post was published at Zero Hedge on Dec 9, 2017.