The U.S. economy isn’t a light switch that can be flipped on and off at will. Yet that didn’t stop the majority of state governors from turning off their economies in 2020 — causing financial misery for tens of millions of people.
The COVID-19 emergency finally appears to be coming to a close, although that process could still take months. Even so, retirement savers still have an extremely challenging road ahead thanks in part to economic ripple effects that will affect the U.S. for years to come.
Kiplinger urged savers to concentrate on planning as one way to mitigate the financial uncertainty. The same article offered some other retirement ideas to consider while making that plan.
Can delaying your retirement help?
The Kiplinger article claims that: “You can significantly increase your retirement income by delaying your retirement date, even if it’s just for a year or two.”
Of course, personal or medical circumstances can also force you into retirement earlier, so this may not be possible.
Tied together with the decision to retire later is whether or not to claim Social Security benefits early. The Motley Fool gave three reasons why it could be a good idea to delay filing for benefits:
- “If you delay your benefits until age 70, you’ll score the maximum payout.”
- If you file at age 70, “you’ll boost your benefits, which can help make up for a lack of savings — even a glaring one.”
- Aside from the opportunity to save more for retirement, according to the article: “There are studies that link working longer to living a longer life.”
Whether or not you choose to retire later or claim Social Security at 70, the Fool article offers some food for thought.
Kiplinger also suggested that incorporating increased medical expenses is a good idea when planning your retirement.
But even good planning to mitigate the near-term consequences of state-enforced lockdowns might not be enough.
Short-term gambling is no replacement for long-term planning
It seems like a lot of retirement savers see the challenges ahead and are making less-than-prudent moves with their nest eggs…
A record $576 billion has flown into equity funds since November — more than the $452 billion seen in the last 12 years combined, all thanks to ultra-easy monetary policies and unprecedented stimulus.
It’s really hard to imagine these numbers…
- That’s twelve years of investing dollars hurled into the stock market in five months.
- Or 24 months worth of stock buys happening each of the last five months.
- Or about one month of stock buys every trading day in the last five months.
So who’s buying?
Barron’s tells us, the number one stock buyers right now? Baby boomers. That’s right: a huge amount of cash is going into stocks from those already in or near retirement.
Considering the near-record valuations in the stock market, we can guess this is a desperation move.
Or possibly an example of the “greater fool” hypothesis?
“Big Short” investor Danny Moses has a startling summary of a dangerous behavior that appears common: short-term thinking about money.
One of Moses’s examples came from the recent “Wall Street Bets” fast-money fiasco:
The average age of a Robinhood trader is 31 years old. They were 17 during the financial crisis, which means they’ve only known the Fed having their back. This is a liquidity-driven market, period. Money is still looking for a home, and it will find its way into whatever is the flavor of the day. That’s a very dangerous, unsustainable model over the long term.
Then Moses pointed a big spotlight on recent stock market mania, specifically commenting on the Archegos margin call, among other blowups:
Money’s free right now. Risk-taking is at an all-time high. That’s always going to come with problems over time. You’re seeing pockets of blowups, whether it’s Greensill, Archegos, whatever it might be. You’re going to see a lot more of these things keep happening because this is what the Fed wanted.
This sort of short-term day-trade thinking could prove to be dangerous for retirement savers. One wrong move could get your savings caught in one of Moses’s “pockets of blowups.”
Physical gold and silver for the long haul
Taking a long view of your savings is important. That’s why you should consider the centuries-long track records of physical gold and silver.
Hard assets like these have stood the test of time against volatile market conditions. They also have a history of acting as a hedge against inflation, which looks to be yet another challenge retirement savers could face in the near future. Furthermore, gold and silver enjoy intrinsic value that persists separately from today’s hot market moves.
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SS generally recommends waiting to “recieve maximum benefit”. To me that’s a suckers bet. The effects of inflation will eat up any real benefit.
Plus, you’re on the hook for increasing Medicare premiums. Once you start taking SS your Medicare premiums are supposedly locked in and don’t increase. Who knows what the premiums will be waiting 5 years. Check me on the medicare premiums but I’m pretty sure that’s correct.
The downside is you basically can’t work for 2 years. Any earnings above $17,000 per annum reduces your SS payment to$0.
If good investing is buying undervalued assets, precious metals are the place to be.
BELANGP on YT proves the best results with 65% stock and 35%gold. But with the stockmarket at nose bleed heights that probably doesn’t work in this current environment.
Best of luck navigating this mess.
What if the “nose bleed heights” are the New Normal for the stock market? All this liquidity has to go somewhere, right? I mean, stocks go up and go down as a matter of course. But what if the valuation of the stock market actually tracks the amount of liquidity in the economy? What if investing in stocks of solid companies is actually an inflation hedge?
I’d love to get an objective assessment from someone – not from someone trying to sell me gold and silver. Not that gold and silver are inherently bad things, but these Birch Gold articles always follow the same template and end the same way: the sky is falling so buy gold and silver.
Regarding ss, one thing never mentioned is the ultimate breakeven point for various retirement ages. It is about 83.
Delaying from 62 to 70 results in higher benefits, but if taking at 62, one would collect 96 months of benefits prior to 70.
A simple spreadsheet can be used to demonstrate this and the breakeven ages.
If you expect to live to be 90, delay.
“The COVID-19 emergency finally appears to be coming to a close, although that process could still take months.”
Ummmmm, no it’s not. Things are just ramping up for the final push into complete authoritarian control. Not enough people pushing back. Waaaaay too many low T guys out there!
The sky is not falling… but it will inevitably fall. We are accelerating into the hockey stick part of an exponential curve. The dollar will die (in one way or another). What is on the other side of that is impossible to guess.
On that note, … good luck to those doing retirement planning.
“planning”
Yeah, do long-term planning for yourself that includes knowing what everybody else will be doing even a month from now.