A Reality Check for Everyone Expecting to Retire – SS, 401K are Dying

Retirement is part of the American dream. But there’s more to it.

The dream is to reach a financially secure retirement.

Many years ago, financial planners said that such security came from a three-legged stool.

Social Security was one leg. Pensions were the second leg. And investment gains funded the third leg.

Now, the first two legs aren’t enough for many people.

Social Security provides some income, but it might not be enough.

Pensions aren’t popular … although that’s not completely true.

If you work for the government, you probably have a pension. An estimated 84% of government workers are covered by a traditional pension plan.

In the private sector, however, just 4% of employees enjoy defined benefit pensions.

This means investments are an important part of your retirement. But like pensions, they may also be disappearing.

Stocks Will Offer Low Returns in the Future

Experts warn that investment returns will be low in the long term.

Jeremy Grantham is a well-known investment manager and market historian. He correctly forecast bear markets in Japan in 1989 and in the U.S. in 2000 and 2008.

Now, his model forecasts an after-inflation average loss of 1.5% a year for the next seven years.

John Hussman, another market historian with a long-term outlook, expects average losses of 1.7% a year over the next 12 years.

Those are precise models. Shown below, a simple chart based on history tells a similar story.

(Source: Crestmont Research.)

In this chart, a decade of low returns follows peaks in the price-to-earnings (P/E) ratio.

The current P/E ratio is at its second-highest reading ever. In the past, highs like this preceded negative returns over the next 10 years.

Investors Need an Alternative Approach

The third leg of the retirement planning stool is as unsteady as the other two.

Low long-term return forecasts are another piece of evidence telling us that the future will be challenging. Investment strategies that worked in the 1980s, for example, can’t be relied on in the 2020s.

So, if you expect to have a financially secure retirement, then you’ll need an alternative approach.

I suggest you focus on short-term strategies — such as the one I use in my One Trade options service

Regards,

Michael Carr, CMT, CFTe

Editor, One Trade

Previous Post
Next Post

Comments

jetteErronee

what is cbd oil good for https://cbdcreamshs.com/ – cbd drops cbdistillery cbd gummies near me

asmr https://0mniartist.tumblr.com

It’s awesome to pay a visit this site and reading the views of all mates about this paragraph, while I am also
keen of getting familiarity. 0mniartist asmr

asmr https://0mniartist.tumblr.com

Hi, Neat post. There is an issue together with your website in web explorer, could check this?

IE still is the market leader and a big section of other people will omit your wonderful writing because of this
problem. asmr 0mniartist

bitly.com

This is a very good tip particularly to those fresh to the blogosphere.
Simple but very precise information… Many thanks for sharing this
one. A must read post! asmr 0mniartist

http://bitly.com

I was excited to discover this great site. I want
to to thank you for your time for this wonderful read!!
I definitely appreciated every part of it and I have
you saved as a favorite to check out new stuff on your web site.
0mniartist asmr

that gamefly

Your style is unique compared to other people I have read stuff from.
Many thanks for posting when you’ve got the opportunity, Guess I’ll just book mark
this web site.

why asmr

Have you ever thought about writing an ebook or guest authoring on other sites?
I have a blog centered on the same subjects you discuss and would
love to have you share some stories/information. I know my visitors would value your work.
If you’re even remotely interested, feel free to shoot
me an email.

in asmr

Fastidious answers in return of this issue with
real arguments and describing all about that.

asmr in

I have read so many posts concerning the blogger lovers but this paragraph is actually a good piece of writing,
keep it up.

or gamefly

Keep this going please, great job!

my asmr

Excellent post. I’m dealing with some of these issues as well..

http://bitly.com/

I like the valuable info you provide in your articles. I will bookmark your weblog
and check again here frequently. I’m quite sure I’ll learn a lot of new stuff right
here! Good luck for the next!

bit.ly

scoliosis
Pretty nice post. I just stumbled upon your
blog and wished to say that I have truly enjoyed browsing your blog posts.
After all I will be subscribing to your rss feed
and I hope you write again very soon! scoliosis

j.mp

scoliosis
Asking questions are actually nice thing if you are not understanding anything completely, but this post
presents nice understanding yet. scoliosis

Leave a Reply

Your email address will not be published.