GenX Least Prepared for Retirement
A new Northwestern Mutual survey showed 51% of respondents think they will outlive their savings. The survey also revealed that Generation X feels the least prepared for retirement. (news.northwesternmutual.com)
Ok, Gen Xers, it’s not too late! You are 44 to 60 years old right now. I am too. Don’t stick your head in the sand, watch my YouTube channel as there are many relevant topics to help and then schedule a free meet n greet with me to get organized and pointed in the right direction.
For those of you that think you will outlive your money, two simple things will help this. First, maximize your guaranteed income! This includes social security and pensions but also, in some cases, income annuities. And second, once a year, preferably in November, do a productive review that includes the following: Inventory; Math (total savings divided by years left in retirement); refill your bank account (withdrawing less than the math allows). By doing the simple math, if you use this as your spending control, you will not run out of money unless you live longer than you projected and if you maximized your income, hopefully you can still pay the bills once the money is gone!
Diversified Investment Portfolio Data
New data from Realtor.com states the top 10% of wealth holders have 36% of their total assets in stocks and mutual funds.
This may surprise many but not me. These higher net worth people are able to diversify by owning businesses, lots of real estate, alternative investment, gold, etc. remember, the “Holy Grail” of investment portfolio’s is finding 10 uncorrelated investment portfolios.
Home Deals on Hold
The WSJ reported that tariffs are already impacting wealthy home buyers as more are backing out of multimillion dollar home deals.
Well, one may not have to do with the other… what about the fact that inventory is rapidly rising and we are reaching a tipping point where prices are starting their downward trend. The writing is on the wall, we are shifting into a buyers’ market in most areas. Maybe they are just backing out, anticipating getting more for less….
High Uncertainty
In 1Q earnings reports last week, mentions of “uncertainty” are up over 300% this quarter, and are more than double the peak of Covid-19 uncertainty mentions. (WSJ.com)
Well, that’s certainly more uncertainty.
Surprising Gen Z Savings
From civicscience.com
This surprised me! Over 70% are saving something which with the power of compounding, this is going to be fantastic! This is going to be incredibly important since there are very few pensions left out there. The younger you are when you start saving and investing, the easier it will be to fund a comfortable retirement.
Tariffs Impact
Yahoo finance report comments by two global banks this week on tariff impacts and trade.
Citi strategists forecast a 39.5% decline in global trade.
Goldman forecasts 20 million Chinese jobs could be lost from this trade war.
Keep in mind, 20 million of 1.4 billion is only 1.4% and global trade might decline in the short run but ultimately, it will shift to alternatives… think of all the manufacturing shifts from China to India. Apple announced this right away.
Holding off on Retirement?
Vanguard’s Global Head of Advice claims working a few more months before retirement is a powerful lever in market conditions like these.
He cited a 2018 study from Stanford University that showed working three to six months longer could help retirement finances just as much as had you saved 1% more of your salary every year for 30 years.
Within 5 years of retirement, your portfolio should be shifting in preparation for retirement. A pullback in markets or fear of pullback should not adjust your plans. If they do, you are not prepared for retirement anyways!
Recession Probability
A group with more eyes on private markets than most, Apollo’s Chief Economist raised recession probability to 90%. (apolloacademy.com)
So much gloom and doom out there. Fear sells, do let it become your self-fulfilling prophecy. Your portfolio and financial plan should be able to handle the volatility and recession. Don’t live in fear, simple be prepared!
U.S. Down, World Up
This is why you diversify. International investing is typically more volatile but can add a low correlated asset to your portfolio. Consider adding a small allocation to your IRA and Roth portfolio if you have not already. Because of taxation, avoid your trust/brokerage/nonqualified accounts.