America’s 60-Year-Olds Are Staring at Financial Peril

[DrQ]

I ran across this chart comparing a $100 investement over the last year (2023) in treasury bonds (purple line), international stocks (green line), US stocks (red line) and gold (blue line). I wish they had included real eatate as well

Gold is misleading over just a year that it jumps. It stagnates for years (decades?) and then moves.

I bought gold at $250 an oz in 1999, but it's not been a good investment given inflation, storage cost and the 28% the government is going to take on the profit.

 

[Ralph Sir Edward]

Gold is misleading over just a year that it jumps. It stagnates for years (decades?) and then moves.

I bought gold at $250 an oz in 1999, but it's not been a good investment given inflation, storage cost and the 28% the government is going to take on the profit.

Ok, how about Jan 1 2000 to date? 24+ years

 

[Carolinian]

Gold is misleading over just a year that it jumps. It stagnates for years (decades?) and then moves.

I bought gold at $250 an oz in 1999, but it's not been a good investment given inflation, storage cost and the 28% the government is going to take on the profit.

Central banks around the world would disagree with you. They set a record in buying gold, often dumping dollars in the process,, over the last six months, after setting previous records in the last two years buying gold. The chart I posted also finished before gold's move from the $1800-1900 range at the end of 2023 to the $2300-2400 range now. We are happy with our gains in gold and silver, but the lions share of our money is in rental residential real estate, and that has gone up even more, plus produced a nice income flow. What we are trying to focus on is hard assets, given the huge government debt and deficit spending that are a threat to dollar denominated assets, or for that matter euro or pound denominated assets that have similar debt problems.

 

[Brett]

Gold is misleading over just a year that it jumps. It stagnates for years (decades?) and then moves.

I bought gold at $250 an oz in 1999, but it's not been a good investment given inflation, storage cost and the 28% the government is going to take on the profit.

Inflation and taxes also affect stocks, real estate and bonds too but holding gold does involve storage costs.
I've held gold mutual fund (ETF) symbol GLD in the past but it has high annual fees and I'm not sure it's a good balance to stocks

 

[Carolinian]

Inflation and taxes also affect stocks, real estate and bonds too but holding gold does involve storage costs.
I've held gold mutual fund (ETF) symbol GLD in the past but it has high annual fees and I'm not sure it's a good balance to stocks

Our storage costs are minimal with two large safe deposit boxes at our credit union. Our gold is in monetary gold coins that have relatively small premiums over spot - US vintage Liberty eagles and half eagles, Canadian 5, 10, and 20 dollar gold pieces, German 20 marks, British sovereigns, French, Swiss, and Belgian 20 francs, and various gold coins of Austria, Hungary, Iraly, the Netherlands, and Denmark. I did pay a slightly higher premium than I usually do to buy some Louis XVIII and Napoleon I 20 francs when gold was in a dip and they were on sale. I only paid about $5 over the normal premium on the Louis XVIII pieces and $10 over for the Napoleon I pieces, but I thought they were something neat to have. These coins are early 19th century while most of our gold is late 19th century or early 20th century. Often, vintage monetary gold coins can be bought for a lower premium than the modern bullion coins, and you own a piece or pieces of history at the same time.

There have been lots of questions raised about whether those ETFs really have all the gold or silver they need to fully back their contracts. In fact, at one point the Wall Street Bets crowd was trying to crash one of the silver ETFs by demanding delivery instead of settling out in dollars but they did not get enough of their members to engage.

One backdoor way some invest in gold and silver is with mining stocks, which usually move more with gold and silver prices than with overall stock market movement. The established miners are pretty solid, but if you really want to gamble the junior miners can give you a huge gain or a wipeout. There are ETFs in both gold and silver mining stocks. I have done some research and we may put our toe in the water with some mining stocks, but individually chosen, not ETFs. I note that some of the hedge funds are deep in some of the gold and silver miners.

 

[jp10558]

I haven't thought of that way, but it is such a true statement.

So many of our friends (and most of America) do it backwards. They spend way more than they should and then complain about being able to afford retirement.

We were out to dinner with some friends about 7 or 8 years ago (who we continue to see all the time). These friends spend non-stop on vacations and going out. And it is often over the top. One of them had just celebrated a 50th birthday for which they had a trip to Vegas, during which they rented Ferrari's and drove around the desert among other things. We didn't go, we had no one to watch our kids and I have no urge to overspend on the sort of things they do. So, after telling us about the trip, they said we never splurge on anything. I said we splurge on vacation. They said we just go on a couple of cruises a year - that is not splurging, that is just ordinary. Meanwhile at the same time they needed to sell their house and buy another in a different town because their son had some sort of problem with some other boys in his school and wanted to move him to a new school district. They couldn't afford to do so without asking his mom for financial help. I am guessing they were mortgaged to the hilt. I might not be a splurger, but I have never taken out a penny of equity on my home to spend.

These days we talk about doing more because we have the money and no debt other than a small mortgage, whereas they are talking about no longer being able to afford to do this or that because they want to be able to retire one day. Yet, they still spend more than us. Just coming back from their 2nd trip to Italy this year. But at least they say no to some things because it costs too much. They never said no before.

You're potentially looking at an extreme (taking out equity loans to spend) - but I'd argue we see a lot of posts here about aging out of stuff, like doing your own maintenance, but also travelling or having fun. I'm only 43, and I'm already sad I didn't do more roller coasters and amusement parks when I was 23 etc and could much easier do it. I also saw people like my mom who both was "responsible" but also basically never got to do many trips because of work, because of cost, because of animals, later because of my elderly dad etc. Now she's 65, and retired, my dad passed, but she unfortunately wasn't able to save up a lot of money (didn't have a high paying job), and has health issues. Now, maybe she's just guilting my and my sister, but there's a good chance she is regretful she didn't travel and go to Europe or all over the US etc when she was in her 30s and 40s and 50s.

I'm not saying you're wrong about saving, but there is an opportunity cost, and not everyone lives for 20+ years after retirement, and of those who do, many aren't in great physical shape so can't do the things they could have done at 30-50 if they weren't "saving to responsibly do it at 65". What they actually accomplished is saving up money to give to a nursing home, hospital, or kids.

I really can't imaging many people are lying on their deathbed thinking "I wish I had more money in my 401k today". Most people are happy or sad about the life experiences. And TBH, the savings don't seem to make much real difference after inflation / gouging / medical costs etc until you're talking like 10 million or so today. Maybe 20. Enough where you could realistically pay the $200k a year "good assisted living" or house refurb costs out of pocket.

 

[rickandcindy23]

The best "life experience" is love. Loving family, your children, your siblings, your friends, and most definitely your parents, no matter how flawed they are or were, the best of life happens to be that which we can have any time we want, as long as our family is living. Love your parents while they are still alive. We very much honor my stepdad, who is still on this earth. We honored Rick's stepmom. Rick called her every morning at 8:30 AM.

We lost our birth parents very early. My dad was only 62, my mom was 65, Rick's mom was 71, Rick's dad was a month short of 74. I still miss all of our birth parents, and we honored their memories by honoring our step parents.

We took my mother-in-law on trips many times. She never went to Hawaii with Rick's dad, and she always wanted to go. From 2006, our first trip with her, she regularly went with us to Maui, Kauai, Oahu (once) and Big Island (once). We even took her to Disneyland.

She didn't want to walk or hike much, but she so enjoyed her books on the lanai. To her, it was heaven on earth.

My stepdad has joined us three times on Maui. He is now 90 and cannot really fly by himself to meet us on the islands at this point. His last stay with us 18 months ago was kind of sad.

 

[rapmarks]

The best "life experience" is love. Loving family, your children, your siblings, your friends, and most definitely your parents, no matter how flawed they are or were, the best of life happens to be that which we can have any time we want, as long as our family is living. Love your parents while they are still alive. We very much honor my stepdad, who is still on this earth. We honored Rick's stepmom. Rick called her every morning at 8:30 AM.

We lost our birth parents very early. My dad was only 62, my mom was 65, Rick's mom was 71, Rick's dad was a month short of 74. I still miss all of our birth parents, and we honored their memories by honoring our step parents.

We took my mother-in-law on trips many times. She never went to Hawaii with Rick's dad, and she always wanted to go. From 2006, our first trip with her, she regularly went with us to Maui, Kauai, Oahu (once) and Big Island (once). We even took her to Disneyland.

She didn't want to walk or hike much, but she so enjoyed her books on the lanai. To her, it was heaven on earth.

My stepdad has joined us three times on Maui. He is now 90 and cannot really fly by himself to meet us on the islands at this point. His last stay with us 18 months ago was kind of sad.

Really not so bad. My husbands father died at 49. My daughter s husband was 40. My dearest cousin was 48. And on and on.

 

[rickandcindy23]

Really not so bad. My husbands father died at 49. My daughter s husband was 40. My dearest cousin was 48. And on and on.

So young. Love people while you can because you never know. We are going on 70, and that means I have already lived longer than my parents.

 

[Brett]

Really not so bad. My husbands father died at 49. My daughter s husband was 40. My dearest cousin was 48. And on and on.

So young. Love people while you can because you never know. We are going on 70, and that means I have already lived longer than my parents.

My mother lived to 100 - I'm hoping I've inherited some of those longevity genes
(with clean living )

 

[Brett]

The Dramatic Turnaround in Millennials’ Finances​

Soaring home prices and smart investments have helped boost a generation once considered perpetually behind​

https://www.wsj.com/personal-financ...hlid=7c9d0e8a14d4ed885a9e78d5b67de75a47654eea
https://www.foxbusiness.com/media/m...rents-were-same-age-drastic-turnaround-report

Millennials are now wealthier than previous generations were at their age. (They can’t believe it either)

The biggest driver of that increase was real estate. Millennials’ housing wealth grew $2.5 trillion, after accounting for the additional mortgage debt they took on. A colossal
jump in home prices benefited owners, whether they scraped together a down payment in the early 2010s or squeaked in just before the recent leap in prices and rates.
Stocks and mutual funds also played a key role, in part because many employees made larger contributions to retirement accounts earlier in their careers.

 

[letsgobobby]

Central banks around the world would disagree with you. They set a record in buying gold, often dumping dollars in the process,, over the last six months, after setting previous records in the last two years buying gold. The chart I posted also finished before gold's move from the $1800-1900 range at the end of 2023 to the $2300-2400 range now. We are happy with our gains in gold and silver, but the lions share of our money is in rental residential real estate, and that has gone up even more, plus produced a nice income flow. What we are trying to focus on is hard assets, given the huge government debt and deficit spending that are a threat to dollar denominated assets, or for that matter euro or pound denominated assets that have similar debt problems.

nothing wrong with real estate, money is made on the buy though and there aren't a ton of deals out there since the pandemic run up. plus jurisdictions are making it very hard to be a landlord with restrictions on raising rent and evicting bad tenants etc. we are much more inclined to sell our current holdings than to buy more (we own or co own ten doors). real estate is also more stressful than owning a mutual fund. even with professional management there are decisions to be made. not always at the most convenient moment.

but the great majority of our money is in stocks and bonds (low cost passive index funds). i share your concerns about rampant fiat currency devaluation but stocks generally do well in these situations. Decades ago I had some gold investments but really think it's a bad investment per se. You should expect it to maintain purchasing power but nothing more. It doesn't offer real (after inflation) growth.

 

[Ralph Sir Edward]

You're potentially looking at an extreme (taking out equity loans to spend) - but I'd argue we see a lot of posts here about aging out of stuff, like doing your own maintenance, but also travelling or having fun. I'm only 43, and I'm already sad I didn't do more roller coasters and amusement parks when I was 23 etc and could much easier do it. I also saw people like my mom who both was "responsible" but also basically never got to do many trips because of work, because of cost, because of animals, later because of my elderly dad etc. Now she's 65, and retired, my dad passed, but she unfortunately wasn't able to save up a lot of money (didn't have a high paying job), and has health issues. Now, maybe she's just guilting my and my sister, but there's a good chance she is regretful she didn't travel and go to Europe or all over the US etc when she was in her 30s and 40s and 50s.

I'm not saying you're wrong about saving, but there is an opportunity cost, and not everyone lives for 20+ years after retirement, and of those who do, many aren't in great physical shape so can't do the things they could have done at 30-50 if they weren't "saving to responsibly do it at 65". What they actually accomplished is saving up money to give to a nursing home, hospital, or kids.

I really can't imaging many people are lying on their deathbed thinking "I wish I had more money in my 401k today". Most people are happy or sad about the life experiences. And TBH, the savings don't seem to make much real difference after inflation / gouging / medical costs etc until you're talking like 10 million or so today. Maybe 20. Enough where you could realistically pay the $200k a year "good assisted living" or house refurb costs out of pocket.

What happens when you are 70? (Don't think it won't happen.)

One of my personal mottos - "Always plan for a future, even if you don't have one. You might be wrong. . . "

 

[Luvtoride]

Interesting statistics, but I think the article is missing two big factors…
1- Most millennials don’t have Pensions as many Baby Boomers do/did thus their “retirement savings” thru employers is larger than boomers at similar age
2- there is no mention of the significant Inheritance wealth from their Baby Boomer parents

Although the article touches on the significant costs of raising a family for Millennials, their struggles to pay for those costs are not going to be met by increased Real Estate value of their homes (unless they borrow against them with 2nd/ home equity mortgages.

My motto about my Millennial kids is “If I don’t fly first class, my kids will”.

 

[winger]

It is a pretty simple formula. Contribute enough to your 401K to get the maximum match from your company. Start early. Even a few thousand a year in your early 20s can turn into millions.

My daughters each have around $25K in Vanguard accounts. I have shown them how if they earn an average 8% return over time the money will grow to well over a million by age 65. I have also explain how when the money doubles every 9 years. The last doubling was almost $1 million. If they put that money away 10 years later - they wont see that last doubling.

The thing is - if one starts investing in sustainable products early enough and is aggressive at saving more over time (e.g. when raises come) and reducing costs (while still having a good time, mind you), he can reach financial independence way short of 65, like decade or more short. Time is the magic pixie dust here.

 

[winger]

I understand that. My wife worked for Merrill Lynch/BOA for 25 years. BOA stock makes up about 1/3 our entire 401K savings - between both of us. We are hoping to sell it soon and invest it into the broad market. Hoping it will hit 50+. Only reason I am still holding onto it now is that everybody is pretty bullish on that stock.

Maybe split some off now and put it into WFC ( if you want to continue betting on the banks with interest rate cut looming (Sept?) ) or broad market.

 

[winger]

I just had my inlaws over for 10 days. Their kids (17 & 19) and a boyfriend - eat out or get takeout for EVERY MEAL. I am sitting in my office in Manhattan and I can see my ring camera go off and its these kids going out to get food and bringing it back.

My SIL makes plenty of money (her husband is retired and drives a school bus to keep busy) - so they can afford it. But what kind of lesson is that for these kids when they are on their own. It drives her husband crazy, but he says he has no say. He says that SIL says as long as kids are happy that is all that counts.

Reminds me of a former co-worker, had a daughter whom parents adored. They bought her so many things (including a pony of all things, which they sold in less than one year, and mind you, they live in the suburbs of a major metro area) - and even though he objected to many of the things, his wife was "as long as she is happy". Not surprisingly, years later I bump into former co-worker on the street, he was no longer married.

 

[winger]

In the end, it's about the question - Capital versus Cashflow. For retirement, substituting capital for cashflow OUT is the better course (up to a point). On the other hand you have the need of cashflow IN when retired, as you have no other way of earning cashflow.

Example, paying off a mortgage reduces your capital (effectively, it strands your capital in an asset you can't sell without replacing with another), but it reduces your cashflow needs (no mortgage payments). Reducing cashflow OUT.

OTOH, having assets that produce net income in allows you use the cashflow IN, to pay for your lifestyle in retirement, while still owning the assets. If you depend on selling assets to generate cashflow, 1.) you don't have that assets any more (you are getting poorer). and 2.) You don't know what price those assets will fetch when you actually need to sell them.

Planning and executing this juggle is what retirement planning is all about.

Dont forget. part of the retirement game for some are taxes -> how to keep stinking Uncle Sam's hands from clawing away more taxes away from you than obsolutely needed.

 

[Brett]

Interesting statistics, but I think the article is missing two big factors…
1- Most millennials don’t have Pensions as many Baby Boomers do/did thus their “retirement savings” thru employers is larger than boomers at similar age
2- there is no mention of the significant Inheritance wealth from their Baby Boomer parents

Although the article touches on the significant costs of raising a family for Millennials, their struggles to pay for those costs are not going to be met by increased Real Estate value of their homes (unless they borrow against them with 2nd/ home equity mortgages.

My motto about my Millennial kids is “If I don’t fly first class, my kids will”.

yes, millennials (and other generations) that don't own real estate, stocks or other assets are probably not in the "wealth" statistics

 

[joestein]

The thing is - if one starts investing in sustainable products early enough and is aggressive at saving more over time (e.g. when raises come) and reducing costs (while still having a good time, mind you), he can reach financial independence way short of 65, like decade or more short. Time is the magic pixie dust here.

Yes, but the many of the eventual savers don't figure this out until 30s or even 40s. Which is why many of them might work later than 65. I didn't figure this out until my mid-30s. So - I lose that last decade.

 

[joestein]

Maybe split some off now and put it into WFC ( if you want to continue betting on the banks with interest rate cut looming (Sept?) ) or broad market.

It is owned through the BOA 401K -sell none or all are our options.

 

[TolmiePeak]

Inflation and taxes also affect stocks, real estate and bonds too but holding gold does involve storage costs.
I've held gold mutual fund (ETF) symbol GLD in the past but it has high annual fees and I'm not sure it's a good balance to stocks

One of the big problems in holding physical gold is the massive spreads between bid and ask prices. It can be a 25% spread. The middle men will eat your profits alive. All of those people who bought gold at Costco and then tried to unload it after prices went up 20% were shocked they got less money than what they paid.

 

[PigsDad]

Yes, but the many of the eventual savers don't figure this out until 30s or even 40s. Which is why many of them might work later than 65. I didn't figure this out until my mid-30s. So - I lose that last decade.

And that first decade is the most expensive one to lose, due to the compounding nature of savings. Financial education should be pounded into our youth in high school and at home. I'm so glad it was for me.

Kurt

 

[rickandcindy23]

Saving is difficult when you are young. The high interest rates on houses in the late 1970's and early 80's had us on a strict budget. Saving was impossible.

 

[PigsDad]

Saving is difficult when you are young. The high interest rates on houses in the late 1970's and early 80's had us on a strict budget. Saving was impossible.

Not picking on you, but many people don't realize how big of a difference even a small monthly amount saved in your 20's, like $50 or $100, could make when saving for retirement.

For example, if you put away $100/month in your 20's and didn't add to it at all after 10 years (so $12,000 total saved), it would be close to $400K when you retire if invested in the stock market. In contrast, if you started that same $100/mo. when you are 30 and continued all the way until age 65 ($42,000 total saved), the total would only be less than $300K. That is extremely powerful information all young people should understand.

I think about when I first started working, I elected to put 2% of my income to retirement savings. There was no match at that time. I think that the vast majority of people could live on 98% of their income without major issues, but those early savings made a huge difference in my retirement.

Kurt