income, protection, retirement, risk management, Taxes

Strategies to Help Avoid Running Out of Money in Retirement

A recent study by the Center for Retirement Research at Boston College found that “many younger baby boomers and members of subsequent generations who don’t have access to a traditional pension could outlive the funds in their 401(k) accounts.” (1)

In the 1980s 401k plans began to replace pension plans in the workplace. Workers became responsible for accumulating their own retirement savings. Of workers born in 1947, 52% had pensions. By comparison workers born only 10 years later, only 21% had pensions.

The study compared retiree spending for people who had pensions and those who only had a 401k. They found that “retirees with pensions often didn’t spend their savings at all. In fact, many saw their nest eggs continue to grow after they stopped working.”

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interest rates, retirement, risk management

July Jobs Day–“Immense amount of uncertainty going forward.”

Markets are struggling to grasp the realities of the new economic dynamics. Inflation is expected to be announced next week at 8.8% while unemployment is only 3.6%, near post-pandemic lows. In addition, second quarter GDP is projected to be negative 2.1% according to the Atlanta Fed. The first quarter was negative 1%. Two consecutive quarters of negative GDP growth signify a recession.

Barry Ritholtz of Bloomberg pronounced “we have never been in a recession without rising unemployment”

While top line inflation is 8.8%, core inflation (without food and fuel) is only 6%, still far above the Fed’s 2% target.

However, says Tom Keene of Bloomberg, “We are not living core inflation… we are living almost double-digit headline inflation and it hurts.” (1)

The estimate is for 268k new jobs to have been created in June. The unemployment rate is expected to stay at 3.6%. Jobs creation in May was 390k.

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