Monday, October 10, 2011

SDS Daily Update for Monday, October 10, 2011

Suburban Dads - It's October 9.  Do You Know Where Your Pensions Are?

In financial commentator Porter Stansberry's daily email, today he reminds us to keep our eye on the growing pension problem in the United States.  Seems kinda odd that we'd be worried about pensions on a day like today - after all, the financial media was all ga-ga over today's 300+ point gain in the Dow despite the fact volume came in at a paltry 144M shares, or 32% below average.  But we're going to omit that bit of news, because it might make us feel bad.  That's why I'm putting it in such a small font so most people won't be able to read it.

From Stansberry's email today:

An article in the Wall Street Journal today discussed state pension funds considering lowering return targets – historically around 8% – in the face of a slack market. Warren Buffett expects the market to return around 5% a year for the foreseeable future. Assuming he's correct (we think he's close), that extra 3% would be a huge achievement.....

"To target 8% means some aggressive trading," said Jeffrey Friedman, a senior market strategist at MF Global. "Ten-year Treasurys are yielding around 2%, economists say we are headed for a double-dip, and house prices aren't getting back to 2007 levels for the next decade, maybe... Good luck to them."

Couple this with Robert Wiedemer's musings I mentioned in an earlier blog.  In a special report on the "Baby Boomer Crisis, " Wiedemer concluded "pensions are likely to encounter severe stress as outlays outpace intakes.  The investments in stocks and bonds will be under huge pressure.  Many pensions' viability is predicated on high long-term stock-market returns.  If the market under performs, the pensions will be under funded."

Friends, I'm not going to beat this to one to death.  The writing on the bathroom stall is clear - the Suburban Dad Nation needs a multi-faceted plan to finance our retirement needs.  Social Security won't be there when I retire; I doubt Medicare will be.  I have a retirement fund like most of you do.  However, I have no idea how well these will perform long run.

I'm not trying to scare or depress you.  But I am beseeching you to take an active role in planning your retirement, regardless of how old (or young) you are.  Start paying attention to financial news.  Educate yourself.  And take steps to put yourself in a great position to retire comfortably.  I'm confident it can still be done, but it's up to us to make it happen.

1 comment:

  1. Maybe even more importantly, if you are in one of the big pension plans you need to understand how and by who is it going to be funded. And what happens when the check to fund the pensions does not clear the bank? If they have to print the money to fund the pensions, then the money wont buy much by the time the retiree gets it.