Let me start of by saying that I am by no means an investment professional but that doesn’t keep me from having an opinion. And I will also admit that looking backwards is a lot easier than looking forwards, especially in money matters. That being said there is something to saving for retirement the old fashioned way and that is to save the money while you are in your income earning years. Fortunately I retired just before the dot.com bubble burst. I had already moved much of my savings into more, some might say very, conservative areas that were somewhat unaffected by the coming down markets. I was more fortunate than many of my follow front-of-the-herd baby boomers in that regard.
It seems that, especially during the boom years of the Clinton administration everyone was betting their retirements savings on doubling or tripling via the stock market’s constant upswing. The feeling was “if I can just put $10,000 into the stock market it will be worth $30,000 to $40,000 in a few years. Many people were planning on retiring with the new found wealth in the their forties instead of waiting for the usual sixties.
And then came the Bush years of stagnation. When Mr. Bush came into office the stock market was right around 10,500. Now more than ten years later it is at a little over 11,000. that make for an annual percentage basis of about 0.3% annual gain. If you had bought $1,000 worth of U.S.Savings Bonds in January 2000 it would now be worth $1500 or the same amount of profit as your $10,000 would likely have gained in the stock market over the same period of time.
I know all you financial advisers out there are saying “what you say might true be but these are unusual times”. To that I say over the very long term you might be right but this has been going on for almost twelve years now. To many that is well over one-third of the earnings years and there seems to be no reason to believe that things will change any time soon. Given the vitriol atmosphere in the congress now there is little reason to believe that your government will ever be able to help bring back prosperity even if they could in the first place.
So, here we are again back to the old-fashioned way. If you want to be more assured that you will be able to live comfortably in your senior years you are going to have to give up some of the “stuff” you deem important today. This includes things like that $3 cup of coffee, the vacation home, the $300 monthly budget for new clothes, and the new car every three years. Instead put it away for retirement. It doesn’t seem to matter much where you put it; if putting it in your mattress makes you feel secure then put it there. Just put it aside where you can’t get to it too easily.
One of the things that we let our corporations get away with is shedding any responsibility for their employees future well being. The company pension plans of my generation are long gone now so the only thing you can be assured of is the social security you will receive. It will be the only thing that will provide even the most basic safety net. And, no I don’t think we U.S. voters, especially us senior citizens, will allow anyone to take that away. But then again what do I know