The Coming Great American Retirement Crisis

The Great American Retirement Crisis: How We Got Here

 
The American Dream used to be: you work hard, you save your money, you live within your means, you have a few kids and raise them to respect others regardless of difference in opinion, you teach them to value and uphold the US Constitution, and when you hit your 60’s, you hang it all up and relax the rest of your days away.

Now, that concept is no longer a viable possibility for most Americans retiring in 2019. The reasons are many, so let’s cover a few key facts right now to see how to better understand what’s unfolding, and how to deal with it.

Retirement Costs Money

 
And lots of it, too. The simple facts are most Americans end up drawing around $1,400/month from Social Security, and the average 401k has about $95,000. Over half of American retirees have investments and money heavily invested in the stock market.

If retirement lasts 20 years, then that means $95,000 divided by 20 years, which leaves about $5,000/year on top of social security.

That means many Americans will be expected to live on $2k – 3k a month, hardly enough to spend lots of leisure time hitting the golf course or traveling and dining out at nice restaurants.

Throw in the cost of medical care which continues to grow into older age, and you’ve got a lot of people who can expect to live near the poverty line in their golden years.

Americans Save Less Money Now Than Ever

 
In what appears to be a fiscal epidemic, more Americans don’t have savings any more. About 50% of Americans don’t even have $500 saved for a rainy day.

Among retirees, 42% of Americans have less than $10,000 saved, meaning they will count exclusively on their Social Security check for survival.

Even selling a house and liquidating all that equity won’t mean a comfortable retirement for most, and now the news is reporting that many senior Americans won’t be able to afford housing or senior assisted living.

Indeed, not only is the American Dream fading away before our very eyes, it seems many people will actually live in poverty.

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Social Security Will Pay Much Less Soon, and Run Out of Cash Reserves in its Trust Fund

 
By 2034, The Social Security will no longer be able to pay out its max benefit, as its reserves will have run out and it will only be able to pay that which it immediately takes in, which is about 77% for social security and 96% for disability.

So for younger Americans who are having trouble even entering the workforce due to most new jobs being taken by people 55 or older, when they eventually draw Social Security benefits, they will likely be less than 77%.

FDR’s Grand New Deal Was Nothing More than a Ponzi Scheme All Along

 
It is becoming increasingly clear that the idea that big daddy government will take care of you from cradle to grave has finally been disproven. while Social Security was never intended to be used as the sole source of retirement income, it’s now showing how unreliable it will be for future generations of Americans even to supplement their retirement, if they can even afford to call it one.
 
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Recession is Now a 75% Probability According to This Leading Economic Indicator

Recession Now a 75% Certainty

 
Some other points mentioned in the video include:

*84% of CFOs surveyed predict a recession by 2021

The survey surprised the surveyors when so many CFOs were in near total agreement that a recession would be here by 2021, if not sooner. A global slowdown is in effect, however the American and Western mainstream media will not touch this topic. It’s always about Trump and either what he’s doing or not doing. In other words, just more fake news.

*Fewer young Americans getting drivers licenses

While getting a driver’s license used to be as American as applie pie, Generation Z’ers are now enrolling in driver’s education courses at later ages, and fewer are going to the DMV to get that all-coveted freedom pass. With Uber, Lyft, and limited resources to include insourcing menial wage jobs to foreigners and immigrant workers (some illegal), the average American 16 year old is now competing heavily with men twice their age who are willing to practically kill themselves to do the same job.

*Labor market supply oversaturation keeping wages flat

Again, globalism reveals its ugly head, with many Americans entering the workforce later for jobs that pay less and offer fewer hours, while women joining the workforce and letting in massive amounts of immigrants more than doubled the labor market, thus driving down prices of labor since the 1970’s.

*Real inflation and CPI around 7 – 10%

The government has consistently changed the way it keeps tabs on metrics such as inflation and the CPI (consumer price index), even going so far to ignore the cost of basic goods because at the end of the day, the Federal Reserve is not there to do anything but protect the global banking elite and keep Wall St looking good.

*Millennials can’t afford to buy homes, have too much debt

With a lack of good jobs, millennials are graduating college with record student loan debt that many will never be able to pay back working a “normal” job. When I waited tables, I encountered a bartender who told me she had over $100K in student debt. I nearly collapsed when I heard that and she said it as casually as you might ask for an extra napkin when having lunch.

*10,000 baby boomers retire every day and need to be wary of market downturns

With 10,000 people becoming 64 every day over the next couple of years, a baby boomer will benefit from being mentally and psychologically prepared to protect their investments, 401k and IRA while they still can. Ensuring that once you leave the workforce your investments are more heavily divided into lower risk assets while being ready to sideline your stock holdings into cash are one way to prepare. We offer a free gold IRA investing kit to help people with this as well.

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How to Protect Your 401k or IRA from a Stock Market Crash

How long do stock market crashes last? How long does it take to recover your losses once a major market downturn occurs? What % of your 401k/IRA should be in stocks/bonds/cash?

With so many Americans leaving the workforce to retire on a daily basis, and over half of them heavily invested into the current stock markets through their current 401k or IRA, it is becoming increasingly important for new retirees to develop a plan to survive an incoming recession.

The next recession is already underway in this blogger’s opinion, going off of economic fundamentals such as slowing retail sales, the Federal Reserves’s decision to stop raising interest rates even a little bit, housing prices dropping and new home starts decreasing, as well as other indicators such as record corporate debt, record personal debt, record student loan debt, and record auto loan defaults.

Fortunately there is still time, but how much time, is anyone’s guess. So for now, retirees should be mentally prepared to adjust their portfolios at the onset of the next recession, since they are not likely to be able to continue working to wait out the market for a recovery, as many unfortunately had to do in 2008. Since it takes an average of 6 or 7 years for stock prices to recover (if the stocks’ underlying company did not go bust during the crash), most people simply cannot afford to hang out in the workforce until they’re 70 years old.

So here’s some things you can do either right now or when you’re reasonably sure the recession has begun in the stock market. Remember, the stock market is not always a good indicator of the real economy, and may be the last domino to fall.

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How to Protect Your 401k or IRA from an Impending Stock Market Crash

 

*A general rule is to have your age in bonds

If you are 60 years old, then around 60% of your holdings should be in safer financial instruments such as bonds and treasuries. The rest could be in stocks, though even that gets riskier as the recession approaches.

*Be ready to convert your stocks into cash and sit on the sideline for the time being

While it’s impossible to time the market, as the clock ticks on, it becomes clear that no business expansion cycle lasts forever. The current expansion cycle, largely boosted by central bank manipulation like quantitative easing as well as corporate stock buybacks and tax cuts for the wealthy, is about to break the record for the longest boom period in market history.

A retiree/potential retiree could start selling off their stocks gradually now and getting into cash in a money market fund or money market bank account. Remember, there is a difference between the two, as the former is not FDIC insured, but is still considered relatively safe

*Take advantage of the only remaining bargains on the market

Gold and silver remain historically undervalued and have found price stability for the last 5 years. While precious metals don’t always go up in price/value tremendously when the economy appears to be doing well, once the recession hits and investors flee to the exits, you can expect metals to go up once again as the Federal Reserve bakes more inflation into the US dollar.

One great way to invest in metals is to invest 30% of your current IRA or 401k into a Gold IRA rollover. We offer a free kit on this site to qualified investors. Just click the link below to find out more.

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