This building, underfunded Retirement Crisis and Pension Crisis is not going away.
It is a mathematical certainty, yet certainly not a light topic to delve into.
What potential affects will the retirement crisis have on generations, financial assets, and future investing?
Indeed many promises were sold to workers building it along the way, yet the vast majority did not save nor perform well enough in investment returns to deliver upon said promises.
The following 49 minute presentation by Real Vision is called, “The Coming Retirement Crisis”. It is a stark look at the present retirement crisis situation we face.
Much of this information you may know of, but likely not in this data driven detail. The days of our overtly consumption driven economy are likely numbered. Here you will likely see why that is so.
Probably the most interesting moment of the presentation is at 27:20 mark.
That is the point in which Real Vision co-founder and famed macro investor Raoul Paul points out that the Federal Reserve is likely to further blow out its balance sheet to some $8 trillion USD by the middle of the 2020s.
An outsized and large retiring baby boomer demographic is hitting their working retirement age now and into the 2020s. What is clear is that many have not saved enough capital for their retirements.
Thus many longer living baby boomers are having to put off retirement longer. Much of the retirement shortfall will come out of their reduced consumption ongoing due to the middle portion of them not having enough saved.
Key to understanding the situation (at 10:48), is soberly looking at the ‘median’ net worth, not the ‘averages’ skewed by the higest 0.1% wealthy.
In a world of increasingly record debt and rigged inflation data, ongoing negative real interest rates have pushed the soon retiring investment crowd into riskier asset classes like stocks (i.e. equities tend to be more volatile than bonds or fixed income investments).
The next economic recession is the real risk ongoing according to Raoul. In a US cult of stocks or equities, a large skew of the investing population has outsized investments in the stock market. This is a problem as stocks are historically volatile and have a very real potential to sell off by more than 50% in value within the recession to come (e.g. 33:47).
How will the US government and its private bank partner, the Federal Reserve, react to all this?
At the 35:20 mark Raoul tackles this ongoing question. He contends they will try for they have to. Expect a further Japanization of US fiscal policies to try and stave off this ongoing systemic problem. To conclude this video, Raoul spells out the difficulty of investing for the millennial generation.
He specifically mentions how gold bullion is cheap (historical gold value context) at the 45:39 mark. Yet he also notates that all time cheap commodities today are more cyclical than secular. Meaning they could experience booms in value to come, but they typically do not last and will cycle from under to overvaluation, back to undervaluation throughout a person’s lifetime.
For longterm wealth accumulation he encourages the start-up and entrepreneurship trends ongoing.
Raoul also lightly touches upon blockchain and cryptocurrencies as a potential opportunity space longterm in the financial world. Although one does not have to look hard to find ridiculous crypto offerings and outsized promises in that space as well.
Although the retirement and pension crisis remains an ugly picture to look at.
Knowing it indeed exists and will worsen is key to perhaps being best prepared for ones financial future going forward.
So heed this valuable information now, save as much capital as you reasonably can, and plan accordingly.