Transamerica Center for Retirement Studies 17th Annual Retirement Survey

The current household savings in all retirement accounts among Baby Boomer workers is $147,000 (estimated median). It should be noted that many Baby Boomers were already mid-career when 401(k) plans were first introduced. Therefore, they have not had a full 40-year time horizon to save in 401(k) plans.

The 17th Annual Transamerica Retirement Survey finds that 45 percent of Baby Boomers are expecting a decrease in their standard of living when they retire, 83 percent of Generation X workers believe that their generation will have a harder time achieving financial security than their parents’ generation, and just 18 percent of Millennials are very confident about their future retirement. Approximately half of workers across all three generations plan to work at least part-time during their retirement. This vision of working during retirement is changing the landscape of retirement.

Research Report

TRCS Press Release

TIAA Survey Finds IRA's Owned by Only a Third of Americans

One-third (33 percent) of American adults have an IRA, with 18 percent currently contributing to their account. Employed individuals are more likely to have an IRA (25 percent) than those who are not employed (11 percent) or retired (8 percent).

Source: The Fifth Annual TIAA IRA Survey

Retirement Fears Over 50

Source: Marketwatch

Liquidity Trap or Market Breakout?

As the S&P 500 hits new record highs, let's review sector performance since the May 21, 2015 closing high. Since then the defensive sectors have been leading the market: Utilities, Telecom, Staples.

From Hedgeye: Stocks moving up on decelerating volume have the potential to create a liquidity trap and could signal a coming correction, while an outsized burst of volume on a strong up move in a stock could signal a breakout to new price levels.

Please pay attention to volume as the market moves to all time highs. In addition, reviewing the CNNMoney Fear and Greed Index shows the psychology of investors is registering at "extreme greed." As Warren Buffet likes to say: "Be fearful when others are greedy and greedy when others are fearful." Wise investing my friends.

Momentum Wins! US Markets Remain in Uncharted Territory

Value investors that look at company fundamentals have to be scratching their heads this morning as they watch the markets. Momentum traders who only care about following very short term trends must love the markets today. At the end of June, 10 and 12 month simple moving averages told us to stay invested in stocks, bonds, and REITs. The markets send signals and the simple moving average is showing us that the beginning of July was not the month to sell equities. How long can this rally from March 2009 last? The market has still not had a monthly close over 2130, but today's US Employment report almost guarantees that the shorts getting squeezed along with momentum trades will help the market climb the wall of worry over 2130 (until this happens the market peaked in 2015). Doug Short has illustrated that the markets are not cheap (link 1 , link 2 and link 3), but like other periods of overvaluation -this condition can last longer than investors expect and expensive markets frequently become more expensive. Jill Mislinski writing for Advisor Perspectives with Doug Short shows us that this market is in uncharted territory. Jill writes, "Never in history have we had 20+ P/E10 ratios with yields below 2.5%."John Hussman who has been waiting for this bubbly market to pop for years summed it up this way on his latest weekly commentary:

Much of America has still not recovered from the violent consequences of the last yield-seeking bubble the Fed engineered. Now the Fed has engineered another, and has drawn nearly every pendulum to an extreme. We expect $10 trillion of “paper wealth” to be wiped from the U.S. equity market over the completion of this cycle, because it is not “wealth” at all. From an investment standpoint, the value of any security is inherent in the long-term stream of cash flows it will deliver to investors over time. Artificially jacking up financial securities through reckless monetary policy doesn’t change the cash flows that those securities will deliver over time; it only converts future expected return into past realized return, leaving nothing but risk on the table for years to come. Central bank intervention is not a benefit to long-term economic prosperity. It is the head of the snake.

By John P. Hussman, Ph.D.

President, Hussman Investment Trust, Source

Please consult a qualified financial advisor before making any investment decisions. This blog is for educational purposes only and does NOT constitute individual investment advice.

Post Brexit Simple Math

During the past twelve months the S&P 500 has been in a range between 1810.10 and 2132.82. Given the earnings recession in the US, the extreme currency fluctuations, the significant decreases in global stock markets since last year, my take is the S&P isn't even worth purchasing until it is below 1970. Here is the simple math 2132.82-1810.10=322.72, which defines the range of the market. Taking 322.72 and dividing the range by 2 shows me the 50/50 risk reward point. 322.72 divided by 2 equals 161.36. 1810.10+161.36=1971.46. My simple math given this weakening economic environment is that I have little to no margin of safety at any S&P values above 1971. If you purchase the market at 1971 or lower and anticipate that it can eventually get back to the old high then you have ~8% upside and if it the market retests the lows there is about 8% downside. To get a 25% return to old highs the market needs to retreat to 1706. Going down to this level also completes a 20% correction in the market from the 2132.82 highs. Bottom line: market buy zone in my mind, using my simple math, is 1704 to 1971 and if the market breaks 1690 we could be in for an extended bear market. Let's see how this plays out. The asset classes continue telling a defensive story with increases in gold, utilities and the long US treasury. Value has also started doing better than growth, highlighting the growth slowing story. Wise investing my friends.

Please consult a qualified financial advisor before making any investment decisions. This blog is for educational purposes only and does NOT constitute individual investment advice.

The State of Retirement in America

Today, many Americans rely on savings in 401(k)-type accounts to supplement Social Security in retirement. This is a pronounced shift from a few decades ago, when many retirees could count on predictable, constant streams of income from traditional pensions (see “Types of retirement plans,” below). This chartbook assesses the impact of the shift from pensions to individual savings by examining disparities in retirement preparedness and outcomes by income, race, ethnicity, education, gender, and marital status.

Source: Economic Policy Institute, PDF