Are Half of US Households REALLY Falling Short of Retirement?

Once you see, with your own eyes, that the Emperor truly has no clothes, it’s hard to believe he is ever clothed again…

And this is where I stand now in my research on retirement planning. The insanity that is the CPS, again what the government uses for its OFFICIAL statistics on poverty, plus the various degrees of outright lies regarding other ‘doomsday scenarios”, one of which was used to launch the political career of a current presidential candidate, forces you to look at studies with a very cynical eye.

I’m at the point now where the climate “deniers” were when they found out about the climate-gate emails and the “hide the decline” fakery. “You can’t do that stuff!” They protested. And were consequently not allowed back into polite society which is run by the fakers. In fact, if you were a woman you were literally accused of ‘whoring’ yourself in order to win approval by men. Disgusting as that is the fakers still run the show. And hand out the research grants to their favored bootlickers.

So it is with an incredible level of frustration that I must now revisit ALL what I thought were heretofore established, and factual, theories in retirement planning. The crazy thing about this is I, and if you follow me at all know this to be true, have been much more optimistic about the state of affairs for current and budding retirees than many in my field.

And yet now I find myself even MORE optimistic! What was holding me back was my own need to “appeal to authority” which continually decried the desperate state many retirees would face. I was, after all, just some guy and yet all these people were esteemed academics and researchers. They know better, right??? Uh huh. (These esteemed academics also knew the CPS is a hot mess and yet here we are still using its data as if it were sacrosanct.)

Instinctively, I knew the pending retirement disaster theory was overblown. My own anecdotal evidence as 20 years working with clients, PLUS empirical evidence using BLS and EBRI data of ACTUAL human beings told me there was
A. Theory
B. Reality
and that they was a growing chasm between the two.

So, last night I find myself reading a document from the Center for Retirement Research “NRRI UPDATE SHOWS HALF STILL FALLING SHORT” and I begin to wonder, what if they’re wrong??? I did a similar video on this yesterday morning too.

You read Gail Heriot’s piece about the truth of the health care “crisis”, you read Ty Bernicke’s study on “Reality Retirement Spending”, never mind all the other research you’ve done and you begin to see clearly, again with your own eyes, that there is more to the story.

Is there an incentive, for instance, for researchers to focus on the negative in order to generate more grant money? No! That would never happen! Never see that happening in climate science, nutrition science, vaccine science, etc. Impossible!

“To calculate projected replacement rates, we also need income prior to retirement. The items that comprise pre-retirement income include earnings, the return on 401(k) plans and other financial assets, and imputed rent from housing.4 Average lifetime income then serves as the denominator for each household’s replacement rate.”

Let me ask you, why would you use “RETURN ON 401k PLANS” as income prior to retirement??? That makes no sense to me. Yet there is no explanation in the notes.

“The exercise starts with projecting how much retirement income each household will have at age 65. Retirement income is defined broadly to include all of the usual suspects plus housing.1

Using this relationship between wealth and income, financial assets and housing are estimated separately.2 In the case of housing, the projections are used to calculate two distinct sources of income: the rental value that homeowners receive from living in their home rent free and the amount of equity they could borrow from their housing wealth through a reverse mortgage.3”

Why are we using imputed income from a home as part of retirement income? That makes absolutely no sense to me. So, I look at the notes for clarification and…nothing. Yet again.

Let me explain it like this… you either have income or you don’t. Imputed income from your home is NOT income you can use to put food on the table. Yes, it is income you don’t need to earn in which to pay the rent but in terms of calculating if you’re no track for retirement, I don’t get it.

That’d be like saying because you no longer commute, you have an imputed income of not needing to fill the tank up with gas 2 times a week and we’re going to use that imputed income in retirement projections. Again, makes no sense.

Lastly, this paper assumes “that households convert the wealth into a stream of income by purchasing an an inflation-indexed annuity.” But they even say “While inflation- indexed annuities are not widely used by consumers, they provide a convenient metric for calculating the lifetime income that can be obtained from a lump.”

Folks, in all of my 20 years not one time did ANYONE ever say to me “let’s put ALL of my net worth into an inflation-index annuity.” Never has happened and never will happen. I frankly don’t care about the “convenience” of doing such a thing for your research. It’s not based on reality. Thus, is meaningless.

Yet, and this is the crux of the matter, because the negativity of the headline, this, and other papers JUST LIKE IT, will get the press. It will lead to interviews and aspiring Presidential candidates will latch on to it in a claim to “save” retirement for middle-income workers.

And if such a candidate should win, say a Senate seat in Massachusetts, she will be in charge of putting together the Consumer Financial Protection Board and staffing it with her underlings who will then in turn dole out grants to research JUST LIKE THIS which tell us how doomed we are. Thus MORE research will need to be done and more grants doled out. You see how this works???

And no one will actually read the fine print. Too much of an inconvenience.

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