There Has NEVER Been A Better Time To Retire

Nov 12, 2023 | Uncategorized

Don’t Believe Me?  Watch This Video

My man talks about a former colleague who died 5 years into retirement.  His wife had died BEFORE he retired so he never got to spend any retirement time with her.  Oh, and by the way, he had not one, but TWO pensions, PLUS Social Security, PLUS over $1 million in a 401k.  

What if he retired 6 years ago instead? Think he could have made it?  On two pensions and Social Security and a portfolio that would have still be worth in the high 6 figures, are you kidding me?  Of course he would have!  

Obviously, he didn’t know his wife was going to die and I don’t know his age.  But how many times have you sat there and said to your better half, “Just one more year so I can get that bonus.” Or, “Just one more year so we’ll break $1 million in the 401k”. Or something like that. 

At some point you’ve got to realize it’s no longer about the income generation retirement planning is about the spending. What are you planning on spending??? When have you looked at that side of the income statement? Have you ever?  

You know why everyone focuses so much on the income side of the cash flow statement?  It’s because your investments. Every day you log into your 401k and see your balance in your mind you’re thinking how much income that can generate.  But remember it’s not the income that drives successful retirement, it’s spending.  

Why do you think I spent so much time on expenses in my retirement course which you can get here?  Because expenses determines your ability to retire. Know your expenses and you know if you can retire.

Oh, and I hear some of you saying right now, “but Josh, retirees are DOOMED!  The dollar is crashing. Inflation is through the roof, Bo Jiden is going to take us to war, health care costs are going to bankrupt us all, Social Security is insolvent. Don’t you know this???” 

Well, for those folks, they probably shouldn’t retire.  The last thing the world needs is more worry warts in retirement spending all their days watching Fox News or ABCCBSNBCCNNMSNBCPBSNPR etc. Let those people get their 7th booster and gripe all day.  We don’t have time for them. 

The facts are that today’s retirees are in the best shape financially than ever.  By far. This is just not debatable.  Great article in the Wall St. Journal that discusses this here. (This may be a paywalled article. Not sure actually).   Here’s the headline though.

Older Americans Are Better Off Than Ever

They invested for decades, are working longer and get bigger Social Security checks than past cohorts.

The article links to a study by some economists at the Hoover Institution, where Thomas Sowell has a chair by the way, that proves the argument. Sadly, the link to download their 2023 study is broken, rookie league stuff there, but if you take the time you can find their 2022 study which I did and discussed on my livestream last night.  We started this discussion at the one hour mark. 

Oh, yeah, you’ll hear the Nattering Nabobs of Negativity screaming it was SO much better back in the days when we all had pensions.  Those people simply don’t know what they’re talking about. 

Here’s from the American Gas Journal magazine in 1928 written by J.J. Berliner, Senior Member of the National Accounting Systems. 

“Few of the industrial pension plans in the United States today are so financed that they are likely to remain solvent without refinancing or modification. 

In the case of many municipal and other public service pension plans, failure to count the cost care- fully has already resulted in bankruptcy of the pen- sion systems, either actual or constructive. it is hardly too much to say that the history of pension schemes has been a record of mistakes or failures. Even the elaborate Carnegie Foundation plan was forced to undergo a radical reorganization only a few years after it was started.”

Remember, this article was written in 1928.  ERISA was enacted in 1974. ERISA was enacted in response to collapsing pensions across corporate America.  Given that Berliner was telling anyone who would listen that corporate pensions were not sustainable as they were not based on any actuarial accounting, is it any surprise ERISA was necessary? Especially when corporate executives such as Charles M. Cohn of Consolidated Gas, Light and Power Company of Baltimore were saying the following in the July 1928 issue of American Gas:

“The pension plan of the Consolidated Company was not formulated upon the actuarial basis so highly recommended by Mr. Berliner, although, generally speaking, the advantages of such a basis in some instances may be as definite as he asserts. However, it seems to us that local conditions affect the operation of the pension system as established. Our experience with pensions, which dates from 1912, has not, therefore, as yet demonstrated a burdensome growth in ratio of the cost of the system, as suggested by Mr. Berliner’s article. In fact, the ratio has been fairly constant. Our system has worked well. It has not proved burdensome…” I’ll add the word “yet” next.

 As to what happened to Consolidated Gas and Energy? Well, like almost all of corporate America it got taken over time and again and is now part of the Exelon company. Do they still offer pensions today? I’ve no idea  But remember, if you read the Berliner article you’ll recognize that one of the primary benefits of the pension is to “exercise disciplinary control over workers.” 

Yeah, it was SO MUCH BETTER back then to retire wasn’t it when no one had 401ks and a few had pensions that they were not sure would even be there for them throughout their retirement. 

The 401k and IRAs have allowed people to take their money with them!  The pension, even if was paid to you, didn’t do that.  The 401k allows you to leave money to your kids, your spouse, a charity. Pensions may allow you to leave a limited benefit to your spouse but no one else.  401ks allows you to control your money.  Pensions? Nope.  You are at the whim of your fund managers in a pension.  How did they get chosen? How much do they charge? Are there any consequences to them if they screw up?  

In a 401k it’s YOUR money and YOUR responsibility.  And as such it’s literally liberating.  Yeah, you may screw it up.  That’s why we have Social Security sitting there at the ready. Just read that Wall St. Journal article, or better yet, the study those gents from Hoover Institute did.  

Or don’t. And work just…one…more…year… which you doggone know full well will become another year, and another.  Next thing you know five more years have passed by and those are five years you’ll never get back. 

With interest rates at 20 year highs, meaning you can get risk free assets paying 5% now, it’s the best time to retire…ever!