When I’m 64
When? In roughly three years, God willing. But then again, no one knows really what perils await me after that. Take for example the poor 83-year-old woman who was brutally killed by her 92-year-old husband (article in Italian here; roughly translated title: “Matera, 92-year-old kills wife with a bat”). If I were in his daughter’s shoes, I’m not sure I would agree with the police putting the assassin under house arrest in my living quarters. I mean, the guy is clearly in good enough shape to rest in more secure confines.
They say money is not everything but it most certainly helps a lot. We should wonder about the structure of our savings when we are 64 or older. Much has been written about the correct “withdrawal” rates of portfolios and how this ties with projected living expenses, life expectancy and the size of the savings pool. Under today’s constrained return alternatives (for a sobering analysis, see this week’s Hussman weekly comment), almost any portfolio which does not in and of itself provide enough income for survival will be put to severe stretching exercises, most of them falling short of one’s desired output. And herein lies the beauty of QE, a true financial drug.
It is a problem almost without equal in recent history. What comes to mind is the debate on what to do with Social Security, a political hot potato that has been tossed around for ages even though we had decent opportunities to make substantial fixes, like the Dominici-Hollings initiative, as late as the early 1980’s. While something did get done after that, time kept passing and as this happened the problem grew in size. In some other countries the situation is even worse. Few analysts or commentators mention the true scale of the debt-to-GDP ratio when such “off balance sheet” items as unfunded pensions and benefits are included.
The inter-generational nature of this problem, while technically correct, does not really help in solving it. Again, the politics of voting makes Baby Boomers unbeatable in this regard and the real question – “while I siphon my state pension payments from my children’s contributions, from whom will they siphon theirs?” – gets pushed down the time scale a few decades, enough to pass the potato to another legislative contingent.
If we had true political leaders with the intention of doing well for a nation instead of focusing on power and getting re-elected, we would likely have a much more informed and trusted debate on what needs to be done. But this has little chance of happening because we have no leaders, and even the most affectionate of children will never vote for a decline in supply of candies.
Meanwhile, I’m making sure all of my children’s baseball bats are safely locked away.
Photo source: youtube.com.