We tend to spend a lot of our time as advisors helping our clients answer a pretty simple question about their retirement: will I have enough money to last? The answer, unfortunately, is often very complex. An important starting point, to be sure, is how much money is saved during working years. It is in answering this question and thinking about the importance of retirement savings, that we often turn our attention to large-scale trends in the population, looking at how much the average American couple has saved for retirement. Unfortunately, the results are often grim.
The Accidental Investor Blog
In some of our recent communication with clients, we have been discussion the growing trend of automation in many industries, and how it is affecting jobs throughout the country. In fact, automation has led to the loss of more jobs than has outsourcing those jobs overseas. The potential of autonomous trucks and cars threatens up to 4 million jobs, possibly in the very near future. This will be the result of automation, not outsourcing. Many of the people who have been displaced over the years by automation are angry because they no longer have an income, and many are upset not only because they can no longer work, but also because they feel that they have lost a part of their identity.
Over the last few months, in our semi-monthly Friday e-mails to clients, we have discussed the problem with pension plans no less than six times. Some of the people I follow on Twitter have also been discussing pension plans recently. (I am not saying I started this trend.) The following three articles are an apt representation of the challenges currently faced by pension plans:
In a September 25, 2000 skit on Saturday Night Live, Will Ferrell portrays a character named Rich Preylant who is competing on the game show Who Wants to Be a Millionaire. Rather than attempting to answer further questions, Rich stops playing after winning $100, wanting to return to his hometown and plan his family’s future. (The skit itself is rather short, so if you have a spare 2:40, you can watch it here.) Upon hearing Rich’s plans for his winnings, Regis is, of course, incredulous. “You are aware we’re talking about a hundred dollars,” he admonishes. Unfortunately, Rich is undeterred.
My apologies to Tina Turner for altering the title of her hit song from 1984. Earlier this month, Morgan Housel of the Collaborative Fund tweeted, “I was born in America in the 20th century but luck has nothing to do with my success. – Too many people.” In his book, Outliers: The Story of Success, Malcolm Gladwell points out that many successful people owe a portion of their tremendous success to good fortune, in addition to what Gladwell referred to as the “10,000 hour rule.” In their books, both Ed Smith (Luck) and Michael Mauboussin (The Success Equation) discuss how to separate luck from skill. Ed Smith has what I think is a tremendous quote near the end of his book. “Destiny, it seems to me, is only a short jump from a sense of entitlement.” (One of my favorite movie quotes is from Back to the Future, when George McFly says to Lorraine Baines, “I’m your density.”)