Ask Terry Questions Outlook for retirees with our aberrant economics

Outlook for retirees with our aberrant economics

By Terry Savage on September 15, 2019 | Investments

So confused. I’m a 4 years retired 66 year old. I’ve lived through the skyrocketing inflation of the 70’s and the nil inflation/deflation of the present (and the various crises that came with them). I’m still the same 100% stock market (and, these days, some cash, enough for 2-3 years expenses) where I’ve been since my 30’s, largely because there is simply no alternative now. I earn plenty on dividends, enough to not need SS, due to my relatively frugal lifestyle and lack of debt. So everything is grand! Or is it? How I long for the days of 3% on a passbook, and 6% on a CD (plus a toaster).

Do I count on the 3.5 million annual US retirees and companies just buying back stock to keep pumping up the market? These new retired folks really have no choice. But what happens when the music stops? The only this I can see from 0% rates is ill advised M&A, crushed public/private pension plans, and an eventual financial collapse.

And everyone buying the stock market anticipating a .25-.50% rate cut and the consumer to save the day!

Thoughts? And Thanks,

Terry Says

I deleted your long list of worries, but rest assured you’re not alone.  However, we’ve muddled through before and look at where the stock market is now!  So here’s the thing.  The average bear market takes 33% of the value of the stock market — and takes years to recoup.  The worst bear markets have taken more than 50 percent of the value of the stock market.

I believe in stocks for the long run.  But how would a market decline impact YOUR lifestyle, health, and emotions?  That’s what you have to consider when deciding how much should be invested in the market — or set on the sidelines, earning next to nothing!  You don’t mention heirs or dependents, but that could also be a consideration.

I can’t answer those questions for you — but at this stage of your life, you should consider the impact of a bear market and “sell down to the sleeping point.”

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