Rockland ∫ Bergen ™

Five facts affecting families in Rockland County

Fact #1:  The average married couple, both age 62 and retiring this year, will require an income until age 92, as at least one of them will live that long. So for those retiring in their early- to mid-sixties, your expected joint-retirement is presently 30 years (though it could certainly go higher).

Fact #2:  Using historic inflation of 3.1%, this couple will need $2.50 in Year 30 of retirement to buy what $1.00 bought them in Year 1.  Evidence: The 1980 first-class stamp was 15 cents. Twenty-nine years later, the same stamp is 44 cents.

Fact #3:  For the middle-income family, in order to preserve quality of living throughout retirement (i.e. protect purchasing power), at least one dollar increase in income will be needed for every dollar increase in expenses. So, if our 62 year old couple requires an income of $50,000 to fund expenses in Year 1, they will therefore require an income of $125,000 in Year 30… just to maintain the status quo.

Fact #4:  Excluding expenses funded by Social Security or pension, all other expenses are funded through income from assets. Such assets must therefore appreciate in value by the same 3.1% annually over the same 30 years to avoid a decline in purchasing power.

Fact #5:  There is only one asset class which has historically allowed for this type of long-term appreciation, and it is global equity.

Here’s the CHALLENGE with these Facts

Very few people realize (presuming they have adequately saved during their working years) that the above five facts will be the primary determinant of whether their resources last as long as they do! Moreover, when somebody is gracious enough to inform them of these facts and their implications, most people resist the information!

Note to readers: We realize this is a lot to ‘digest’ in a single session, but please read the last two paragraphs carefully because they are at the heart of the issue.

Why the resistance?

Resistance ultimately arises over the counter-cultural fact that the long-term inflation-adjusted income available through equity, an asset class which their parents and grandparents likely told them was risky, turns out to be safer, whereas ‘fixing’ one’s income through bonds, an asset class which their parents and grandparents likely told them was safe, turns out to be inadequate.

While this remains quite counter-cultural, one can hardly call it counter-intuitive, given that everything around us, from the cost of a gallon of gas or a gallon of milk, to the price of a first-class postage stamp, tells us that it is purchasing power (via inflation and taxes) which must be their greatest concern as they prepare for (and enter into) retirement, and therefore that protection of purchasing power be their primary portfolio goal.

“OK, I get it. Now what?”

If you have have read this far, and are intuitive enough to sense the reality of the above information, you’ll want to seek out an objective, well-informed retirement planner and behavioral advisor.

This compassionate but resolute advisor will assist you in the creation of a lifestyle plan and will thereafter help you accomplish everything that is available (with patience and discipline) through the use of a plan-directed, diversified investment philosophy. Without this third-party assistance, a vast percentage of families fall short of achieving what’s available simply because of their very natural tendency toward emotionally-oriented behavior—precisely the kind that will side-track them at many points along the way.

If you’re ready for a conversation, please complete the below request and we will email you within 24 hours.

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