Planning For Retirement in Difficult Times

The Difficult Retirement Road Ahead Requires Long-Term Planning

Bullion.Directory precious metals analysis 14 April, 2021
By Peter Reagan
Financial Market Strategist at Birch Gold Group

The COVID-19 emergency finally appears to be coming to a close, although that process could still take months. Even so, retirement savers still have an extremely challenging road ahead thanks in part to economic ripple effects that will affect the U.S. for years to come.

Kiplinger urged savers to concentrate on planning as one way to mitigate the financial uncertainty. The same article offered some other retirement ideas to consider while making that plan.
 

Can delaying your retirement help?

The Kiplinger article claims that: “You can significantly increase your retirement income by delaying your retirement date, even if it’s just for a year or two.”

Of course, personal or medical circumstances can also force you into retirement earlier, so this may not be possible.

Tied together with the decision to retire later is whether or not to claim Social Security benefits early. The Motley Fool gave three reasons why it could be a good idea to delay filing for benefits:

1. “If you delay your benefits until age 70, you’ll score the maximum payout.”
2. If you file at age 70, “you’ll boost your benefits, which can help make up for a lack of savings — even a glaring one.”
3. Aside from the opportunity to save more for retirement, according to the article: “There are studies that link working longer to living a longer life.”

Whether or not you choose to retire later or claim Social Security at 70, the Fool article offers some food for thought.

Kiplinger also suggested that incorporating increased medical expenses is a good idea when planning your retirement.

But even good planning to mitigate the near-term consequences of state-enforced lockdowns might not be enough.
 

Short-term gambling is no replacement for long-term planning

It seems like a lot of retirement savers see the challenges ahead and are making less-than-prudent moves with their nest eggs…

As reported by Reuters:

A record $576 billion has flown into equity funds since November — more than the $452 billion seen in the last 12 years combined, all thanks to ultra-easy monetary policies and unprecedented stimulus.

It’s really hard to imagine these numbers…

• That’s twelve years of investing dollars hurled into the stock market in five months.
• Or 24 months worth of stock buys happening each of the last five months.
• Or about one month of stock buys every trading day in the last five months.

So who’s buying?

Barron’s tells us, the number one stock buyers right now? Baby boomers. That’s right: a huge amount of cash is going into stocks from those already in or near retirement.

Considering the near-record valuations in the stock market, we can guess this is a desperation move.

Or possibly an example of the “greater fool” hypothesis?

“Big Short” investor Danny Moses has a startling summary of a dangerous behavior that appears common: short-term thinking about money.

One of Moses’s examples came from the recent “Wall Street Bets” fast-money fiasco:

The average age of a Robinhood trader is 31 years old. They were 17 during the financial crisis, which means they’ve only known the Fed having their back. This is a liquidity-driven market, period. Money is still looking for a home, and it will find its way into whatever is the flavor of the day. That’s a very dangerous, unsustainable model over the long term.

Then Moses pointed a big spotlight on recent stock market mania, specifically commenting on the Archegos margin call, among other blowups:

Money’s free right now. Risk-taking is at an all-time high. That’s always going to come with problems over time. You’re seeing pockets of blowups, whether it’s Greensill, Archegos, whatever it might be. You’re going to see a lot more of these things keep happening because this is what the Fed wanted.

This sort of short-term day-trade thinking could prove to be dangerous for retirement savers. One wrong move could get your savings caught in one of Moses’s “pockets of blowups.”
 

Physical gold and silver for the long haul

Taking a long view of your savings is important. That’s why you should consider the centuries-long track records of physical gold and silver.

Hard assets like these have stood the test of time against volatile market conditions.

They also have a history of acting as a hedge against inflation, which looks to be yet another challenge retirement savers could face in the near future.

Furthermore, gold and silver enjoy intrinsic value that persists separately from today’s hot market moves.

This article was originally published here

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