EdgePoint: Planning for retirement
Our latest entry of the EdgePoint Academy focuses on retirement, specifically on topics and issues faced by investors preparing to retire or already there. Over the next few months, we’ll publish a series of articles covering the following topics:
Are your retirement savings on track? Compound your money, not your problems.
The big day has arrived: having the right investments can help meet your retirement income needs
The retirement income balancing act: the impact of withdrawal rates
Sequence of returns: a risk worth learning about
Your retirement preparedness temperature check
First things first – what you need to know while you’re saving for retirement and how compounding can help you.
Wealth is what you don’t spend
The median family income adjusted for inflation was $29,000 in 1955. Today it’s just over $63,000, an all-time high. But half of Americans today have zero dollars saved for retirement.
The gap between what you earn and what you spend is the figure that matters most. The majority of Americans earn more today than ever before, but it might not feel that way because the gains have been offset with higher spending.
To generalize only a little: In the 1950s camping was an acceptable vacation. Hand-me-downs were acceptable clothes. A 983 square foot house was an acceptable size. Kids sharing a room was an acceptable arrangement. A tire swing was acceptable entertainment. Few of those things are acceptable for most households today. The average new home now has more bathrooms than occupants.
The median household’s real wage gains over the last half-century have been spent. The household savings rate fell by 30% during a period when the median real income rose 40%.
The % of S&P 500 Index sectors at record valuations is higher than during the tech bubble
Inflows into Tech funds
Young people want to own Tesla, they don’t want to own fossil fuels
Jim Cramer on CNBC “The world’s changed. There’s new managers, they don’t want to hear whether these are good or bad… this has to do with new kinds of money managers who frankly just want to appease younger people who believe that you can’t ever make a fossil fuel company sustainable.”
Changes in global energy mix:
Inflows into Tech funds
Young people want to own Tesla, they don’t want to own fossil fuels
Jim Cramer on CNBC “The world’s changed. There’s new managers, they don’t want to hear whether these are good or bad… this has to do with new kinds of money managers who frankly just want to appease younger people who believe that you can’t ever make a fossil fuel company sustainable.”
Changes in global energy mix:
