Commentary on "92 Percent of Baby Boomers Believe in a Retirement Crisis"

By Kevin L. Coppola


 (Click Here to Read the ORIGINAL ARTICLE)

The on-again-off-again public concern over Social Security seems to me to be an inversely correlated concern over what the markets—and correspondingly, retirement plan balances—are doing. When times are good for the stock market, people seem to want to raise concerns about Social Security. And when the markets are going down, Social Security seems to take a back-seat to concerns about the market.

Why is this? I have 2 theories: 

(1)    Greed and fear are the 2 emotions that drive most people. No offense to you if you are one of the few who have those emotions well in check. However, for the “greed” driven, when all is well with their retirement plan, they go looking for MORE. “Social Security…woe is me…may not be there when we “need” it, etc.”

(2)    For those already resigned to the possibility that Social Security may not be around—or at least insufficient to provide Retirement Income Security—their focus, AS IT SHOULD BE, is on the fate of their retirement plan…how to fix it…what is their employer going to do for them?, etc.

We don’t have a Social Security crisis in this country…what we DO have, and what the article confirms and Compass Investors has been saying for a decade, is that we have a retirement security crisis. And between 92% and 100% of those surveyed, depending on their age believe that to be the case too. And, BTW, having 90% of respondants agree to something is an unheard of number as far as surveys are concerned.

Compass Investors begins our education process by encouraging new customers them set a goal for having Retirement Income Security. That goal is, simply put to “make sure you can generate your pre-retirement level of income, no matter how long you should live.” This can be done by growing a nest egg large enough so that you can invest it in a guaranteed product (such as an annuity) and live off the interest alone.
 
The author speaks to the use of annuities in the article too. However, annuities have a bad rap for some reason. Well, we don’t sell them, but I can tell you I have a few for just the reasons I mentioned. If my company is not going to have pension money left for me when I retire, and/or if the government is not going to give me a “pension” (aka, Social Security), then I’ll just go create my own by growing my retirement plan large enough so that I can annuitize it and live off the interest—forever, if need be.   After all, my retirement plan the ONLY thing I can control or do anything about! 

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Kevin L. Coppola
kcoppola@compassinvestors.com