Survival of the Fittest


 

The coronavirus worsened income and wealth disparity in the U.S.(1). However, if you were on a good path for retirement planning and financial stability, chances are you were in the group that came out ahead.

According to the latest Retirement Confidence Survey by the Employee Benefit Research Institute (EBRI), a majority of retirees and workers are more confident now about their retirement prospects than they were last year just prior to the virus making its way to America. In fact, 80% of retirees feel fairly good about having enough money to last through their retirement, up from 77% a year ago. This stands to reason since people who were already retired didn’t have to worry about losing their jobs(2).

The benefits of lifelong planning and saving are the purposeful equivalent to “Survival of the Fittest”(3). In other words, if you entered retirement with reliable sources of income, a portion of your investment portfolio allocated for growth and appropriate safety nets, your likelihood of surviving a crisis – could potentially increase. With that in mind, if you’d like to shore up your financial portfolio for the future, please contact our office.

Unfortunately, a secure retirement is growing more difficult to achieve these days. Recent research found that more middle-aged Americans are actually accumulating higher debt as they get closer to retirement. For many, that means carrying credit card balances, taking on student loan debt, second mortgages to upgrade their homes or even buying a second home before they pay off their primary mortgage(4).

For young adults, the road is even more difficult. Fewer people are putting their homes on the market, so low inventory has resulted in persistently high real-estate prices that are preventing young adults from buying their first house. That’s not a good sign, because home buying is one of the strongest paths to lifetime wealth accumulation. One of the stated missions of the Department of Housing and Urban Development is to address the affordable-housing shortage. Former Secretary Ben Carson was making very good progress in this area, as well as, the success of Opportunity Zone investment in run-down areas around the country.

Jamie Dimon, CEO at JP Morgan, recently said he expects the U.S. economic recovery to continue through 2023. This is no surprise considering businesses are re-opening, continued high personal savings, the Federal Reserves loose monetary policy and tax-payer funded government spending will support economic growth. Although many of these tailwinds are not supportive of real organic growth that come from normal free-market activity, low unemployment, etc.

(1) Alicia Adamczyk. October 23, 2020

(2) Richard Eisenberg. Forbes. April 22, 2021

(3) Nishan Degnarain. Forbes. January 2, 2021

(4) Knowledge@Wharton. April 13, 2021

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