The End of Retirement

Here's an interesting (Philosophical) analysis on the Road Ahead...

The End of Retirement

The entire system of economic value that underlies the possibility of investment broke down completely in the speculative excesses of the last thirty years, drowned in a flood of unpayable debts â€“ public, corporate, and private â€“ that were mistakenly classified and then sold as financial assets. The face value of these paper debts vastly exceeds the value of all human economic activities on Earth; the huge majority of them can thus never be paid off, and so they are effectively worthless.
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That awkward fact, if honestly faced, would likely bring the worldâ€™s economies to a shuddering halt. Thus we can be confident that it will not be honestly faced. Instead, governments around the world are playing a high-stakes game of make-believe, pretending that the global economy is not bankrupt in the hope that the losses can be spread out over years rather than hitting all at once. For all I know, they may succeed â€“ but even so, the downside will not be pretty.
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People nowadays invest for many reasons, but one of the most common is retirement. Ever since the American pension system and its government equivalent, Social Security, began to shed their reputation for stability and adequate funding, a growing number of Americans â€“ pushed that way by large and lavishly funded ad campaigns â€“ have placed their hopes for a comfortable old age on investments. The result is a huge fraction of Americans who are emotionally as well as financially invested in the hope that a big payoff from their assets will enable them to have the retirement of their dreams.

If you are among the people who cling to that belief, Iâ€™m sorry to say I have bad news. Over the next decade or so, the huge overhang of paper wealth that now floods the world economy is going to lose nearly all its value. As it goes, it will take your retirement funds with it.
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Itâ€™s anyoneâ€™s guess exactly how the process will play out. One possibility is a long deflationary spiral in which markets slump, bankruptcies soar, and the legacy of bad debt suffers the death of a thousand cuts. Another is hyperinflation, in which the dollar value of the bad debt still holds good but a cheeseburger costs US$150,000 and workmen take their salaries home in wheelbarrows. Another is a credit crisis in which efforts by governments to fund deficits via borrowing exhaust the worldâ€™s dwindling pool of credit, and nations are forced into default. Still another is a political decision on the part of a major debtor nation to default on its foreign debt, leading to panic selling of offshore assets and the collapse of international trade and investment.
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For the next decade or so, then, thereâ€™s unlikely to be any asset class that will give prospective retirees the income theyâ€™ve come to expect. Nor will private pensions, most of which are dependent on investments and vulnerable to corporate bankruptcies, far much better during that time. Nor are government pensions immune; most governments are hemmorrhaging red ink right now, adding to unsupportable debt loads, and the pool of credit available for government borrowing is far from limitless.
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Retirement as a social habit was entirely a product of the zenith of the age of abundance now sliding backwards in our collective rear view mirror. For a brief window of time â€“ rather less than a century â€“ it made financial and political sense for nations in the developed world to pay their elderly citizens to stay out of the work force, in order to keep unemployment down to politically bearable levels. All this unfolded, in turn, from an industrial economy so lavishly supplied with cheap energy that human labor was worth replacing with machines wherever the state of technology permitted, and so greedy for new markets that every part of human life was made subject to market forces.
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The Advice

If I were asked for advice about retirement, then, it would probably go something like this. If youâ€™re already retired, or within a few years of retirement, itâ€™s probably worth your while to try to get any investment money you have left into a stable investment, if you can find one. Still, itâ€™s probably unwise to assume that your investments will be worth anything in the long terms, and having a Plan B in place would be a very good idea. If youâ€™re more than a decade or so out from retirement, having a Plan B in place is essential. If youâ€™re thirty years out or more out, as I am, forget about Plan A for now; you can look into the options for investment later, once the wreckage of the last few decades has been hauled away and a new economic order has begun to take shape, but you probably will never retire.
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No matter what you choose, itâ€™s not going to be as fun as sitting on a lawn chair in a Sun Belt trailer park. Still, history is under no obligation to give the options weâ€™d prefer, and a great many pleasant options are going away for a time, or forever, as the industrial age draws to a close.
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The End of Retirement

gauharjk Notable Member

gauharjk Notable Member

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The End of Retirement

gauharjk Notable Member

gauharjk Notable Member

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