While I held shorter term fixed income, I agree that we were lucky to live during a period where one could get decent returns from fixed income in a tax-deferred account. As for the most powerful bull market I've thought about that as well. Market history suggests that secular swings happen every 15 or 20 years, more or less. Prior to the bull of 198x/9x there was the bear of 196x/197x. (Before that the post-war boom, the great depression, the swinging '20s...) If the cycle holds then the current bear will run through 200x/201x followed by another bull. No guarantees, of course, and even if it happens chances are it won't be as big and as powerful. Still, given the choice I'd rather invest in a bear and retire in a bull than the other way around.brucecohen wrote:But I wouldn't cite that as a model for most of today's workers because I benefited greatly from a risky decision to go very long on fixed income back when interest rates were double-digit and I benefited from the most powerful bull market in the history of North America, if not the world.
RE: Public service pensions. Govt employees have traditionally had better pension plans than those in the private sector. Before they were allowed to strike, the balancing mechanism was that they also traditionally had lower salaries. Now it's not uncommon for both public sector salaries and pensions to beat those in the private sector, along with greater job security. Somehow we have to get back to a total compensation approach that better balances govt remuneration with that of large private sector employers.
Basing a system on people’s voluntarily saving for 40 years and evaluating the relevant information for sound investment choices is like asking the family pet to dance on two legs.
Not yet convinced that failure is baked into the voluntary, self-directed, commercially run retirement plans system? Consider what would have to happen for it to work for you. First, figure out when you and your spouse will be laid off or be too sick to work. Second, figure out when you will die. Third, understand that you need to save 7 percent of every dollar you earn. (Didn’t start doing that when you were 25 and you are 55 now? Just save 30 percent of every dollar.) Fourth, earn at least 3 percent above inflation on your investments, every year. (Easy. Just find the best funds for the lowest price and have them optimally allocated.) Fifth, do not withdraw any funds when you lose your job, have a health problem, get divorced, buy a house or send a kid to college. Sixth, time your retirement account withdrawals so the last cent is spent the day you die.
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