Fed Up with the Fed
We recently conducted a survey on inflation and price increases with our friends at Casey Daily Dispatch. Regular readers already know that the Money Forever Reader Poll Inflation Rate is 8%. We covered this in a couple articles in March and provided a breakdown of where all readers see inflation; for now, note that if a retiree wants to earn 4% on his portfolio to supplement his Social Security income and 8% to keep up with inflation while holding 30% of his portfolio in cash (as we recommend), he must earn 17.1% on the other 70% of his portfolio. That’s no small order.
So it turns out that the “excessive risk” has been transferred to seniors. To earn a 17.1% return, we have to take far more risks than we’d like. Instead of investing in safe instruments like CDs or long-term Treasuries that once offered good interest rates, we have to seek out riskier investments to make ends meet. Seniors can’t risk a big blow to their portfolios, but ultra-conservative investing is no longer an option.
This is one of the reasons many seniors are turning to junk bonds. There was a time when retirees wouldn’t touch a junk bond with a ten-foot pole, but now many feel forced into them. Too many seniors live in fear as they tap into their principal and drain their life savings. Others are cutting back on expenses and returning to work, often at far less glamorous jobs than they once had. It is not a pretty picture.
And yes, I find it maddening that “too big to fail” banks are once again paying out large bonuses to their executives at our expense. Goldman Sachs (NYSE:GS) reinstated its annual Partners Dinner in New York City last Friday; while I’m not one to boo-hoo a good party, a blowout, black-tie gala sure seems in poor taste. I suspect the partygoers slept a lot better in their Champagne-induced comas than many baby boomers and retirees did that night. I can only imagine what that little affair cost.
The excessive risks banks took during the real estate boom have been successfully transferred onto the backs of the taxpayers, seniors, and savers. Each month the Federal Reserve meets and issues a BS report. They word it to fool the public, but thanks to Vedran we can decode their BS. I won’t be fooled, and I refuse to let our readers be fooled either.
Frankly, I’m tired of the BS from the Fed, Wall Street, bankers… you name it. Based on the number and tone of letters our readers send in, you are too. Do they really think our generation is that stupid? We’ve seen a thing or two in our time, and we know what’s really going on.
OK, the rules have changed. Now we have to take risks in order to survive… and hopefully thrive. Nevertheless, we can manage those risks responsibly to earn the income we need to make sure our nest egg lasts and we sleep soundly at night. And that is exactly what we are doing.
That’s why I started Miller’s Money Forever: to give my generation the truth about our situation and the tools to take control of our retirement finances. I’d like you to consider taking charge of your retirement today with a no-obligation trial subscription to Miller’s Money Forever. Please click here to learn more.