Generation X In Trouble

Generation X is, generally speaking, in the middle of its greatest earnings power. That is changing, by the way, which is one of a list of reasons book #2 is languishing. It’s because the timeline and path to retirement has been changed by the pattern of lifetime earnings power. Back to the point, and away from my personal sob story.

In the face of 8% inflation, at least, the retirement savings pie has now declined by 17.5%, the red circle. Important that I have seen the other counterparts and shown Blackrock frequently, other targeted retirement date funds are worse, not better.

Very Challenging From Here: How Challenging?

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The short run is challenging, even after today is completed, in the absence of a dramatic rally. Solid yellow is S&P 500, solid turquoise is Nasdaq 100. Three months ago, when AGG (bond market, the denominator), was here at 98.90, you can see the yellow (S&P500) and was 5.4% lower and the Nasdaq was 7.6% lower from here. This doesn’t mean that we are going there, this is not financial advice, but it gives you a context for understanding.

The 2022 low is 3673 area, a full 200 points lower on the S&P 500, which 5.4% lower from here.

Breakeven Shows You

Some people say “invest for the long term.” The statistics used as ‘evidence’ is self-selected. LOOK at the rate the portfolio must improve, simply to return to January 1, 2022 levels. This is sequence risk. If you lose early, then digging out is very, very difficult.

No One Said…

The X-axis has an important, notable omission. No one plotted a unit of time here, that’s the reason I chose this image. This year, the entire lattice has been in occurring in a fraction of the time when compared to other years. And, the blue curve on the right is much flatter (standard deviation is much higher).

Add These All Up

If you can handle the flatter blue curve, if your setup takes this properly into account, then ok! Yabit…

  • It’s one thing to tell yourself this, but now that 100 is 82.5 (down 17.5%), now what do you think? Happy talk is fine when it’s up either 10% or 15%, but now the flip side has appeared. Soooo, are you certain?

  • Let’s say you need to withdraw from 82.5, now that red table is much difficult.

“Set it and forget it” is easy to understand, and it’s an example of why I try very hard to avoid using tired, obsolete lingo. And the fact it has happened to have worked out (through November 2022) is not the same thing as correct.