Displaying items by tag: retirement

(New York)

One of the main mistakes that retirees make is that they underestimate the amount of money they will need for spending in retirement. Accordingly, one of the main jobs of financial advisors is to adjust their thinking on this and make sure that does not happen. Here are some of the reasons people underestimate what they will need. They discount the likelihood of needing to help family members who might get into a precarious financial situation, or even paying for things like weddings. Retirees also forget to budget for one-time big ticket items, even though they are mostly predictable, such as a new car or a new roof. People also underestimate how much more they spend on entertainment, as they will have a great deal more time. Healthcare is also chronically underestimated.

FINSUM: While advisors deal with this frequently, it is never a bad idea to revisit the key “problem” areas.

(Chicago)

Most people talk about retail investors’ effect on the stock market, especially when things get bad. But what is much less understood is their role in the bond market. Individual bond buyers are growing force in the bond market and are one of the major factors that has kept bond yields low. The proportion of the US population 65 or older has grown 40% since 2000 and is set to keep growing. Retirees typically buy more bonds as they near retirement, which should keep downward pressure on yields.

FINSUM: So admittedly this WSJ article we discuss absolutely supports the arguments we have been making to our readers for many months. We are not bearish on bonds, despite a lot of comments to the contrary, because there is such a big demographically-driven source of demand.