America's readiness for retirement continues to go down, as does the amount of people who believe that they can actually rely on social security and retirement. How does all of this impact you? All that? More on today's episode of The Retire One Show.

Hello and welcome to The Retire Once Show. The show is designed to help you get to retirement, but most importantly, stay retired. I'm your host, Jonathan Rankin. I'm the founder and c o of Theorem Wealth Management, and I'm joined as always by my lovely co-host. Hi, I'm Melissa Rankin. Thank you so much for joining us.

Thank you for being here. We are back. I know that it's been a few weeks, but, uh, a little bit of a hiatus. You know, anybody who's had kids can know that when you have two young. It seems like that sickness just gets passed from one person to the next and, uh, keeps going round and round and round. Next thing you know, it's been two months.

Is this the, I think this, well, it's only been a month, but I will say that it's, it feels like two. It does feel like two, but I feel like this is the first time in, I don't even know how long that. Every member of our household actually has a voice and has, oh, knock on wood. Whoa, whoa. I'm trying to change that, that cough, that voice.

It's just been one of those years, but, uh, we're back and we are happy to, it's been one of those years. He says it is in April. I know. I just feel like, I feel like, you know, it's already been a year and it's just, uh, this is the first time that everybody's healthy. So hopefully all of you are healthy and had a great holiday weekend, but, uh, absolutely.

We're happy to be back. Obviously a lot's been going on in the markets and in retire. So, uh, we've got a lot to get to today, but before we jump into that, Mel, what do we want people to do? We want you to subscribe, we want you to follow along on this journey, if you will. I mean, if nothing else, just to keep track of how often our kids get sick.

That's right. And, and not with that, but how often we lose our voice because, oh, yes. As clients will know a few weeks ago. It was hard to have a conversation when I would just strain through a lot of those, uh, a lot of those calls. So thank you to all of those clients who were very patient and, uh, yes and dealt with that.

But, uh, we are happy to be here, you know, and really today we're gonna be talking about social security. You know, there's new studies out talking about how many people actually believe they can rely on social security and also America's retirement readiness. So that's what we're gonna jump into first.

So actually with that, there's a study that Fidelity did that shows that America's readiness for retirement has diminished significantly. Yes, sir. I mean, and you use those words significantly and diminished together. I just feel like that's catching. Yeah. I don't, you know, maybe this is just their PR team that's saying, Hey, this is a big sweeping, you know, thing that everybody has to read, and then you dig into the.

They surveyed, uh, 3,569 people, which, you know, if you, it's not that big of a pool. If you've been watching our show for a while, you know that, you know, that doesn't seem like that many people, but we're still gonna dive into the numbers, see if it's applicable to you. Uh, they surveyed these people that were between ages of 25 and 75, all working households, and what they found was that millennials, their savings rate decreased by 0.2.

Uh, baby boomers by 2.2%, but Gen Xers actually saw their savings rate increase as of late, uh, by 1.4%. So I believe this is going back over the past year. So we're seeing certain generations reduce their savings, others increasing it. I, you know, again, out of that pool of about, you know, 3,500 big age range.

Yeah. But I think that the big takeaway from all of that was that Americans have saved only 78% of income needed. For retirement. Yeah. And this is, this ultimately comes back to how much do you need to live off in retirement. And, you know, federally does this whole, uh, you know, America's retirement score, where they score America's retirement on a scale of zero to 150.

And you know, the America's, that's around numbers. America's retirement score has now moved back into the yellow. They say it's at 78, a five point decline from the all time high that it. At 83 back in 2020, so our readiness for retirement has gone down. My guess is that with the market going down, that's gotta be attributable to it, but we'll dig into that in just a minute.

Fidelity actually said that the primary result of the drop was that Americans are saving less and investing more cautiously, both of which are natural reactions during a challenging financial. I mean, that's stating the obvious, the pandemic market volatility, the latest turmoil in banking. I mean, the list goes on and on.

You're telling me that, uh, people concerned that their money in their bank is adding to, you know, this fear that, you know, they're not gonna have enough for retirement? I mean, their overall stress. Yeah, I, you know, I, who would've thought that that would happen, but, you know, I do think that there is this, This issue that we're seeing with people saving for retirement and, you know, using that as a means to just tap into additional income instead of, you know, instead of cutting back on spending, it's, let's cut back on our savings.

And that can have long-term ramifications down the road. When you think about, you know, if you're in your thirties or forties today and your retirement's 20 years away, you might not be thinking about 20 years away as you're going through the. Can I go to the bank and withdraw money outta the atm? If the bank's not gonna be around?

You're not thinking about that. So I think all of that leads to this concern of do I even need to save for the future? What will the future look like? So, yeah, it can get a little scary there. Um, but in some of the other numbers, 57% of people were worried about losing their savings by investing too aggressively, which is interesting because I feel.

People aren't saving as much. It's almost like it's contradicting a little bit. Yeah. So you're saving less and you're, it sounds like investing more conservatively. Um, which is understandable. I mean, nobody likes to see a bear market or go through it. Course not. The issue is that the market's already fallen.

Now granted it's come back a little bit as of late, but. We're talking about, you know, reducing equity exposure after the market's fallen. You know, where was this conversation in November of 2021, you know? Exactly. And, and that's the, that's the issues that you know. Instead of having a discipline investment approach, most people will, you know, they're going to put together an asset allocation based on that time and say, oh, you know what?

Everything's going well. Let me increase my stock exposure, increase the risk I'm taking, and then have this knee jerk reaction when things go the opposite way. Well, of course, things go in cycles, so you're going to, we're gonna go through bull markets and bear markets. If you are adjusting your ass allocation based on what the last 12 months or six months in the market did, you're always gonna be on that whipsaw of being on the wrong side of the trade.

Which is interesting because Fidelity also said that only 59% of people are investing in an age appropriate manner, which kind of goes to your point. Yeah. I mean, I, I found that the interesting part of that was how millennials were not invested appropriately based on their age and saying that they didn't have enough equities in their portfolio.

And I think about, well, yeah, a lot of millennials started their career right in the teeth of the great, you know, the global financial crisis, which, you know, was not a good time. We remember that. No, I was gonna say we lived that. Yeah, we did. And we made it through. But, you know, I, I, what I don't understand.

Why is there this thought of reducing equities when, for millennials, retirement is going to be decades away? Not only that, but there was a period of time from what, 2009 through last year, where the market was extremely strong for that demographic. Now I know there are other things, whether it was student loans and all these other things that come into play, didn't take into, yeah, housing, all that stuff.

I do feel like, you know, thinking about how you're investing right now and maybe it's social media that is adding fuel to the fire. I mean, that was, it's driving force for sure. That was a big reason why Silicon Valley Bank went outta business was it was this push on social media. And so we're starting to see this new regime of.

You know, investors with a public voice and getting caught into these narratives of, well, when everything's going down, everything looks horrible. Let's just start reducing equities. And maybe that's causing some underweight there. But, uh, that is concerning that I feel like for the millennial generation.

The last takeaway that I found interesting from the Fidelity report was that 52% of people are going to need to make some sort of either modest change or significant change to their retirement spending plan if they don't save more. So we have this saving problem. That, uh, that America's facing. But also now there's this other concern that we want to dive into, which is the fear that social security's not gonna be there.

And I know we covered this before, but uh, we do talk about this often, but most Americans still say that they don't think that they can count on Social Security for their retirement income. Yeah. This was a new study that was published by Audience's Life. That found that a majority of Americans that are, you know, working right now are worried about their long-term financial stability.

And let's dive into some of the highlights, because I feel like that's gonna be the most important part for our audience. Absolutely. So let's start with some of the big numbers. 74% say that they can't count on social security benefits when planning for retirement income. I hear this all the time when talking to people.

Even though they're, some of the people that we talk to are retiring in the next year or next six months, they, for years, they haven't planned on, you know, relying on social security and they don't even wanna factor it into their retirement plan. Even though 74%, though, that's still a big number. That's, that's a big number.

And I know there's this fear that social security's going away and you see all these big headlines. You hear that all the time. Yeah, you do. But the reality is there are a lot of proposals right now working their way through, uh, through congress. You know how they can solidify social security and, and fund it for a longer period of time.

In fact, I saw one that was, uh, potentially increasing the retirement age from 67 to age 70 for people in their twenties. So if you're watching this in your twenties, I would be shocked. But, uh, but also thanks for watching. Thank you for watching. Um, I know retirement's are gonna be a wise while away for you, but, uh, thanks for watching.

But yeah, number too early to be thinking about it though. No. And. I wonder how much their, you know, Congress is going to be able to increase the retirement age for people given what we saw in France. I mean, for those who aren't, uh, familiar, France raised their retirement or they increased their retirement age to 64, which it was 62, so they raised by two years, and it was just chaos in the streets.

I mean, Businesses were boarding up windows. I mean there were riots, there was trash all over some of the pictures. It was crazy. Yeah, it looked, uh, it looked pretty bad. And you know, it's not a place that as beautiful, I think it is. It's not a place that I wanna visit anytime soon based on all of those, uh, the riots there and the protests.

But that certainly not right now. That was just, Increasing it from 62 to 64. We're already at 67, and as we know, I think Americans can probably riot with the best of 'em. That just, I don't know, I think we've seen that from social proof, so trying to push back on that part, I don't know if that's going to, uh, going to happen, but, um, I, I do feel like for those who are retiring within the next 10 years, uh, at least even, even 15 years, I would feel confident that retirement's or that social security's going to be there for you.

You know, they do say that the trust fund is, uh, is fully secure until I believe it's 2034. And then after that, there's enough money that is going to be generated by the system alone that's going to be able to generate at least 78% of proposed benefits. So it's not going away completely, even if nothing happens in Washington.

So, I wouldn't worry about that part of it, which might lead into this next, um, point that they found in the study. 88% say it's critical to have another source of guaranteed income beyond social security benefits in order to have a comfortable retirement. This is, again, these giant numbers. These are giant numbers, but this is, this is something that I wanted to point out because I feel like it's important.

You see a big headline that says, most Americans say they can't count off social security for retirement. So you click on this story and it's by Allion's Life, and they say something like this, and then they have their, uh, their specialist, this, uh, Kelly Levine come out. And her quote in the story is, social Security benefits are often the backbone of a retirement strategy, but it cannot be your entire strategy.

A strong retirement strategy will ensure you have enough guaranteed income to cover your cover, your essential expenses. That guaranteed income can come from Social security benefits, along with other inve investments and protection products such as annuities. That's convenience. What Holly Hunts sells annuities.

They're an insurance company. So when reading these numbers, and this goes back to the fear of is social security going to be there? Remember who's publishing the story because consider the source. Yeah. We, we've always talked that annuities, they're not the best thing in the world, but they're also not the worst thing in the world.

They're, they're a great fit for a certain group of people. If you are worried about the market, you want guarantees, they're a great source of guaranteed income. And it is a very specific circumstance that you should buy one keyword specific. It's not a one size fits all, and that's where we see the danger coming to play is that there's this blanket approach to saying everybody needs an annuity.

Like they're at an Oprah show. It's not like we're trying to give away annuities to everybody because everybody's retirement is different. And that's the problem with studies like this is that it scares people into thinking that they need these complex products because annuities are complex. But I've seen a lot of people who have them that it does deliver that certainty.

It makes sense. It does. And it's, you wanna make sure that it makes sense for your specific retirement. So, uh, I had to, I had to point that out because it was just, you know, it was interesting when I saw these numbers and then I knew. Scanning the article. There's gotta be a quote in here somewhere around annuities.

And there was, like I said, we are not anti annuity and not pro annuity. We are pro specific to your circumstances. I say we're pro your retirement. That's it. And so, um, it is interesting that some of the other things in the study that I want to go through was, uh, that right now fewer Americans worry about a major recession, rider around the.

That's down to 57%, which it was a lot higher than that last year, but 41% say they are still concerned that they will be laid off because of an economic downturn. So congratulations that people feel better. I was gonna say those, that, that feel good about it. I guess that's, that's something It is. I mean, I still do believe that there's a recession coming around the corner, but hey, that's just my opinion, uh, based on what we read.

But. If that's the case, then you know, I would say locking all of your money in annuity might not be the greatest thing, uh, but once again, based on your own retirement. So another good point from the study was more than half, 63% actually are keeping more money out of the market than they think that they should.

And 62% would rather have their money sit in cash than endure the market. Kind of goes back to what Fidelity's saying. People are misallocated based on their specific, you know, age and their retirement goals. And this is a big number. 63% of people are under allocating the stocks. And this isn't us saying go out and, you know, flood your portfolio with stocks.

It's about establishing an investment discipline, something that you can stick to for a long period of time because market swings are going to happen. But if you look over the history of the. You can go back to the Great Depression. Uh, typically bear markets don't last as long as bull markets. Bull markets are a lot longer.

So if you're going to be trying to time that market sitting in cash, well when are you getting back in? I remember this with clients and, and I was gonna say, that's always the question. Yeah, it is. But I remember this specifically in years, like 2000. You know, when talking to people after that, maybe 20 10, 20 12, and everybody had, you know, a lot of people had this story of, oh, I got outta the market back in oh seven.

I saw this thing coming, and that's great, but you're still sitting in a bond fund and it's four or five years passed. It's when are you gonna get back in? Because the news never makes it seem like it's a great time to just jump back in. In fact, March 9th of oh nine didn't seem like a good time. Uh, no.

March 26th of of 2 20 20 didn't feel like a good time at all, but both of those instances were the bottom of the market. And the only reason why the market bottom was because a change in policy oh nine. It was a change in the, the way the, the banks had to mark securities on their balance sheets, and in 2020 it was the giant stimulus.

Both things are not something you can predict or foresee. So for all these people that are keeping money outta the market, I just have a fear that they're going to miss out on, you know, a growth opportunity whenever we do see it. That could be, what do we always say? We're going to see a new all time high in the market, but when are we gonna see it?

We don't know. Nobody knows. And so I wouldn't try to time the. Um, what else have we got in this? I was gonna say there's one more key point that I wanted to point out. 66% of people worry that if they don't increase their retirement savings soon, it will be too late to have a comfortable retirement goes back to what Fidelity was saying.

Yeah. I mean, and so I think that we can see the common themes of what people are concerned about is that they've gotta, they've gotta save more instead of spending. I mean, which you think would go kind of go hand in hand. People are like, instead we just won't save as much. Yeah. I mean that's a, that's the gist of, I guess, of what Fidelity's kind of getting at It is.

But I think there's a bigger conversation we had about how it's harder, and I, I've, I've heard, uh, I've, I've read a couple other people on this topic of it's harder for millennials and younger generations to save because of how much is in front of you on social media. You know, especially the millennial generation, they value vacation more than any other.

You think of makes sense. You know, you see people all day long as you're scrolling on your phone, oh wow, everybody's at the beach. I wanna go on vacation or the show. I wanna take our kids somewhere. I want to be able to, you know, have this grandiose lifestyle. Well that money's gotta come from somewhere.

And so, um, you know, I don't know how much of it is a factor of, I just want to make sure I'm living my best life now and today or, uh, and kind of forget the future. It's really one or two camps you. The fire movement. Let me stop working at 38 years old. Let me live in an RV and live off travel the world $25,000 a year or its.

Let me just live my life and forget about retirement and figure it out later on down the road. Be in the now. So you know, tho both of those things can bring it back to you. Just gotta save more, save more, invest more discipline. I feel like both of those things are gonna take care of themself. And if you are considering an annuity, Make sure that annuity fits your specific, uh, retirement and your specific, you know, overall financial picture.

There's not a one size fits all property. Absolutely. Don't let those high numbers, what was it, 88%, 74% over the sixties on a few of 'em. Don't let those high numbers scare you into getting something that's not right for you. Yep. And the last takeaway is that, uh, don't be worried by all these big headlines about social security going away.

Like I said, it's funded through 2030. And even after that, if nothing happens in Washington there, it's at least funded enough with ongoing revenue to give you at least 78% of benefits. So, uh, with that, I'm Jonathan Rankin. I'm Melissa Rankin, and I hope that we gave you a little bit of peace of mind with some of these studies.

Absolutely. Thank you for being here, and we will see you next time.

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