Categories
Wealth

What if the Canadian Government Gave Everyone $45k at Birth

Governments exist to provide public goods (like streetlights) and to socialize certain individual costs (like healthcare) for the overall benefit of its population. It can be argued, therefore, that in addition to free healthcare it might be in a society’s best interest to ensure a secure retirement for every citizen.

Many governments already do this to some extent. In Canada, for example, people who contributed to the Canada Pension Plan will benefit from a schedule of payments upon retirement. Those who haven’t contributed may receive alternative retirement funding, such as the Old Age Supplement and the Guaranteed Income Supplement.

None of these provide for a particularly flush retirement, however it keeps most of Canada’s retired residents housed and fed.

What if, instead of providing supplemental income at retirement, the government gave a lump sum to each person born in Canada? The lump sum would be untouchable until retirement, and would be invested on the baby’s behalf until he reaches age 65.

Assuming a nominal return of 7% and inflation rate of 2%, a $45,000 investment at birth would equate to $3.7 million in nominal terms and just over $1 million in real terms (after inflation) by age 65. All things equal, this should provide a comfortable retirement for every person born in Canada, eliminating the need for OAS and GIS. Moreover, employees would no longer need to contribute to CPP or individual retirement portfolios, freeing up more money for consumption, if desired. But for the sake of simplicity, let’s assume people continue to contribute to CPP.

Providing $45,000 to every resident at birth would likely lead to a number of unintended consequences – such as birth tourism – but let’s leave that to the side and examine whether the broad idea is even feasible. This is a high-level conceptual look, not a thorough scientific analysis, and is meant to spark ideas and generate discussion, not propose ultimate solutions.

According to Statistica, it is expected that about 375,000 babies will be born in Canada in 2020. Therefore, to provide $45,000 for every baby born would cost about $16.875 billion annually. A ton of money. Yes, but not in relative terms.

How could $16.875 billion in new spending ever not be a ton of money? According to Employment and Social Development Canada (ESDC) – a department within the Canadian federal government – planned spending on OAS and GIS in 2017-2018 was $51.155 billion. Far more than the cost of the lump sum at birth, with much worse end results. Using the 4% rule of thumb for sustainable withdrawals, a $1 million portfolio could sustainably generate $40,000 in annual income (in today’s dollars). In contrast, OAS and GIS currently provide maximum $7,368 and $10,992 in annual income.

That’s 54% less retirement income at 3 times the annual cost to the Canadian government. While this analysis doesn’t consider all the nuances and knock-on effects, the idea seems worthy of further discussion.

2017-2018 Planned spending figure
Categories
Life Work

Cash for Life

I have to be pretty bummed out to play the lottery.

I know the odds of winning are infinitesimal and the lottery is essentially a self-imposed tax. Yet, sometimes I just need the fantasy of quick riches to infuse some hope into a crappy week.

With that said, I’ve only bought a couple tickets over the last several years. I guess I’m generally happy.

But what if I did win? I joke that I’d quit my job if I won 10 grand. Of course, that’s not realistic. To be honest, I’ve thought a lot about this and I’m still not sure how much I’d need to feel like it’s time to quit my job.

I am working towards financial independence, but it’s a moving target. I do set goals, but every time I approach my goal I stretch it. Over the short run I’m fortifying my finances. Over the long run I’m trading my finite time for money.

Most of us are only on this planet for about 80 years, so there comes a point at which you must choose to live life your way. That’s easy to write but hard to do.

Although I moan about it sometimes, I have a great job and I have worked hard for the equity in my career. I have to admit, I’m scared to walk away from a career that many would gun for. Partly, my fear is that I’d quit and discover that I didn’t have enough money. My other fear is that people would think I’m stupid for walking away from a great job. I shouldn’t care, but that’s human nature I suppose.

However, eventually one must prioritize what they truly want out of life. The fact that you are alive to read this is a fluke of magnificent proportions. Life is a gift that can’t be wasted on committee meetings and the general circle-jerk of corporate nonsense.

“Walking away” isn’t about abandoning work completely. Instead, we need to seek fulfillment, whether that comes from painting pictures, teaching children or renovating kitchens. This could also mean de-prioritizing money.

Fulfillment comes from making a meaningful impact, seeing the fruits of your labor and helping people. Fulfillment doesn’t come from leasing a new BMW every five years.

Building wealth and financial freedom isn’t just about chasing money. It’s about having what you need to live an interesting and productive life – a life that will be remembered.

I still don’t know when enough is enough. However, when walking away from something it’s important to have something to walk towards. Without first discovering what you find fulfilling you’ll never be able to walk away – no matter how much money you have.

Categories
Wealth

Should Parents Pay for College?

A friend of mine (let’s call her ‘Jane’) recently brought up the cost of putting her children through college. It turned out she was paying all the bills.

This would be great if she could afford it.

But she can’t.

Jane is 51 years old and earns roughly $90,000 per year. She will likely happily work for another 15 years. Currently she has about $400,000 in retirement savings and plans to aggressively save during her remaining working years.

To help her children pay for college, she has withdrawn some of her savings and tapped into a line of credit.

As a parent, I can understand the instinct to do everything you can for your children. However, I don’t believe parents should put their retirement at risk to pay for their kids’ education.

I realize I’ve probably ticked off a few people.

What is the parental obligation?

The moral argument that parents are obligated to provide an education for their children is strong. I agree that people shouldn’t have kids if they’re not willing to set them up for the world. However, what that means has evolved over the decades. Today that might mean a masters degree. But what were parental obligations 50 years ago? And what will they be 50 years from now?

The parental obligation seems to have grown over the years. Regardless, parents with college aged children today should have known what they were getting into, but at what point does the obligation end? Maybe never. I don’t know.

Of course, the decision is more than moral. It’s pragmatic. Money doesn’t appear out of thin air, and for that reason there are many additional considerations.

Who’s paying for retirement then?

Let’s put the moral argument to the side.

There is a pressing financial issue facing parents today. The cost of post-secondary education continues to rise faster than incomes. While it is increasingly necessary to get a college education, it is also increasingly financially unattainable for many people.

This is happening while much of the world faces a retirement crisis. People simply have not saved for retirement. Jane is one of the lucky ones, yet she still faces a shortfall if she doesn’t continue to aggressively save and invest.

Jane’s ability to fund her retirement is at odds with her desire to pay for her children’s education. She probably cannot do both.

Her window of opportunity to remain self-sufficient in retirement is closing. The more she financially commits to her children’s education the less likely she will retire as planned. Of course, plans have a way of going wrong anyway. Any number of unexpected events – ill health, redundancy – can cut her timeline to retirement in half. Jane has limited time and lots of downside risk.

In contrast, her children will have 60 years ahead of them once they graduate from college. If they pay for their own education, this is plenty of time to repay debts. If they pursue the right career path, they likely have much more upside than Jane has downside. Moreover, if Jane’s retirement is adequately financed she will retain independence. If Jane sacrifices her retirement to pay for her children’s education she will invariable depend on them (perhaps even live with them) once she stops working. Whether this is good or bad is up to the family to decide, but you must recognize that each option comes with trade-offs.

The biggest trade-off for Jane’s kids if they self-fund their education is they will be saddled with debt on day 1 of their working lives. That seriously restricts their ability to take entrepreneurial risk. It also forces them to take the first job that comes their way, perhaps sending them down a path they didn’t envision. Debt is restrictive and stifling.

As you can see there are no clear cut answers (unless you’re rich), but here is what I think:

  1. The decision to go to college and pursue a stream must be carefully evaluated. College is simply too expensive to use as a place to find yourself. Students (and parents) must have a path in mind and need to fully understand the return on investment of a college degree.
  2. Education costs should be shared by both parents and children. Everyone needs a stake in the game. Not only does this reduce the burden, I believe it builds commitment. The more a student is aware of the difficulty in paying for college, the harder they’ll work to get the most out of their education.
  3. Avoid paying for college using debt. If any debt must be incurred, the child should borrow (not the parent). The downside risk for a middle-income, middle-aged parent struggling to save for retirement is simply too large.
  4. Prepare well in advance. In anticipation of college costs (even if the child is still a toddler) cut some expenses. Forgo a trip or two. Importantly, the child must participate in these sacrifices starting at an early age. And when they can get a part time job, a significant portion of their earnings should be stashed away for school.

I don’t have all the answers, but I hope I have provoked some discussion.

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Categories
Wealth

Americans are Nowhere Near Prepared for Retirement

Americans haven’t been saving the recommended 10-20% of their incomes and simply aren’t prepared for retirement.

The median 401k for someone aged 55-64 (i.e. pre-retirement years) is only $61,738. Even the most frugal spender could only make that last a couple years in retirement.

In other words, for most Americans a comfortable retirement simply is out of the question. Instead they will continue to work, depend on social security and rely on family.

The dream of sailing through the Mediterranean or hiking in the Alps will remain a dream for most, as they work double-shifts as Wal-Mart greeters.

I get it. Life happens when you’re in your 20s, 30s and 40s.

There are bills to pay, things to buy, life to live. At that age, many people feel like they can’t save for retirement and believe they can make up for it later. However, people need to understand that when they spend money they’re making a tradeoff. Do they want that extra vacation or do they want to retire a year earlier? Do they want to upgrade their Toyota to a Lexus or retire 5 years earlier? When compounding is considered, those are real tradeoffs.

Most people I know don’t want to work forever. People want to stay busy and contribute to society, but they also want the freedom to pick and choose what they do. That requires money.

Unfortunately, as you can see by the tables below (source: Vanguard) most retirements are quite underfunded.

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Categories
Wealth

How to Give Your Child a Massive Financial Head Start

Something that is often forgotten in the personal finance field is that young kids have a massively long time horizon. The finance industry tends to ignore the compounding capability between ages 0 and 20, only to think of people as savers once they start working.

Sadly, this is detrimental to children. Because young children have such a long time horizon, a fairly small amount of savings can go a long way due to the benefits of compounding. Effectively, savings and investments made during childhood can give a child a massive financial head start.

Because young children have such a long time horizon, a fairly small amount of savings can go a long way due to the benefits of compounding.

So why is this cohort ignored?

The personal finance industry – made up of advisors and asset managers – earn fees on dollars that come in the next quarter. The larger those dollars the larger the fees. So it doesn’t pay to provide advice to people with small account sizes. I’m hoping this article can help fill the void.

I’ve previously explored how high school kids can create $1,000,000 in wealth by working summer jobs.

The following idea starts even earlier than high school, is easy to implement, financially feasible and doesn’t depend on a child’s ability to find work. Frankly, anyone can do this and help give their child/grandchild a massive financial head start.

Most newborns have four grandparents. If each grandparent contributes a manageable $25 per month into an investment account earning 7%, the child would have accumulated $51,430 by age 20. Imagine what a 20 year old could (responsibly) do with this money: pay college tuition, make a down payment on a property.

But why would the grandparents fund the account alone? What if the parents also each contributed $25 per month? In this case, the child would have accumulated $77,145 by age 20. Just that additional $50 per month results in a massive increase in value. This alone gives the child a massive financial head start.

    Let’s say the child at age 20 pretends this money doesn’t exist.

    What if at age 20 the child opted to leave that money invested until retirement without making any additional contributions?

    By age 65 the child would have accumulated $1,620,227. Of course, this doesn’t account for a higher cost of living down the road, but no matter how you look at it $1.6 million is a huge sum of money. Especially considering the child never had to invest a penny.

    Of course, like most of us, the child would likely contribute to his own investment portfolio. What if – after receiving the portfolio at age 20 – the child continued to contribute $150 per month until age 65? By age 65 the child would have accumulated $2,153,876!

    Time is on a newborn child’s side. Unfortunately, that time is typically wasted. An extra 20 years of compounding early in a child’s life can add massive amounts of financial wealth for little upfront investment. So if you or someone you know is about to have a baby or already has a young child, share this with them.

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    Categories
    Wealth

    5 Year Plan for Financial Freedom

    One of my readers recently asked me to provide more information on my background. To be fair I have so far divulged little about myself, other than what’s on the ‘Start Here‘ page. While I might never provide a full curriculum vitae – as I must remain discrete – I will strive to give more insight into who I am and why I see the world the way I do. I’ll eventually put up a more ‘About Me’ page, but I will also strive to infuse more personal experience into my articles. Below is one of those articles.

    It was February 2009. I was sitting in my boss’s office waiting for him to get off the phone with his car guy so I could talk to him about some competitor product research I was conducting. At the time, I worked for a big Canadian asset manager that managed retail and institutional money.

    In 2009 the world was in the grip of a devastating financial crisis and my world was collapsing around me. Every day I feared for my fate, as I watched thousands around me get laid off. I had a baby, stay at home wife and a massive mortgage.

    Unemployment wasn’t an option.

    I had no fall-back. No parents to move back with and no family wealth to rely on if I was laid off. I had enough saved to survive a few months but the midst of a crisis was no time to be searching for a job. Frankly, if I were laid off I would have been unemployed for a long time.

    My stress levels were off the charts. At the mercy of those around me was no way to live. My stress eventually manifested in what felt like an explosion in my head. I experienced a blinding headache that took 16 days to dissipate.

    My neurologist’s diagnosis: stress. Fucken great. I honestly wasn’t sure if I was relieved I wasn’t dying or disappointed I had no choice but to head back into battle.

    As I waited for my boss to finish talking to his car guy I used the opportunity to create a plan to achieve financial freedom.

    Up until that point I had played the game by the rules. Study, get a job, buy a house, pay your bills on time. But the financial crisis abruptly taught me I couldn’t rely on the system to provide me income. I mapped out my escape plan on a scrap piece of paper.

    My mortgage term was renewing that month and that felt like a good catalyst to create change. I was sick of depending on the kindness of strangers (employers) so I roughed out a 5 year plan to get me on track to financial freedom. The gist of the plan was to remove the thing that could sink me if I ever lost my job: my mortgage. My strategy wasn’t necessarily to completely pay it off. After all, mortgage rates were low and over the long run inflation would make my debts more manageable. (Inflation effectively erodes the value of the debt.)

    Instead, my plan was to get to a point where I could cover my fixed costs with a minimum wage job.

    While I sat in my boss’s office I quickly compared my monthly essential expenses with my take-home income. Any difference was deemed nonessential. I earmarked a portion of that nonessential expenditure to mortgage prepayments. I didn’t allocate all of it at once to ease my budgetary shock.

    After my meeting I contacted my mortgage provider to increase my monthly mortgage payments and switch to bi-weekly payments. I started small by increasing my payment by 20%. Once I got accustomed to the higher payment after a few months I again increased my payment. I also plowed any salary increases into my mortgage payment. I increased my by-weekly payments every few months or so until I was eventually doubling every single mortgage payment.

    By slowly increasing the payments and by using any salary increases the change was less painful. It just became a matter of fact that I didn’t have any money left for vacations or other pleasures and conveniences. My wife and I both committed to this 5 year plan. (Luckily my wife and I are very compatible when it comes to money.)

    While life felt stagnant for those five years, I was actually putting a major dent in my mortgage principal. Five years pass by quickly. I made sacrifices but the outcome was worth it.

    At the end of my five year mortgage term I re-amortized my mortgage back to 30 years to minimize the payments. My mortgage payments shrank to a level I could cover (and then some) with a minimum wage job.

    Also, during those 5 years my house appreciated in value, salaries rose and inflation eroded the real value of what remained of my debt putting me in a better financial position. Effectively, after my 5 year plan my mortgage payment became so low that it could be viewed as super cheap rent that would never rise.

    After minimizing my mortgage payments, I then used the freed up cash-flow to save, invest and live life.

    As you’ve probably noticed, there’s no magic trick to this. I simply gradually but consistently increased my mortgage payments to an aggressive level and committed to the 5 year plan. By only increasing by small increments – say 10 or 20% at a time – and by passing any pay increases directly through to my mortgage I barely knew what I was missing. In fact, that 5 year experience taught my wife and I to live quite frugally, which we still do.

    Note: The purists out there will say that I would have generated a better ROI by using funds put towards my mortgage to instead invest in the stock market. While I agree with this in theory, in reality the life-altering downside risk of mortgage default outweighed the incremental potential financial gain of investing. Today, with that life-altering downside risk removed I am psychologically equipped to invest in assets with higher reward potential.

    While I wouldn’t necessarily say I am 100% financially free (not sure I would ever feel that way until my dividend income covers all my expenses) I feel secure. Life improves dramatically when you feel secure. I still work and I still get stressed, but now it’s mostly on my terms.

    As for my boss? He’s still living paycheque to paycheque and remains wholly dependent on the kindness of his employer.

    Categories
    Investing

    Investing Fees Will Leave You Broke During Retirement

    If you’ve been paying attention you probably know that investment fees will reduce the value of your retirement portfolio over time.

    For example, Questrade argues that by switching to a lower cost investing platform you could retire 30% richer.

    All this is true. Essentially, whatever you pay in fees is foregone wealth. I.e. if your annual fees are 2% and your gross return is 8%, your net return is reduced to 6% after fees.

    Remember: fees can be layered (often covertly) into your portfolio in multiple ways – advice fees, investment management fees, tax, operating expenses, and so on. Sometimes the fees are bundled, sometimes they’re charged separately. Buyer beware.

    Unfortunately, high fees will do much more damage than leave you ‘less well off’ at retirement. High fees could mean the difference between going broke or not.

    Check out the following example for Joe Smith retiring at age 65 with a $1,000,000 portfolio. Sounds like plenty of money for retirement, right? Well, the level of fees mean the difference between Joe eating ham sandwiches and cat food for lunch.

    Start with the following assumptions for Joe:

    • Requires a frugal annual income of $40,000, adjusted for inflation
    • Will live until age 95
    • Builds a balanced growth portfolio consisting of 80% stocks and 20% bonds
    • Has a 10% average tax rate

    What are the odds Joe goes broke before he dies?

    Calculation methodology for the data geeks: Using data made available by https://engaging-data.com/ , the probabilities are calculated by using stock and bond returns between 1871 and 2016. For example, if an investor expects to be live for 50 years in retirement, all historical 50 year periods are analyzed. One historical cycle would be from 1871 to 1922, another one from 1872 to 1923, and so on until 1965 to 2016. Thus 95 different historical cycles are considered (in this example).

    The chart below shows the portfolio failure rate, based on historical precedent, for Joe Smith at various fee levels. “Portfolio failure rate” essentially shows how often during the historical periods the portfolio ran out of money before the end of the period (in Joe’s case 30 years).

    Investment fees have a significant impact on the portfolio failure rate. In Joe Smith’s case, the portfolio failure rate rises from 18% when the investment management fee is 0.30% to a whopping 42% when the investment management fee is 2.50%.

    Hold up…think about what this really means. Imagine what it would be like to run out of money as a senior citizen.

    This is a deadly serious issue and a catastrophic failure of the wealth management industry. The average retiree is getting screwed out of their money leaving them completely broke during retirement. This creates massive hardship, as a broke retiree often has no way of recovering and has to rely on the state, charity or family for food and shelter. Dignity and independence, however, are lost forever.

    While the difference between 0.30% to 2.50% sounds very wide, this is the realistic range for investors in Canada.

    For example, Cambridge Canadian Equity Fund charges an MER of 2.48%. AGF Global Strategic Balanced Fund charges 2.63%. Mackenzie Canadian Growth Balanced Fund charges 2.29%.

    Meanwhile, at the other end of the spectrum, Questrade provides all-in portfolio services for 0.38%. Finally, a DIY investor can combine Vanguard’s FTSE Canada All Cap Index ETF, which has a 0.06% fee and Canadian Aggregate Bond Index ETF, which has a 0.09% fee.

    Investors who do a little investigating will better understand their costs and be able to shift from one end of the spectrum to the other.

    Bottom line: Pay close attention to fees, as this is one of the few parts of investing that is totally within your control. Over the long run it will have a huge impact to your standard of living and independence.

    Categories
    Wealth

    How to Generate Retirement Income

    Picture this. It’s September 1981 and you’ve just retired. You want to live a comfortable life so you figure you need to generate a retirement income of about $50,000 in today’s (2019) dollars.

    That means you need $18,172.17 in 1981 (chart below).

    Inflation-adjusted income required to match a $50k income in today’s dollars.

    How do you proceed to generate a sustainable retirement income from your investments?

    In 1981 the solution was pretty simple and low-risk. You could buy and hold 10 year US Treasury bonds that, at the time, yielded over 15%. Investment required: $118,587.78!

    Of course, $118k in 1981 is worth more than $118k today because of inflation. In today’s inflation-adjusted terms (adjusting for Consumer Price Index) that’s the equivalent to $326,289.62.

    Unfortunately, for those retiring today, this retirement income strategy is totally infeasible. This is because the yield on 10 year US Treasury bonds has dramatically declined.

    The chart below shows how the 10 year US Treasury yield has declined over the decades. Currently the yield is flirting with all time lows of about 1.5%. These lower yields mean that an investment in US Treasury bonds doesn’t generate the income it used to. Said differently, to generate the required $50,000 annual income today using low-risk US Treasuries, you’d need to invest way more money than you would need to in 1981.

    10 year US Treasury Bond Yield

    As of September 1, 2019 you’d need to invest almost $3.5 million (chart below) into 10 year US Treasury Bonds to generate a $50,000 annual income. In inflation-adjusted terms, that’s about 10x more than you’d have to invest in 1981.

    (Final chart below shows inflation-adjusted investment required to generate the inflation-adjusted equivalent to $50,000 in today’s income.)

    Investment in 10 year US Treasuries to generate $50k (in today’s dollars).
    Inflation-adjusted investment in 10 year US Treasuries to generate $50k (in today’s dollars).

    With Yields So Low, How Can you Generate Retirement Income?

    Now you’re probably thinking you wouldn’t rely on just your straight investment income to pay for retirement. You might intend to draw down your capital and rely on a pension. This is what most people do. But I would argue it is not the right strategy.

    If you have a good defined benefit (DB) plan pension that replaces at least half your current income, God bless you. You can probably stop reading…that is, unless you think your company has even the slightest risk of going bankrupt sometime between now and the time you die or if you think your company will find a way to weasel out of paying its obligations (because with lower yields it is becoming increasingly difficult for defined benefit plans to remain fully-funded).

    On second thought, keep reading even if you have a DB plan.

    The Retirement Income Rule of Thumb

    The wealthy of the world strive to pay their retirement bills from their returns ON capital…not the return OF capital. In order to build lasting, generational wealth, enough income must be generated from a combination of dividends, interest income and capital gains to cover living expenses.

    You may be familiar with the 4% rule of thumb. This rule states that – based on historical market returns – an investor can withdraw up to 4% from their portfolio each year without eroding their capital. In essence, the 4% withdrawal is offset by returns from a combination of dividends, interest income and capital gains that equals to 4% or more.

    Generating a satisfactory income aligned with the 4% rule while maintaining a high degree of safety was easily achievable in 1981 – US Treasuries are considered risk free assets. Today, however, the environment is far more challenging.

    How do you generate sustainable income from your investment portfolio today? Unfortunately, you might not like the answer.

    You can do some or all of the following:

    1. Learn to live with a lower retirement income by living more frugally.
    2. Work longer and delay withdrawing from your portfolio. This allows your portfolio to grow larger and reduces the income-generation burden on your portfolio and the risk you outlive your savings (i.e. longevity risk).
    3. Build a larger portfolio by earning more income and saving a greater proportion of that income throughout your working life.
    4. Take greater risks with your money by investing in assets with higher total returns potential (combination of dividends, interest income and capital gains). The downside is that you might lose more money than you’re comfortable with if things go south.

    Of course, you can avoid all this if you have $3.5 million to invest in 10 year US Treasury Bonds. Without $3.5 million to invest in risk-free assets, you must stretch across the risk spectrum to find assets with higher dividend yields, higher interest income and greater capital returns potential. Of course, moving up the returns spectrum requires you to take on more risk.

    Beware of Risk

    Whatever you do, don’t go chasing higher returns without paying attention to risk. Same goes for higher yields. Not all yields are the same – for example, a company might have a high dividend yield because the market anticipates a dividend cut or worse. (When it comes to dividend yields, I always look at a company’s payout ratio to assess the sustainability of the dividend.)

    While you won’t be able to escape greater systematic risk (i.e. market risk) when investing in asset classes with higher total return potential, you can eliminate idiosyncratic risk (company-specific risk) by diversifying across companies. Moreover, systematic risk can be mitigated by investing in a variety of assets classes with low-or-negative correlations.

    Don’t make the mistake of ‘diversifying’ across asset classes with similar risk exposures – e.g. dividend paying stocks, corporate bonds, high yield bonds – and thinking you’re set. Many (probably most) asset classes are exposed to the business cycle and risk sentiment, so you need to find a way to balance out your risk exposure using assets that are negatively correlated to these factors, such as sovereign bonds and gold.

    But I just said US Treasuries yields are super-low, right? And gold is more of a currency than income-generating asset. True. This simply underscores today’s challenge with generating retirement income from a portfolio.

    Once you have to start worrying about risk, it becomes exponentially more difficult to generate retirement income using investments, like you might have in the past. It can be done – investing doesn’t need to be hard – but it’s not like 1981 where any monkey could fund their retirement without taking on risk or making lifestyle tradeoffs.

    Today, it is inescapable fact that you’ll need to do some combination of the four options noted above: 1) Live on less, 2) work longer, 3) save more, 4) take on more risk.

    See. I told you you won’t like the answer.