Tags: Gallup poll | Social | Security | dire | straits

Gallup: 66 Percent See Social Security in Dire Straits

Gallup: 66 Percent See Social Security in Dire Straits

By    |   Monday, 17 August 2015 11:00 AM

Retirement experts have warned for years that the Social Security system is headed for crisis, as retiring baby boomers will withdraw more in benefits than current workers provide in taxes.

And apparently we Average Joes are listening. A new Gallup poll shows that 66 percent of Americans see the Social Security system as either in a state of crisis (21 percent) or having major problems (45 percent).

In addition, a 51 percent majority of non-retired Americans doubt they will be able to draw any Social Security benefits when they retire. Those younger than 50 are the most skeptical of receiving payouts.

"These negative views likely will continue until elected officials in Washington take action to tackle the system's long-term problems or the projections about the system's financial strength improve as a result of shifts in the economy," writes Gallup's Frank Newport.

So how should the problems be solved? Given a choice between raising taxes or cutting benefits, Americans opt for the former 51 to 37 percent.

Elsewhere on the retirement front, an important investment concept for retirees is sequence-of-return risk.

If you start your retirement investing at the peak of a bull market, that will limit your returns. And if you start withdrawing from your retirement kitty at the bottom of a bear market, that will limit your wealth too.

So what are we to make of this? Eric Nelson, CEO of Servo Wealth Management, offers a few thoughts, based on the bear markets of 2000-2002 and 2008.

  • "First, your portfolio’s sequence of returns is not necessarily a risk to your long-term spending ability," he writes in a commentary. "Instead, the return pattern seems to impact more the amount of wealth you’re able to leave behind."
  • In addition, conventional wisdom about the advantages of bonds may be inaccurate, Nelson says. "Portfolios that place an extreme emphasis on low-risk asset classes [such as bonds] expose retirees to significant long-term, purchasing power risk. They have low volatility, but even lower-relative returns compared to stocks."

The S&P 500 index has tripled from its March 2009 low, while the 10-year Treasury yield fell just 5 basis points during that period to 2.19 percent.

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Retirement experts have warned for years that the Social Security system is headed for crisis, as retiring baby boomers will withdraw more in benefits than current workers provide in taxes.
Gallup poll, Social, Security, dire, straits
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2015-00-17
Monday, 17 August 2015 11:00 AM
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