Analysis of last week’s abysmal jobs report is coming in, and many are trying to point out the “bright” side of only 74,000 jobs being created. The spin goes as such…
It’s not all that bad. It’s not all despair, or the labor force’s complete loss of hope of ever finding work and simply giving up. No, it’s really more the effect of swaths of baby boomers (finally) retiring. 347,000 workers left the labor force last month, but for workers who left the labor force in all of 2013, 76% were the retirees who do not want a job. And as this population bubble ages, we should expect more of this. Retirees leaving the work force means work opening up for Generation Y or “Millennial” applicants to take their place. This is all positive news for the economy!
But is it positive news for the economy, really?
There are two compounding reasons baby boomers have outsized impact on jobs numbers and will continue to for the near future. One, there are more of them, obviously. But second, because of the soft economy, and with savings being severely crippled from recent stock market crashes, many of those boomers have been forced to delay retirement until they are too old or too sick to continue working. This means we have a glut of older workers just on the edge of retirement, waiting until the last possible moment to hang it up, at which time they are more likely become an immediate drain on healthcare resources and Social Security funds… right when those things are in a crisis themselves.
And consider this: If 347,000 people leave the work force and only 74,000 take their place, that means a lot of the vacated positions are simply being phased out. We are not making enough room in our economy for Generation Y after all, unfortunately.
How can this turn out well?
Zero Hedge has an enlightening chart that highlights the aging workforce against declining participation from the total working population. There is no positive spin to put on this dynamic. Not when American retirement savings are in worse shape than ever, and it is pushing Social Security closer and closer to insolvency. When Social Security was first introduced, for each beneficiary, there were a massive 41.9 workers paying into the system. Now that same ratio stands at less than two workers per beneficiary. The “trust fund” is really just a bunch of IOU’s because Congress has continually raided it for pet projects over the years, and the halcyon days of running cash surpluses are long gone.
What does all this mean for your retirement? Well, these factors and others are brewing a perfect storm of economic and social unrest as it all comes to a head. Fewer workers entering the workforce, less money available for the elderly and dependent, and an economy that can’t seem to find a sure footing beyond all the stimulus and government intervention of the last decade… Where will your portfolio end up in all this when you hit 65? For many Americans already, the timing has been dramatically bad. When one hits retirement age just as the market hits a wall, what does one do?
Are your savings vulnerable to a total market free-fall when the bubble pops? Have you diversified enough so that one asset class can balance out the pitfalls of the others? Or will you be forced to remain in the workforce digging yourself out of a rut when you planned to be on a boat without a care in the world? Or even worse, will health concerns force you out of the workplace and onto the government dole as the government is scrambling to balance their books at your expense?
Gold and other precious metals can give you some peace of mind as you look across the financial landscape and see that it is actually a minefield. Call us today and get on the road to securing your retirement for fancy boats, not Fancy Feast.