Columbia

protect-young-investors-from-baby-boom-bust-reuters: Personal Finance News from Yahoo! Finance

"The peak of the valuation in U.S. equities was 10 years ago," says T. Doug Dale Jr., an adviser with Security Ballew Wealth Management in Jackson, Mississippi. "Valuation levels are coming down. You have a lot of baby boomers selling off assets as they need to liquidate for retirement and that will further exacerbate the decline in valuations."

Researchers from the San Francisco Federal Reserve recently said that demographics actually point to a bearish trend in stocks. Aging populations create headwinds in the market, they said after studying the link between demographics and asset prices.

The Fed researchers looked at the ratio of investors aged 40 to 49 (those likely trying to build equity) to those aged 60 to 69 (those likely to be shifting allocation toward safer investment vehicles such as bonds).

They then compared this ratio to the year-end price/earnings ratio from 1954 to 2010 and found a strong correlation between shifting demographics and stock prices. Their results spell bad news for a full market recovery:

The model-generated path for real stock prices implied by demographic trends is quite bearish. Real stock prices follow a downward trend until 2021, cumulatively declining about 13 percent relative to 2010. The subsequent recovery is quite slow. Indeed, real stock prices are not expected to return to their 2010 level until 2027.

globalexpress

Maybe because 401K's were not available until the early 80's? Even then, they were not widely available.

N9373M

My wife and I just went to a financial advisor who really put our minds at ease. It was not cheap, but we now know where we are, what we have to do, and know we'll be able to retire at 56 and 58 respectively, and have the money to fill the gap till SS and our TSP annuities kick in. I also know I'll be dying at age 90.

PM me if you wish more info.

Thedude

401ks were in the tax code in '78 and became available in 1980.
Traditional IRAs started in 1974.

globalexpress

Did the financial advisor include VUL's as part of your retirement savings plan? Did you pay him by the hour or did he work on commission on what he sold you?

globalexpress

Yes, nice google-ing! I have a relative who was an accountant back in the day. He told me that it took a while for those plans, particularly 401k's, to "catch on" and actually have companies make them regularly available to their employees even though they were available per the code. Unfortunately, old guys did not have a tax efficient way to save for retirement like we do today. But then again, defined benefit plans were much more prevalent than they are today.

N9373M

Flat rate based on income/net worth. Big load up front, then about half that annually. Asked us our goals and then showed us how to get there. Covers everything from insurance (life, home, auto, flood, earthquake), wills, current savings, taxes - including returns, etc.

Not trying to advertise, but First Command Financial Services might offer more insight.

If you're a "hands on type" this might not be for you. We were on a path and his services assured us we'd meet our goals. In my case retiring at 58 trumped owning an airplane.

globalexpress

Yes, unfortunately the good old days of airline pilots being able to afford stuff like that are probably over.

But did your advisor sell you any investment vehicles called VUL's as part of "the big plan?" Just curious. Most financial advisors call themselves advisors but actually are salesman in disguise who only sell the products their company sells, whether or not they are the best products/services available. That is why I asked specifically about VUL's. They pay the advisors fat up front commissions and are often "sold" rather than bought :-)

N9373M

No - never heard of VULs. The majority of our saving will continue to go into TSP (US Govt 401K), a little to build liquid cash reserve, and a little more into a fund I could not locate quickly in the analysis he gave me. He makes his money with the initial review and the annual maintenance.

BFMthisA10

Oooo, you had me up to this point. I'd be careful with this outfit. My only experience with them (aside from tons of BAD anecdotal discussions) was when they approached our pilot training class. Cause, well, they approached every pilot training class; free lunch at the o'club. On the surface very smooth, but something didn't smell right; a little too slick in their pitch. One of the products that they peddled was an annuity that carried some obscene fees; to the tune of 50% of contributions for the first few years.

I truly hope your experience with them is a positive one; don't let me be a debbie downer. But I would carefully examine their fee structure, and track that against both your returns and the quality of the advice that you recieve.