Money and Old Age: Second Installment


The second panel on wealth and aging discussed financing retirement through the lens of the asset management firm, with participants from the highest executive levels of Putnam, MFS, BOA, Columbia Threadneedle and BlackRock. Major take-aways:


Placing retirement costs on employees through 401k plans has not been successful. We lost old-style pension plans. We need new solutions, perhaps annuities purchased over time by “forced savings.” The average 401k on retirement contains only $91,000. But attractively priced products are not now available.


Discussion of who incurs the “risk” of “age liability.” With lengthening lives, not many financial product companies are anxious to incur that risk.


Given longevity, we must keep equity in portfolios all our lives (a theme in all panels). Also, we may consider using Health Savings Accounts as part of retirement planning (not explained.)


There is a need for easy-to-understand retirement products. People now insist on understanding. Millennials are risk-adverse (perhaps due to the experience of their parents and the 2008 recession).


Women continue to outlive men. Women will own a majority of retirement assets. Women now are 57% of the U.S. workforce. Women retire two years earlier than men, are underpaid, take more time off due to family roles, start investing later than men, want to be “scholars” understanding everything before they act when they should be investing ASAP. Earnings in society also are not growing robustly. Women thus need to be thought about in detail in terms of advisory services, as they tend to be less prepared to retire.


In investing, traditional company value could be seen on a balance sheet. Today, value is in technology, which gets quickly written off. How do you judge a company in terms of investment? Tech investment is attractive to millennials. Part of the answer: look at cash-flow.


Discussion of effect on the market by discontinuation of the government’s program of quantitative easing. How will retail investors react to a major increase in the supply of bonds in the marketplace?


You must invest with a long view, a 20-year window. One recommendation: U.S. equities, which show the ability to promote the “most profound value growth,” to which ultimately should be added Chinese equities when the market becomes less opaque.


Current investors need to be better prepared for the future by advisors. Markets are always subject to drops. It has been a decade since “we have been discussing loss and volatility.”



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