10/05 12:47 ET
There have been times in the past when there was really no return for investors over a fairly long period of time. The idea of not having any return of consequence for 18 years seems dreadfully grim, but it is possible.
Charles D. Ellis, Greenwich Associates Founder
10/05 12:48 ET
The easiest way to talk about the future given the high levels of valuations put on stocks today and bonds, largely driven by the Federal Reserve doing the right thing for the economy as a whole, which was to increase employment, securities investors have gotten an unbelievable benefit in high returns.
None of us should be surprised if future returns are clearly modest by historical standards. Certainly we should not be anticipating a repeat of the kind of favorable experience that we’ve had for the last few years. It will not happen.
As returns regress to the mean, un-wonderful results must be expected.
Charles D. Ellis, Greenwich Associates Founder
10/05 12:49 ET
Any final thoughts before we wrap up?
John Authers, Bloomberg Opinion, New York
10/05 12:50 ET
There’s one area that I would like to focus attention on, and that’s when to claim Social Security. Broadly speaking, Americans claim Social Security at 63 or 64. “Full retirement” is at 65. And you must claim Social Security by 70½.
I am a big advocate of re-thinking that set of numbers. If 65 was the right age to retire in 1935, when Social Security was made the law of the land, health-care improvements would shift that fulcrum from 65 to probably at least 70, or maybe 71 or even 72.
Charles D. Ellis, Greenwich Associates Founder
10/05 12:51 ET
If you don’t claim Social Security, each year that you put it off, you get an 8% increase in your long-term benefits.
And if you wait not until 65, but until 70½, you get 76% more from Social Security every year for the rest of your life, adjusted for inflation.
If you continue to work during that period, you get to add more money into your 401(k) plan, you do not take money out of your 401(k) plan, and you add market returns, the 401(k) would shift substantially upward.
Charles D. Ellis, Greenwich Associates Founder
10/05 12:52 ET
The combination of more Social Security and more 401(k) payouts would shift millions of American workers from too little to enough, and would be the best investment each individual could make for their own happiness.
All of us in the investment world should be championing this investment decision with everyone that we know, with every Congress-person and every senator every chance we get.
Charles D. Ellis, Greenwich Associates Founder
10/05 12:54 ET
That concludes our live blog for today. We need to thank Charley from the bottom of our hearts for giving us his time, and offering some fascinating answers. It was also great to attract so many questions in advance.
I’m arranging the next book to discuss now. I aim to share the title in the Points of Return newsletter tonight or tomorrow—and please join us for the book club blog next month.
John Authers, Bloomberg Opinion, New York
John Authers is a senior editor for markets. Before Bloomberg, he spent 29 years with the Financial Times, where he was head of the Lex Column and chief markets commentator. He is the author of The Fearful Rise of Markets and other books.