Have you ever heard of the 1955 TV series Gunsmoke? What about Columbo (1968) or MASH (1972)? If you have a client who is convinced these were the height of quality television and they watch these reruns constantly on METV or COZI TV, you might have a client who lives in the past. Their cinema graphic interests are their concern, but sometimes this attitude affects their investment outlook. What can you do to get them into the 21st century?
1. They remember 8% interest rates on bonds like it was yesterday. Actually, it was in around 1990. That is over 30 years ago. Today, you can find CD rates over 4%, a rate not seen since about 2006. That was 15 years ago.
Logic: Building a bond or CD ladder makes sense. If rates peak in the near future, they will have locked-in rates at a 15-year high. If rates continue to climb, they add more rungs to the ladder.
2. They are upset prices are rising on consumer goods and think merchants and manufacturers are ripping them off. They think back to the 1960s when a new car averaged $2,600. Today it’s close to $50,000.
Logic: They are right. A new car today costs almost 20x what is cost 60 years ago. But back in 1960, the median household income was $5,600. In 2021, that number had risen to $70,784. People are earning more today.
3. They feel taxes are high and will be going higher. Tax rates top out at 37%. They think this is outrageous. It was never that bad before.
Logic: Or so they think. A married couple filing jointly crosses into that marginal bracket at $647,851. The household with that average income of $70,784 is in the 12% marginal bracket until they cross $83,550. In 1971, the first income tax bracket started at 12%. $20,000 put you in the 32% marginal bracket. $200,000+ put you in the 70% bracket. Goods and services might have been cheaper, but taxes were a lot higher.
4. Health care was cheaper when they were growing up. This is true. Health insurance premiums have risen faster than inflation for years. Health insurance has increased in cost by 4.03% a year between 2005 and 2022. Inflation averaged 2.13% a year over the same period.
Logic: You get what you pay for. Cancer death rates have decreased 27% between 1991 and 2016. They will probably agree their friends with other serious illnesses are doing better than their parents were years ago. Medical care has improved. Is this an area for investment.
5. Everything costs more now. OK, they admit people were making less in the 1960s and 1970s. Prices have still gone up. They talk about the prices of gasoline, groceries and movie tickets.
Logic: Lots of stuff has gotten cheaper. The first Apple computers cost $666.66 in 1976. The first VHR video recorders cost $1,00-1,400 in 1977. Improvements in technology have made household electronics cheaper.
6. I don’t text or use social media. E-mail is fine with me. As we age, we often get comfortable with a level of technology. We pretend later improvements do not exist.
Logic: When you were younger, you might have been the first in your family to fly on a jet or travel overseas on vacation. You embraced new technologies and were an early adopter. It is not too late to get on the bandwagon. You will not be alone. According to PEW Research, 61% of people 65+ own a Smart Phone and 45% use social media. This has grown 4x to 5x since 2010.
7. I watch old TV programs because I do not recognize any of today’s film stars. They drop back to an age when they were comfortable, seeing familiar faces.
Logic: There is an easy way to resolve this issue. Switch the conversation to sports. They have a favorite team. They follow the games on TV or in person. They know the players, even though they are completely new faces.
8. My traveling days are over. I am too old. They are feeling their own mortality. Friends in their age group are passing away. They are doing less and less.
Logic: The cruise industry and many travel companies have realized their market segment has both money and leisure time. Cruise ships have level floors and elevators. Shore excursions are classified by activity level. Several cruise lines are targeting the “adult” demographic. That includes them. Show them some glossy brochures. The faces they see will have grey hair and smiles.