Pensions have been underfunded and managed to compound their capital shortfalls for more than 2 decades. Today in the midst of the biggest and third global asset bubble in 20 years, investment yields and expected returns have never been lower with withdrawal expectations never larger.
Contrary to the self-serving recommendations of the financial sales sector, when investment conditions are hostile the answer is not to increase risk exposure and hope for lucky ‘wins’, the answer is to seek defense against the coming mean reversion period and wait for capital-worthy opportunities to return.
Unfortunately most pension managers, financial advisors and savers are doing the opposite, and this will only serve to make deficits worse. The below audio discussion about the retirement savings crisis still widely unacknowledged, is worth sharing.
Financial solutions lie in math, pragmatic planning and self-discipline, not in sales pitches and willful blindness. Here is a direct audio link to the segment starting at 11:26 and ending at 41:00.
The financial system will soon witness a collision between an unstoppable force and an immovable object. Pensions around the world are being crushed under the weight of trillions in unfunded liabilities while hundreds of millions of Baby Boomers are advancing to retirement in ever greater numbers, creating a perfect storm for the next crisis that is all but mathematically certain to happen.