Retirement | timiacono.com

For the first time since before the financial crisis, more Americans think they’ll have enough money to be comfortable in retirement than not according to the latest Gallup survey.

On its face, this is not very surprising given the dramatic rise in stock prices and home prices over the last year or so, developments that are pretty hard not to notice if you’ve given retirement even a passing thought. The latter is probably more important since, for better or worse, housing plays an outsized role in the finances of most American families.

It would appear that, more than anything else, we’re confident that the Federal Reserve will be able to keep asset prices inflated and that confidence may be misplaced.

Not surprisingly, how people think about retirement is quite different depending on how close to it you are as confidence goes down in the survey as age goes up with only 45 percent of those aged 50 to 64 answering yes to the question while 48 percent said no.

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When first reading the questions posed in this story at the Atlantic about how bad financial illiteracy is around the world, I thought they were some sort of trick questions, designed to make even smart people feel a little dumb when they sped through them at too fast a pace.

But there were no tricks involved – they were as simple as they appeared at first glance – as we get a better glimpse into just how bad people all around the world are when it comes to simple math and how little we know about the financial world, problems that adversely affects billions of people financially who are easy prey for big banks and our other Wall Street overlords, both of whom are quite good at both subjects.

The most interesting part of the report (to me at least) was how much financial illiteracy (or literacy below) varies around the world and a pie-chart seemed to be in order.

Go read the questions that were posed if you really want to be gobsmacked.

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The title - The best states to retire in are a little surprising – of a CNN/Money story about a new Bankrate survey is likely only surprising to people who live on either the East or West Coast, regions that are almost entirely absent from the list. It would be better to see these highlighted on a map, but the message is made clear simply by listing them.

1. South Dakota
2. Colorado
3. Utah
4. North Dakota
5. Wyoming
6. Nebraska
7. Montana
8. Idaho
9. Iowa
10. Virginia

There’s a little detail in the report about what makes each of these states appealing and both health care and tax rates appear to be prime considerations.

What’s really surprising about this (at least to me) is that these are almost all cold-weather states, a factor that, traditionally, has kept retirees away from these areas in favor of warmer climes like Florida and Arizona.

Of course, this is just one survey and you need look no further than a link embedded in this story – Related: Best Places to Retire – to find that places like Florida and North Carolina are still popular (though even this list includes a good number of Rocky Mountain areas). It would appear that, as was the case for my wife and I, positives such as low population density, low crime, etc. are no longer being easily trumped by cold weather.

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Means and Medians, Good News and Bad

It’s not really clear if rising 401k balances as noted in this CNN/Money story are the good news it portends to be for the nation’s future retirees as a whole, or if it’s just another example of how the mean can sometimes be very different from the median.

First, we’re told retirement accounts are bulging, due primarily to soaring U.S. stock prices:

The surging stock market helped boost average 401(k) balances to yet another record high in 2013. But many young and low-income workers are not doing such a great job of keeping that cash in their accounts.

The average 401(k) balance hit $89,300 at the end of the year, up 15.5% from $77,300 in 2012, according to an annual tally by Fidelity Investments.

But, the bad news comes  much later:

A 2013 study by the Employee Benefit Research Institute found that nearly half of workers had less than $10,000 saved.

That’s quite a disparity and it’s a pretty safe bet it’s widened over the last year or so, adding to the growing concern over the nation’s growing wealth inequality problem.

Combine this with the far greater likelihood that small retirement accounts will be cashed out rather than rolled over when a worker changes jobs – a problem that gets a good deal of attention in this story – and the situation is only likely to get worse.

I never cashed out a retirement account, but many, many years ago I do recall not really paying too much attention to it until it breached the six-figure mark. It’s understandable how people could look at a $10K, $20K, or even a $50K balance and think, “I’ll just pay the penalty and take the money”. This was no doubt a matter of necessity rather than choice in many cases in the years following the onset of the Great Recession.

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