Is America’s Retirement Crisis Real?

In tomorrow’s Juice, we focus on dividend stocks. We love dividend stocks around here, particularly because we think they can be a part of almost any long-term, retirement-focused portfolio. 

We have to laugh, though, when we put together the Trackstar list of the most-searched dividend-paying stocks. Nvidia (NVDA) now blows away all competitors, trouncing Apple (AAPL) (and even edging the second most searched stock overall, non-dividend payer, Tesla (TSLA)). 

Yes, Nvidia pays a dividend! Maybe the most overlooked and inconsequential dividend in the freaking stock market. 

You’re certainly not going to live off of NVDA’s meager 0.02% dividend yield. But you very well could have retired on NVDA stock if you have owned and profited from enough of it. 

That said, one thing is certain: There are all different types of dividend stocks for investors to choose from. Tomorrow, we distinguish between a few key categories.  

But first, today, we focus on something else that we thought was certain: America is in the midst of a longstanding and persistent retirement crisis. 

From Gen Z right through to the senior citizen population, large numbers of Americans are struggling to save (enough or at all) for retirement. And many of those in retirement aren’t faring all that well. 

We don’t usually like to throw shade here at The Juice. But sometimes it’s so well-deserved that we can’t — and probably shouldn’t — resist. 

We came across an article written by a lawyer at the National Association of Plan Advisors (NAPA) website. This is an organization, affiliated with the American Retirement Association, that advocates in Washington for retirement plan advisors. So, we know where their interests lie, which makes the editorial they print all the more tone deaf, if not scary. 

We’re gonna pick this tripe apart in two installments: This one, where we take a more qualitative approach, and in next Monday’s Juice (May 6th), where we take a more quantitative angle. (So, if you were forwarded this email or want a friend or family member to subscribe for free to The Juice, this is the link to use). 

Anyhow, the article in question came with the title: Critiquing the Retirement ‘Crisis’.

The lawyer-author opened his tone deaf take by saying: 

It’s been said that a crisis is a terrible thing to waste. But what if it’s a figment of your imagination?

“Crisis” is a word much bandied about these days, most particularly as a label applied to retirement—by foes and fans alike. Indeed, while not so long ago headlines posed that premise as a question (“Is there a retirement crisis?”), it is now generally posited as a current reality (often accompanied by an exclamation point)—even though an examination of objective data (and a clinical application of the term “crisis”) suggests otherwise.

Classic way to open a weak argument. By taking the reality that we tend to overblow things in our society and applying it to a specific instance where we’re actually not. 

The lawyer goes on to argue two main points:

• That “any number of leading retirement ‘industry’ voices” use the word ‘crisis’ as a way to drum up business. As in, you’re in a retirement crisis and I specialize in retirement, so you need my help. 

This boggles The Juice’s mind because, from our perspective, we’re in the retirement crisis because of the very people who lead the retirement industry. Because groups such as NAPA are unwilling to admit we have a problem out of fear that it would undermine their outdated points of view and tired personal financial and investment-related approaches and products. 

But we digress. 

• The author then claims that there’s nothing wrong with what he calls “America’s retirement savings plan,” the 401(k). He dismisses any concerns over it benefitting the relatively well-off, such as high earners and people with so-called good jobs.

We’ll dispel the living hell out of this next Monday with numbers. Here’s a preview from a Juice we did in January on people prematurely taking cash out of 401(k) plans. 

But first, forget about the 401(k). 

To really understand and fully appreciate the retirement crisis you have to stop thinking about retirement for a second. Because, under current circumstances in the United States, the people struggling — the folks in some type of retirement crisis — don’t have the luxury of thinking about retirement. Either planning for it (effectively or at all) or living it out comfortably. 

This is the problem when you obsess over one thing, such as retirement. You ignore the contributing factors that you can’t ignore if you want an ounce of credibility within the debate. 

When there’s a housing crisis and an overall cost of living crisis, there is going to be a retirement crisis, at least for a large enough segment of the population for it to matter. 

Saying there’s no retirement crisis is akin to saying there’s no housing crisis because most Americans are sitting on a ton of home equity and low-interest rate mortgages. Or saying there’s no cost of living crisis because you walk by restaurants and bars every night packed with people dropping $28 on plates of pasta and $16 on craft cocktails. 

Absolutely, the 401(k), not to mention the Individual Retirement Account (IRA) and other investing vehicles and strategies, works for a ton of people. But enough people exist who they don’t work for — either because they (try to) use them and still struggle or can’t use/access them in the first place — to create a crisis. 

If you’re spending almost all of your money each month on rent or a mortgage, healthcare and groceries, you likely won’t be saving much, if anything for retirement. One crisis contributes and leads to another.  

If you’re in retirement and your property tax bill keeps skyrocketing (this is a thing), your medical costs continue to soar (also a thing) or you’re helping out your cash-strapped offspring (another thing), you’re potentially living through a retirement crisis, while in retirement. 

Defending the sacred retirement industry and touting the 401(k) might be the most meaningless, if not delusional and out-of-touch thing you can do these days as millions of people struggle to make ends meet. They’re in a predicament where basic needs or aspirations such as home ownership come first and feel out of reach. 

They’re dealing with these immediate crises today, which means that, sadly, retirement might not even be on their radar.  

The Bottom Line: Here again, like with housing, The Juice realizes that lots of people are doing super well. And that’s freaking awesome. However, we have seniors in this country, young people just starting out and quite a few generations sprinkled in between dealing with one or more of the aforementioned crises. 

Without a comprehensive approach to dealing with all of these things, we’re never going to help the people who, often through no fault of their own, need it. And we’re certainly never going to do any good by acting as if the tough times they’re living through are merely a figment of their imagination.

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