Thoughts from the Frontline

Blame it on Demographics

By John Mauldin

February 11, 2005

Blame it on Demographics
Is Retirement in Your Future?
Fantasy Island
Supply and Demand Is the Main Culprit
The Necessity of Absolute Returns
Puerto Vallarta, Connecticut and Home

Last week we talked briefly about some of the problems surrounding Social Security, and especially the possibility that the deficit problems may be worse than we thought because of the trend towards (on average) living longer.

But a large part of the current debate misses what I think should be the real point, and that point is the focus of this week's letter. Everyone assumes that if they work hard and save they will be able to retire. While a sad number of people do not plan for retirement, those who do make assumptions about what type of retirement they will be able to afford with their savings, pensions and Social Security based upon historical performance of the markets.

But past performance is not indicative of future results. Today we are going to look at a study which suggests that past performance might in fact be highly misleading. That is because the conditions which created that past performance have changed dramatically, and that is going to have a great affect upon the retirement plans of the Boomer Generation.

Bill Gross of PIMCO, commenting on this topic last week made these comments,…

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