Read e-book What If Boomers Cant Retire?: How to Build Real Security, Not Phantom Wealth

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But, that is a far cry from entailing that a company is worth only what the initial investors injected directly into it decades ago. Parker has other peculiar beliefs. He views the marked-to-market mechanism as flawed.

Manual What If Boomers Cant Retire?: How to Build Real Security, Not Phantom Wealth

Thus, when you and I both own an IBM share; your share should have a different market price than mine! Another Parker's special is the "parasitic investor" that entails all investors who trade stocks including pension funds, mutual funds, and retail investors. Since parasitic investors were not among the initial investors who injected capital directly into the company they are parasitic.

Per Parker, any measure to boost stock price is bad. This is because it inflates Phantom Wealth. Parker is obsessed about corporate downsizing. But, he ignores that the U. Our unemployment rate remains very low. And, our standard of living as measured by GDP per capita has grown faster over the long term than any Western economy too.

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The author is missing the boat on the underpinning of economic growth. When Parker goes into recommendations, cognitive dissonance remains high. He suggests dismantling the existing equities markets as they just create Phantom Wealth. He would have them replaced by private investment pools and labor oriented funds. He believes the entire securities industry will have to make such changes or go out of business during the first quarter of this century.

This will be the first time in 40 years this has happened.

But, what Parker promotes are risky, concentrated, and illiquid investment vehicles. Such investments would be inappropriate to replace existing equity markets that are efficient, well diversified, and liquid. Parker also promotes the Japanese Keiretsu model where banks and corporations co-own each other. This is a flawed model due to conflict of interests that lead to bad credit decisions and cause bank crisis.

He also proposes creating investment vehicles that compensate investors based on a company's payroll size. This is a quick way to render our private sector obsolete in a globalized World economy. The author recognizes the challenge of an aging society captured by the forthcoming decline in the number of employees per retirees.

The author's average understanding of demographics combined with ignorance of economics has resulted in a moribund book. The author constantly focuses on the wrong thing. It is not so much Social Security that has an actuarial problem. It is Medicare because it compounds the force of technology driven healthcare costs with the demographics of an aging society. Social Security has to deal with only the lesser of those two forces. He thinks retirement plans are excessively concentrated in stocks.

Social Security is invested in Treasuries. The retirement of Baby Boomers is more dependent on bonds than stocks. He is obsessed by all evils of stocks. But, the retiring of the Baby Boom generation will affect bonds, real estate, and other asset classes just as much. He does not recognize that any investment's market value represents the present value of its discounted future cash flows.

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As Baby Boomers will sell their portfolio investments, it will increase the discount rate for all investments. This is the case because every investment class competes with each other. There is nothing inherently worst about stocks vs other investments. His Phantom Wealth concept is nonsense.

Four in ten baby boomers have no retirement savings

He does not understand that a stock market value is supported by earnings. The well-to-do have access to preventative care and medicine as needed, which isn't always the case with lower-income folks. This results in the wealthy typically living longer than low-income workers, on average. This increased longevity, along with the fact that higher earnings often means a bigger Social Security benefit, has allowed the rich to strain the program.

Even the Federal Reserve may be partly to blame. Keeping interest rates at a record low for seven years negatively impacted the yields on those aforementioned special-issue bonds that Social Security invests its excess cash into. This has a negative impact on interest income.

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All of these factors, along with Congress' inability to agree on a solution to fix Social Security, has aided in Social Security's forthcoming shift from being a cash flow positive to cash flow negative program. I won't sugarcoat things. It's not good news. But it's also not as dire as you might think, even if the Trustees report is correct and Social Security's asset reserves are completely exhausted by The good news, if there's a silver lining to be found here, is that Social Security can't go bankrupt.

A Major Social Security Change Is Coming in 2022

America's most important social program is funded in three ways :. These latter two categories account for a reasonably small percentage of the revenue collected each year. As long as the payroll tax remains the primary funding mechanism for Social Security, and Americans keep working, the program will collect revenue that can be disbursed to eligible beneficiaries.

This ensures that the program can't go bankrupt. The downside is that this doesn't protect against the potential for a cut to current or future benefits. If Social Security's asset reserves dwindle beginning in , it's a sign that the current payout schedule isn't sustainable. Ultimately, the Board of Trustees report is a wakeup call for today's working Americans to reduce their expected reliance on Social Security during retirement. But given how often lawmakers in Washington have kicked the can on Social Security, betting on politicians to save the program from steep benefit cuts doesn't seem like a smart move. You'll often find him writing about Obamacare, marijuana, drug and device development, Social Security, taxes, retirement issues and general macroeconomic topics of interest.

Sean Williams. May 14, at AM.