A Preview of the Sungarden Study

The current generation of retirees represents a diverse group. Members of the so-called “silent generation” are now in their 70s and 80s, but they are now joined daily by a significant number of Baby Boomers, the oldest of which are now in their late 60s. They have seen market booms and busts, and many have survived well enough financially to live off of their savings. Those people and others still pursuing the goal of a sustainable retirement have been presented with an enormous amount of information from financial advisors and financial media. Who could blame them if they felt a bit bewildered at this point?

The most vital and pervasive issue these investors will face in the next decade is how to wring out enough income from the savings they have amassed to maintain or enhance their lifestyle. They have prodded along, building wealth under a reasonable assumption: that when they finally reached the stage where they could enjoy the fruits of their labor, they could be largely sheltered from market volatility and earn a steady and sufficient level of income from their investments.

But something happened on the way to retirement paradise…financial instruments they have perceived as “safe” and able to produce an acceptable level of income, have morphed into low-return investments with new and unfamiliar risks. Specifically, the market for “high quality bonds” (Treasuries, Municipals and Corporates) does not at all resemble what they are accustomed to. They benefitted from tremendous market tailwinds for both stocks and bonds in the 1980s and 1990s. But the financial crisis of 2007-2009 and its aftermath have made it more apparent to them that investment markets, particularly for income, have changed. This requires retirees, pre-retirees and their financial advisors to be far more flexible in their investment approach, or risk major disappointment at a time of their lives where they cannot go back and make the money all over again.

© Sungarden Investment Research


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