“Time and tide wait for no man.”  It is a saying which has found its way through history albeit with uncertain provenance.  The list of authors who may have penned it include St. Marher in 1225, Geoffrey Chaucer in 1368, Thomas Nashe in 1596, Sir Walter Scott in 1822, and Charles Dickens in 1844 (though Sir Walter Scott and Charles Dickens used words which most closely match).  Regardless, it was clear to our ancestors that the march of time is tireless.  Somebody should tell the Americans.  A 2018 survey by insurance company Northwestern Mutual estimates that 21% of Americans have saved nothing for retirement – zero, zilch.  About one-third of Americans have saved less than $5,000.  Millennials, while clearly not helping the numbers, are not to blame.  The same study suggested that one-third of the Baby Boomer generation have saved $25,000 or less.  Focusing on young people, according to a separate survey by Bankrate.com, 30% of the Millennials who are saving for retirement prefer cash as their “long-term” investment option which only compounds the issue (pun intended).  That does not bode well for personal finances in retirement as the population ages.

The lack of retirement savings has several ramifications.  To start, the lack of financial assets (retirement savings) contributes to the income insecurity felt by many who have been “left out” of the equity bull market and also have not seen real wage growth as labor’s share of GDP declined post-crisis.  This in turn affects labor trends.  Despite the well documented decline in the overall labor participation rate (i.e. the percentage of the total adult population who is either employed or actively seeking work) over the past twenty years, the only two age segments that have experienced increasing participation rates are the 55-64yrs and 65yrs+ brackets.  It is a small leap of logic to conclude that the lack of retirement savings may have something to do with older workers staying in the labor force.  In the absence of saved financial resources, logic then follows that there will likely be a higher dependence on social safety nets such as Social Security and Medicare/Medicaid.  The solvency concerns of these programs along with the fiscal issues they create for the US government are well understood (not to mention the impact to economic growth in a consumer-driven economy when the maximum Social Security benefit is a little more than half the current GDP per capita).  Of course, all of these issues coalesce around choice – and importantly choices in politics.  As we move through the general mid-term elections this year and potential Presidential candidates ramp up rhetoric looking towards 2020, we are likely to see the candidates speak to these concerns through policy.  While these fiscal retirement issues may seem far off, the clock is ticking and it is only a matter of time before the tide goes out.