Social Insecurity

On January 31, 1940, Ida May Fuller was the first recipient of a monthly social security check in the amount of $22.54.  Miss Fuller was a legal secretary who retired in November of 1939.  She started receiving benefits at the age of 65 and lived to be 100 years old, dying in 1975.

Ms. Fuller worked for three years under the Social Security program and her total Social Security taxes withheld equaled $24.75.  Her initial monthly check was for $22.54 with her lifetime collected income being $22,888.92, according to the Social Security website.

              • In 2019, about 64 million Americans will receive over one trillion dollars in Social Security benefits.
              • Among elderly Social Security beneficiaries, 21% of married couples and about 44% of unmarried persons rely on Social Security for 90% or more of their income.
              • We are an aging population (US Census data below).

You may have recently read the Social Security Board of Trustees released the annual report on the long-term financial status of the Trust Fund. In the report, they stated the combined assets of the Old-Age and Survivors Insurance and Disability Insurance (OASI and DI) Trust Funds are projected to become depleted in 2035, with 80% of benefits payable at that time. That is a 20% reduction in income…in retirement.

Market Insecurity

The last five years have shown this market is not getting much love from investors.  Over those five years, investors have been net sellers of equity mutual funds, and generally net buyers of bond mutual funds (see below).  Maybe as we age as a society, we are getting more conservative?  Maybe young adults are wary of Wall Street, as they have witnessed bad events in the economy.  We believe bonds should be a part of an investor’s allocation, but with ten-year Treasury Notes yielding roughly 2.5%, that is a tough pill to swallow.  Without the upside of stocks, an investor could run out of money in retirement, as inflation is a silent killer.  Couple that with a reduction in Social Security and that is retirement insecurity.

Equity (Stock) Mutual Fund Flows

Bond Mutual Fund Flows


As the chart below shows, the U.S. is still in expansion mode as interest rates remain low, jobs are plentiful, household debt-to-income is low, and the consumer is feeling happy.  2019 could be one of the biggest years on record for IPO money raised.  That can be seen as a bad sign as IPO’s tend to peak at market tops.  But, as we see above, investors are not flocking to the stock market, so there appears to be a lack of irrational exuberance.  Currently, the stock market is signaling a thumbs up for the economy.

The bond market is another story.  The tale of two markets.  Bonds are signaling trouble ahead as rates have remained low and there doesn’t seem to be any pressure for rates to move higher.  However, as a contrarian signal, investors buying bonds can be keeping rates low.

Now what

Markets are painting a mixed picture.  Those looking to retire or achieve financial independence must stay their course.  The tried and true methods of diversification, long-term patience and rebalancing will win in the end.  There are reasons to believe both the bond market and the stock market.  There are areas of strength and weakness.  We are living longer, and government programs may not be as much of a help as one may have planned.  Those nearing Social Security, call us, as there are options to review.  For those that are not, save, save, save and make the market your friend.








Morgan R. Christen, CFA, CFP®, MBA
Chief Executive Officer


Past performance is not a guarantee of future results. Indices are not available for direct investment. Index performance does not reflect the expenses associated with the management of an actual portfolio. CPI data are available from the US Bureau of Labor Statistics. Stock is the capital raised by a corporation through the issue of shares entitling holders to an ownership interest of the corporation. Treasury securities are negotiable debt issued by the United States Department of the Treasury. They are backed by the government’s full faith and credit and are exempt from state and local taxes. The indices are not available for direct investment; therefore, their performance does not reflect the expenses associated with the management of an actual portfolio. Past performance is no guarantee of future results, and there is always the risk that an investor may lose money. Diversification neither assures a profit nor guarantees against loss in a declining market. The information contained herein is based on internal research derived from various sources and does not purport to be statements of all material facts relating to the securities mentioned. The information contained herein, while not guaranteed as to the accuracy or completeness, has been obtained from sources we believe to be reliable. Opinions expressed herein are subject to change without notice. Social Security  Census data Mutual fund flow courtesy of Investment Company Institute.  Stages of expansion courtesy of Vanguard.

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