Many have been asking how the Wuhan virus (COVID-19) will be affecting investment markets so we’ll touch this in a moment. But first, and realizing February brings an RRSP deadline, we pause to realize how many days people work and save, compared to the days you want to enjoy retirement. The results may shock you. To enjoy a “long and happy retirement” we must keep focus on resources you and we bring together to always sustain the life you choose. … And let me not forget to wish “Happy Valentines’ Day” to you and yours.
PREPARING A LONG AND HAPPY RETIREMENT.
Imagine over a century gone by when people could work on their farm to age 70 or more, but average lifespan was less than 50. For the lucky ones who reached 65 the average number of days to be retired were less than 500. Over the generations since then we’ve moved from farming to manufacturing and more recently to information- and innovation-based technologies with “services” now 78% of our modern economy. Life has never been safer; it’s never been easier, wonderfully assisted with health advances, robotic devices, and artificial intelligence. Age groups growing the fastest today are over 85 and even centenarians at 100+.
So now imagine how many days it would be if you retire at 65 and live to 95 …somewhere near 11,000 days! Or imagine saving diligently, controlling debts, building wealth, and retiring at 55 with continued health improvements that drive an active lifespan to age 105. This picture shows us working 7,500 days allowing for study, weekends, raising families and paying off the mortgage and expanding our retirement to 18,000 days! Science tells us now that some of today’s children will live beyond 150, and nothing more vividly shows how changes are coming to life, career, and future retirement lifestyles.
Take it personally: each day’s savings of your working life may need to buy 2 or 3 days of retirement. Don’t brush over that – let it sink in – get it under your skin. Because if we miss this, it could mean outliving your money. Will your children support you at 85 when they’re wanting their own retirement? Can we depend on Canada Pension which offers at most ¼ of basic living expenses? Can we start a new career or business in our 90s? No … the farm is long gone and each generation has their own challenges to live with including our massive govt debts built since the 1970s so we cannot retire safely on the federal purse nor from the support of our children!
Absolutely we each carry our own responsibility. Everyone who retires will win the lifestyle that has been earned by daily diligence, monthly savings, and yearly reviews to optimize and secure wealth. We all must practice effective personal and financial habits which accelerate money’s growth and have proven successful in sustaining wealth for life.
By the way if you’re comparing to others it’s a sad picture so don’t spend much time on this. Canadians age 50 have saved on average $60,000 … and ten years later their average is near $80,000. Home equity doesn’t count because we always need a home, and downsizing doesn’t necessarily cost less. Ultimately in today’s dollars it helps to have $1Million as that can pay $50,000 annual income even with some inflation protection. Most Canadians nearing retirement see thick clouds on their future, with 70% reporting only a major lottery would make the difference. The only true difference would come from habits of successful saving through their working years.
Where you are today is a result of decisions and actions up to now, and we have the resources to build and sustain wealth for your future. Our planning has already confirmed, most of our clients have a strong foundation of current or future wealth. Going forward with your career choices, retirement planning, home ownership, further knowledge and hobbies, and projecting your needs for the years ahead, we promise to continue our focus on the whole picture which will accelerate your Wealth and accentuate your Life for personal goals and treasured dreams.
IMPACT OF A GLOBAL EPIDEMIC.
Now our second piece today: many ask the impact of COVID-19 (coronavirus) as it spreads more widely from Wuhan. It’s a sensitive question, first with the deeply human dimension that touches so many individuals and families. Then too, the influence on our world community and personal investments.
With the increase of infections and reported deaths each day it has been impossible to forecast how soon this would peak and begin to subside. Actually, reports of new cases seem to be turning downward although this is muddled somewhat near the epicentre where some people had chosen to avoid seeking help from hospitals and clinics. Death stats may rise for some days yet soon they too begin to ease. This follows a natural course as we have seen with other infectious diseases.
While we’re here let’s recall how to ease the fevered anxiety of transmission with:
- Regular & thorough hand-washing,
- Disinfecting commonly touched surfaces,
- Proper handling, fitting, and disposal of surgical masks,
- Reasonable isolation to inhibit the spread to/from others.
Epidemics can influence investment markets – clearly they get the shakes during early news reports – but generally there is no lasting impact.
- Ebola arose in 1976 and each year will hit a few thousand people. Health treatment and now the 2019 vaccine have reduced deaths. Ebola has no impact on investment markets.
- Avian or bird flu since 1997 has resulted in several hundred deaths. There are treatments but no vaccine. We’ve found no meaningful impact on investment markets beyond a few weeks.
- SARS took centre stage Nov 2002 to July 2003 infecting 8,096 people with 774 deaths. Markets fell briefly but more than recovered within six months. Treatments exist and now a vaccine (reports differ).
- MERS arose in 2012 with 912 deaths to date worldwide. There is no vaccine at this time. We’ve found no meaningful impact on investments beyond a few weeks.
- Seasonal Flu affects near 1 Billion people annually with 300,000 to 600,000 deaths each year. Impact on investment markets is roughly zero.
Perhaps we’re still carrying a genetic memory of the worldwide flu pandemic of 1918 which infected ¼ of the world’s war-weakened population with estimates ranging 20-50 million dead. Such memory fans anxiety (and certain Netflix movies) when media report on a major new virus. But even with today’s vaccines for the flu the U.S. last year reported 61,000 deaths from flu plus 50,000 more from pneumonia, and none at all from SARS, Ebola, MERs etc. Investment markets pay far more attention to earnings and innovations than to seasonal flu or brief epidemics.
China productivity may fall by a third from 6% to 4% for first-half 2020 due to the current virus, and the world’s economy may shave ½% from GDP due to reduced travel, transportation, and manufacturing of parts from China. Airlines, travel agencies, movie theatres, casinos and restaurants, may suffer this quarter while earnings probably rise among online and e-commerce systems, healthcare, and high-end manufacturing firms. As a side-effect China and other nations aim to ease the difficulty with low interest rates and other pro-growth policies. Plus, where certain business sectors may slide 5%-15% over a month or two those will likely rise as promptly once the virus is more contained.
Here from ECDC (European Centre for Disease Control and Prevention) we share a Feb. 12th picture — if unclear click and visit their site. Such graphs show COVID-19 starting to recede. Bearing in mind this can change somewhat day-to-day, ultimately the trend for transmission and fatality will decline. Yes we will contain this virus as it runs its course. Someday it may be part of the normal seasonal infections for which people will vaccinate (or not). I hope we’ll vaccinate for even while COVID-19 has mild symptoms for 82% affected we think of our family and neighbours whose health is protected if the rest of us are vaccinated.
IN CLOSING.
Reach me with any questions, and certainly connect us with anyone who is needing help to secure financial wellbeing, lifelong comfort, and a rewarding retirement. Share this letter with anyone you know who can benefit.
Yours in Financial Security for LIFE!
Brian Weatherdon, MA, CFP, CLU, CPCA. 905-637-3500
627 Guelph Line, Burlington, Ont. L7R 3M7. 1-877-937-3500
Brian@SovereignWealth.ca
Author: A Lifetime Of Wealth — And How Not To Lose It (2013). Protecting Life, Loved Ones, and Future Dreams (2013). Your Business, Your Retirement: Halton Retirement Study (2015).
** This monthly letter touches on key strategies in Canadian and global investing and financial planning. This letter is not an offer to sell any kind of security, insurance, or program. Historical returns and risk measures are not a valid guide to future performance. Returns are from publicly available sources and research from a variety of firms including but not limited to GLC, RBC, CIBC, Mackenzie, Franklin Templeton. Opinions reflected in this letter belong solely to the author and no other body is responsible for the content expressed here. We value opportunity to consult alongside your legal and accounting firms to advance your financial security and unique goals. We are grateful always to receive your comments and questions.