Tag Archives: financial advisor

Are You Ready to Take Social Security Benefits?

My Comments: Today is Tuesday so today I talk about Social Security. These comments by Dan Caplinger may be old news, but for those of you just starting to think about retirement, know that Social Security is a fundamental income component for millions of people.

Chances are, you’ll be in that group. The sooner you get your arms around this idea, the happier you will be.

by Dan Caplinger on Sep 17, 2017

There are some things you need to be aware of before you file for retirement benefits from Social Security.

Social Security helps support tens of millions of Americans in retirement. Because of how important Social Security benefits are, you can’t afford to make any mistakes about how the program works and how you can get the most out of it that you can. In particular, these must-know facts about Social Security are often misunderstood, leading to critical errors that can result in getting lower benefits than you’re entitled to receive.

1. Social Security payments vary depending on when you take them

Most people understand that you can claim your Social Security as early as 62 or as late as 70, and when you claim can have an impact on how much money you get. Yet even though the mechanics are simple, many people don’t understand them. For starters, know that your “primary insurance amount” is the monthly benefit you’re entitled to receive if you claim Social Security at your full retirement age, which for those retiring now tends to be between 66 and 67. The Social Security Administration calculates your PIA based on your lifetime earnings and the year of your birth.

If you claim benefits early, then you lose a certain percentage of your PIA based on how early you claim. Up to 36 months early, you’ll lose 5% of your benefits for every nine months that you’re early, while shorter periods result in pro-rated decreases. If you claim more than 36 months early, then you’ll lose an additional 5% for every 12 months that you’re early in claiming them. That makes the maximum possible benefit reduction 35% (for those whose full retirement age is 67 and who claim at 62).

Those who claim their own retirement benefits late get a bonus of 2% for every three months that they wait beyond their full retirement age. That comes to a maximum bonus of 32% (for those whose full retirement age is 66 and who claim at 70). These bonuses aren’t available for spousal benefits but only for benefits paid on your own record. By understanding these provisions, you’ll be better able to calculate the impact of various options on your finances.

2. Your claiming decision can affect benefits for your entire family

Your family members may be entitled to Social Security based on your work history under certain circumstances. This is most common for spouses: If you’re married, your spouse may be eligible to receive up to 50% of your primary insurance amount as a spousal benefit. However, other family members, such as children or parents, may also be entitled to benefits.

In order for these family members to claim their benefits, you usually must file for and receive your own retirement benefits. In the past, alternative strategies allowed workers to file for benefits but then suspend them, opening the door to spousal and family benefits while letting the worker put off their benefits and thereby earn delayed-retirement credits. With the repeal of the file-and-suspend rule, that’s no longer an option, so families have to weigh the impact of having a worker delay benefits against the ability of other beneficiaries to get payments.

3. The government can take away some of your Social Security benefits in some cases

The laws governing Social Security provide for several instances in which benefits can be lost. If you claim Social Security before reaching full retirement age and while you’re still working, then you may start forfeiting part of your benefits if you earn more than $16,920 per year. Those who worked for public employers with their own pension programs can end up losing money because of the provisions of the Government Pension Offset and Windfall Elimination Provision.

The government may also take away part of your benefits indirectly through taxation. If you receive Social Security benefits, and the sum of half of those benefits plus your other sources of income exceeds certain thresholds, then a portion of your Social Security income is treated as taxable income and therefore boosts the amount of tax you’ll owe. It sometimes makes sense to defer taking Social Security benefits if you know that claiming them now will leave you open to losing some of those hard-earned monthly checks.

Be ready for Social Security

Claiming your Social Security benefits at exactly the right time can be tough, especially if you don’t have extensive financial assets to supplement those benefits. Nevertheless, it’s worth the effort to learn what you can about the program and the strategies that will help you get the most from it.

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The Middle-Class Squeeze Isn’t Made Up

My Comments: Are you a middle-class American? I used to be and may still be, but those like me are a dying breed. The economic devastation now engulfing a huge portion of Texas is going to reverbrate across the nation. Apart from the humanitarian crisis, it will add to the unseen crisis affecting middle class America.

Economic inequality led to the downfall of the Democratic Party last November. It’s manifest by the lower economic expectations of those who live in rural America, by those whose education is no longer enough to get ahead, and still pervasive social discrimination against those not white enough. To Trumps credit, he saw the problem and built a movement, even if he is likely to waste the opportunity.

Like many ‘economic’ essays, this may be hard for you to get through. But to the extent you want to preserve the underlying goodness of this nation, and protect yourself along the way, you would benefit from a better understanding of the problem.

By Barry Ritholtz / Feb 15, 2017

Benjamin Disraeli is reputed to have said “There are three type of lies: lies, damn lies and statistics.”

Today let’s address the third component of Disraeli’s formulation in the context of a recent National Review article with the headline, “The Myth of the Stagnating Middle Class.” The article observes that “more Americans have easier lives today than in years past.”

To regular readers, this is a variant of the assertion that “common folk live better today than royalty did in earlier times,” a claim we debunked two years ago. The current argument is more nuanced in that it: a) relies on a few statistical twists; b) contains statements that are true but don’t support the main claim; and c) is an argument against Donald Trump’s populism from the political right. It all has the general appearance of plausibility until you start digging.

This is where we come in.

Let’s begin with the claim that more Americans have easier lives today than in years past. This is true and almost always has been. Progress is humanity’s default setting ever since our ancestors climbed down from the trees and began walking upright on the African savanna.

Thus, it should come as no surprise that the standard of living for all Americans has been rising for many years, mainly because of technological advances. However, the main issue under discussion is actually about how the economic benefits of the U.S. economy get apportioned across the populace.

In other words, how the wealth is distributed. The National Review engages in a statistical sleight of hand that distracts from this.

For further insight I spoke with Salil Mehta, who teaches at Columbia and Georgetown, and is perhaps best known for his role as the top numbers-cruncher in the federal government’s $700 billion TARP bank bailout plan in the financial crisis.

Mehta made short work of the article:
The article is a peculiar mixture of motivating facts and fantasy logic, which is what makes cherry-picking statistics unsafe for policy conversation. The main issue with the piece is that that it continuously mixes and matches data to fit a fated narrative.

Mehta further observed that the National Review argument included in some cases various classes of Americans (such as minorities and immigrants), while excluding them at other times in statistics. This kind of data cherry-picking is always a red flag.

Consider for a moment how the Pew Research Center did its big research report, “The American Middle Class Is Losing Ground”: The report, which actually figures in the National Review article, analyzed the Current Population Survey from 1971 to 2015. It used data drawn from the Bureau of Labor Statistics, which has well-established standards for managing data and making empirical comparisons.

Maybe it’s best to make the point with two of the more telling charts in the report. Here’s the first one, showing that income growth for the middle class has trailed that of the upper class:

The second chart (below) shows that the wealth gap between the upper and middle classes also widened significantly (even after the losses from the financial crisis):

Best practice in these circumstances is to go to the original data source, cite it and analyze it in a way that is consistent, regardless of whether the outcome supports your conclusion.

As I’ve said before, there are many reasons to dislike this economic recovery: it has been lumpy and unevenly distributed by geography, by industry and by level of educational attainment. Much of that has harmed people who were once considered middle class. Add to this the decades-long impact of automation, globalization and the decline in labor’s bargaining power, and it adds up to economic stagnation for the middle class.

But wage and wealth stagnation alone don’t account for the full measure of middle-class angst. Inflation and its components also play a part. Prices for things we want have been deflating, while the cost of things we need have been going up. Mobile phones, computers and flat-panel TV are better and dollar-for-dollar cheaper than ever. The same is true for cars, which in a few years will likely be self-driving.

But those are mostly wants. When it comes to needs, it’s a different story. Housing, even after the 2008-09 crack-up, is expensive. Rentals have gone straight up as home ownership has fallen. The costs of education have skyrocketed and show no signs of slowing. Medical and health-insurance costs are among the fastest-rising of all consumer expenses.

The National Review article concludes by saying, “Government can’t fix that problem, because that problem doesn’t really exist.”

Wishing that a problem doesn’t exist doesn’t make it vanish. But it does offer some insight into why the Republican Party was blindsided by the rise of Donald Trump and his populist appeal. It isn’t that the party elite was myopic, but that it actively fabricated a bubble into which no contrary information was allowed entry. The troubling thing is that the GOP is still at it.

Middle-class anxiety has been building for more than a decade and it mixed in the last election with a general sense of frustration with America’s leadership class. No wonder the middle class feels squeezed — because it is.

This is how much fees are hurting your retirement

Thursday = Retirement Issues

My Comments: Value is in the eye of the beholder. When we need something, and for whatever reason, choose not to do it by ourselves, we spend money. If you are selling advice, or pork chops, or cars, people are going to spend money when they have to.

As a self-styled expert on retirement planning, what you pay for financial advice can run into several percentage points every year. What is your frame of reference that determines if you are getting value in exchange for what you are paying?

Aug 17, 2017 Craig L. Israelsen

This article is reprinted by permission (?) from NextAvenue.org.

The importance of keeping your investment portfolio costs low should be self-evident. They come directly out of your pocket. But you may be surprised to see how much it matters to stick with low-fee mutual funds and Exchange-Traded Funds (ETFs). I’ve run the numbers.

The two primary portfolio costs consist of what’s known as the “expense ratio” of the funds or ETFs (the annual fee charged as a percentage of assets) and the “advisory fee “(if there is a financial adviser involved).

The average expense ratio among all mutual funds is roughly 100 basis points or 1.0% (one basis point is one hundredth of 1%). Assuming an annual advisory fee of 100 basis points, or 1%, the total portfolio cost is 2% (or 200 basis points). At that level, for a diversified fund portfolio with a starting balance of $1 million, the average annual withdrawal for a retiree between age 70 and 95 is about $126,426 (assuming the retiree makes the government’s Required Minimum Distribution or RMD). Remember: this is an average withdrawal figure over a 25-year period; the actual RMD will vary each year based on your portfolio’s performance during the prior year and each year’s RMD percentage.

If the cost of funds in the portfolio is cut in half by using mutual funds or ETFs with lower expense ratios, the overall portfolio cost can be reduced from 2% to 1.5%. By doing so, the average annual withdrawal then increases to $136,218, meaning the retiree will have roughly $10,000 more income each year. That works out to a “raise” of about $830 a month during retirement.

$32,000 more a year in retirement

But you can do even better. It is now possible, by using low-cost ETFs, to build a diversified retirement portfolio for as low as .10% (or 10 basis points). If the advisory fee were reduced by a mere 10% down to .90% (or 90 basis points), the overall portfolio cost could be lowered to 1.0%. At that level, the retiree can withdraw an average of $146,853 each year — or an additional $10,000 annually.

Finally, if the adviser lowered his or her fee to .40% and the fund expenses amounted to .10%, the total portfolio cost would be just .50%. At that level, $158,407 would be the average amount withdrawn each year.

All together, by slashing fund expense ratios from 1.0% to .10% and the advisory fee from 1% to .40%, the retiree could receive $32,000 additional annual retirement income — or roughly $2,600 more each month between the ages of 70 and 95. Clearly, the impact of portfolio costs is huge.

A modern diversified portfolio

Here’s how to put together a low-cost, diversified portfolio that I call the 7Twelve® portfolio. If you use low-cost, actively managed funds from various fund families, the overall fund expense can be as low as .54%. If you use ETFs from various fund families, the cost can drop to .16%. And if you use just Vanguard ETFs, the overall fund expense ratio can be as low as .10% (I have no affiliation with Vanguard; they’re just an investment company specializing in keeping costs low).

The idea of building a diversified portfolio for as little as .10% is not theoretical. It is a reality and can and should be considered.



Craig L. Israelsen, Ph.D., teaches in the personal financial planning program at Utah Valley University in Orem, Utah. He is the author of “7Twelve: A Diversified Investment Portfolio With a Plan” and his website is 7TwelvePortfolio.com.

Will This Happen to Social Security?

Tuesday = Social Security comments

Concern about the continued viability of our Social Security system if very justified and real. The solutions to the problem are reltively simple and if started soon, will be absorbed by the economy with relative ease.

But Capitol Hill is the wildcard here. The crisis is far from dramatic. Yet. Elected representatives in both houses of Congress operate on an election cycle timeframe. If the crisis isn’t within the current cycle, the response is essentially “Not my problem!”.

But the issues does give each and everyone of us the opportunity to explore the current thinking of every single candidate as they go through the election process. Without that kind of pressure, they won’t act until the ball is about to drop.

Sean Williams \ Aug 7, 2017

According to the June 2017 snapshot from the Social Security Administration, nearly 61.5 million people were receiving a monthly benefit check, of which 68.2% were retired workers. Of these 41.9 million retirees, more than 60% count on their Social Security to be a primary source of income. That’s huge, and it demonstrates just how important Social Security is for current and future generations of seniors.

Is Social Security doomed?
Of course, as you’re also probably aware, the program isn’t on the best footing. A number of demographic changes are expected to wreak havoc on Social Security and throw its future into limbo. These include the retirement of, on average, more than 10,000 baby boomers per day, which is pushing the worker-to-beneficiary ratio lower, and the lengthening of life expectancies, which has allowed seniors to pull a benefit from the program for an extended period of time.

The result, according to the latest Social Security Board of Trustees report issued last month, is that benefits could be slashed for current and future retirees by up to 23% in 2034 should Congress fail to act. It’s not exactly the best outlook for a program that means so much to our nation’s retirees.

But there’s an even more glaring figure to most Americans: Social Security asset reserves. The Trustees report predicts that asset reserves could touch $3 trillion by 2022, implying the program is expected to remain cash flow positive through 2021. However, beginning in 2022, and each year thereafter through 2091, Social Security will be paying out more in benefits than it’s generating in revenue, resulting in a $12.5 trillion cash shortfall between 2034 and 2091.

Social Security’s bankruptcy is almost certainly a myth
Some Americans view this imminent cash shortfall as the end for Social Security — especially millennials. When surveyed in 2014 by Pew Research, 51% of millennials believed that Social Security wouldn’t be there for them when they retired. Thankfully, though, this worry turns out to be nothing more than the program’s most pervasive myth.

Social Security will almost certainly be there for many future generations of retirees for one key reason: the payroll tax.

The payroll tax is a 12.4% tax on earned income between $0.01 and $127,200, as of 2017. This maximum taxable earnings figure often increases on par with the Wage Index. Also, it’s worth noting that most workers only pay 6.2% of their earned income into Social Security, with employers picking up the tab on the remaining 6.2%. In other words, as long as people keep working, the payroll tax will keep getting collected, generating income for Social Security to disburse to eligible retirees. Since the payroll tax comprised a whopping 86.4% of income collected in 2015, there should still be plenty for the Social Security Administration to disburse. Unfortunately, this doesn’t mean that current payment levels are sustainable, which is why the Trustees are suggesting cuts could be imminent within two decades.

This is the only way Social Security could possibly go bankrupt
Of course, when we’re talking politics, we can never say anything with 100% certainty. While Social Security currently can’t go bankrupt thanks to the payroll tax, legislation on Capitol Hill could always change that.

Earlier this year, a Republican lobbyist had tinkered with the idea of reducing or eliminating the payroll tax in its entirety, according to Fox News. Assuming the average household generates about $50,000 in income annually, and that most people work for an employer, we’re talking about an average of $3,100 in extra income in the pockets of households each year. Since we’re a consumption-driven economy, this extra cash could fuel spending or bolster personal saving and investment. At least that’s the idea on paper.

The reality of the plan is that it would potentially end the primary source of funding for Social Security. Interest income only provided 10.1% of revenue in 2015, with the taxation of benefits kicking in another 3.4%. If payroll taxes are eliminated, Congress would need to find a way to generate at least $800 billion in annual income. One idea floated around was a value-added tax (VAT) on consumption, which is purportedly capable of generating $12 trillion in revenue over the next decade. However, a VAT could also reduce consumption, and it makes revenue generation very lumpy given natural economic cycles and the regular occurrence of recessions and economic slowdowns.

In short, it’s not a very good idea, in my opinion. However, if Congress were to move forward with a plan to reduce or eliminate the payroll tax, then, and only then, would it be possible for Social Security to go bankrupt.

A silver lining, but you need to remain proactive

Breathe a sigh of relief, folks, because Social Security isn’t going anywhere. If there is a silver lining, it’s that you will receive income during retirement, as long as you’re eligible.

Nevertheless, the Trustees report serves as a genuine wake-up call that working Americans need to turn their attention to saving and investing in order to reduce their reliance on Social Security. After all, Social Security is only designed to replace about 40% of your working wages, but quite a few seniors are leaning on the program for much more.

This all starts with formulating a budget and saving more. The May personal savings rate was a paltry 5.5%, per the St. Louis Federal Reserve. Financial advisors suggest saving 10% to 15% of your paychecks if you want to retire comfortably, and the only way to do so is to better understand your cash flow. Formulating and reviewing a budget can often be done in around 30 minutes each month, and it can be done online, making it easier than ever to save money.

Likewise, even though the stock market goes through bouts of volatility, it’s shown time and again that it’s among the best wealth creators over the long term. Historically, the stock market has appreciated at a pace of roughly 7% per year, inclusive of dividend reinvestment. Proactively saving more and investing wisely is a good, but simple, formula to reduce your reliance on Social Security once you retire.

Disruption Of Confidence

Monday = Investing Money:

I’d like to think that my posts help someone, anyone? Professionally I’ve lived in the financial world for over 40 years and it pains me to say I haven’t a clue what’s going to happen next. What’s telling is that others, far more competent than I, don’t have a clue either.

Lance Roberts, whose comments I share this week, is a technician, attempting to glean clues from a rigorous adherence to mathematics and the signals that supposedly exist and reveal the future when correctly interpreted. Tread carefully.

Aug. 20, 2017 Lance Roberts Seeking Alpha

As noted last week:
“The weakness in the market previously, combined with the threats between the U.S. and North Korea, led to a fairly sharp unwinding in equities on Thursday which in turn triggered a short-term sell signal.

That sell-off has remained confined to the current bullish trend line but has threatened to violate the 50-dma (day/daily moving average). If the market is unable to regain the 50-dma on Monday, and remain above it for the balance of the coming week, the most likely move in the markets will be lower.”

I have updated the chart above (see HERE) through Friday afternoon. I followed that analysis up on Tuesday, stating:
“On Monday, the market surged out of the gate as headlines suggested ‘geopolitical risk’ had subsided. I find this particular explanation hard to digest, given the rising rhetoric of a potential trade war with China, violence in Charlottesville over the weekend, no resolution with North Korea, etc., so forth, and so on. I find little evidence of a global turn in geopolitical stresses currently.

Monday’s ‘buy the dip’ frenzy was no different. The question will be whether the market can both reverse the short-term ‘sell signal’ and climb above the previous resistance of the old highs? Such a reversal would end the current consolidation process and allow for additional capital to be invested.”

That was so last Tuesday…

The reversal, at least to this point, was not to be the case.

Exactly one week after last week’s sell-off, the market dumped again. This time it was the news of the complete dismemberment of President Trump’s “economic council” of CEOs along with the rumor that Gary Cohn would be exiting his position at the White House as well. While the latter turned out to be #FakeNews, the damage had already been done as market participants began to question the ability of the Administration to get its promised legislative action advanced.

Given the run-up in the markets since the election, which was based on tax cuts/reform, infrastructure spending, repatriation and repeal of the Affordable Care Act, the lack of progress on that agenda has left the markets pushing higher on “hope” and “promises.” The disbanding of the economic council has led to some disruption of that confidence.

Importantly, with the market currently on a weekly sell signal, it also compounded the bulls’ problems by breaking the bullish trend line that begins in February of last year.

This is not a “panic and sell everything” signal…yet.

It is, however, a potentially important change to the bullish backdrop of the market in the short-term particularly given the ongoing deterioration in the internal participation in the market. Note that when sell signals have been triggered from similarly high levels (vertical red dashed lines), subsequent corrections have been fairly brutal.

Previously, I questioned whether or not to “buy the dip?”

“My best guess currently is – probably. But not yet.”

I also stated the following two reasons for that sentiment:

1. Bull markets don’t typically end when the mainstream media is “peeing down both legs” over the 1.5% drop on Thursday.

2. The bullish uptrend remains intact and “fear” gauges remain confined to a downtrend.

This remains this week as well. The sell-off so far remains contained above the previous bullish breakout to new highs and remains above current price support levels. Furthermore, while volatility did pick up a bit on Thursday, it has not exceeded last week’s volatility spike, suggesting traders are less worried about a correction than media headlines makes it appear.

Trump Can’t Reverse the Decline of White Christian America

My Comments: Remember the context. Racial tension has been a hallmark of our society since the beginning. Think pilgrims vs indigenous peoples in the 1620’s. Think black vs white in the 1860’s.

Right now the tension is elevated, and coupled with Trump’s inability or unwillingness to quash the tension, overreaction is going to surface. Reaction, within limits, will allow the ideology behind the tension to fade or lose. Otherwise the message becomes all about the confrontation rather than the underlying false premises of bigotry, racism, religion and political ideology.

Robert P. Jones \ Jul 4, 2017

Two-thirds of those who voted for the president felt his election was the “last chance to stop America’s decline.” But his victory won’t arrest the cultural and demographic trends they opposed.

Down the home stretch of the 2016 presidential campaign, one of Donald Trump’s most consistent talking points was a claim that America’s changing demographics and culture had brought the country to a precipice. He repeatedly cast himself as the last chance for Republicans and conservative white Christians to step back from the cliff, to preserve their power and way of life. In an interview on Pat Robertson’s Christian Broadcasting Network (CBN) in early September, Trump put the choice starkly for the channel’s conservative Christian viewers: “If we don’t win this election, you’ll never see another Republican and you’ll have a whole different church structure.” Asked to elaborate, Trump continued, “I think this will be the last election that the Republicans have a chance of winning because you’re going to have people flowing across the border, you’re going to have illegal immigrants coming in and they’re going to be legalized and they’re going to be able to vote, and once that all happens you can forget it.”

Michele Bachmann, a member of Trump’s evangelical executive advisory board, echoed these same sentiments in a speech at the Values Voters Summit, an annual meeting attended largely by conservative white Christians. That same week, she declared in an interview with CBN: “If you look at the numbers of people who vote and who lives [sic] in the country and who Barack Obama and Hillary Clinton want to bring in to the country, this is the last election when we even have a chance to vote for somebody who will stand up for godly moral principles. This is it.” Post-election polling from the Public Religion Research Institute, which I lead, and The Atlantic showed that this appeal found its mark among conservative voters. Nearly two-thirds (66 percent) of Trump voters, compared to only 22 percent of Clinton voters, agreed that “the 2016 election represented the last chance to stop America’s decline.”

Does Trump’s victory, then, represent the resurrection of White Christian America? The consequences of the 2016 elections are indeed sweeping. Republicans entered 2017 with control of both houses of Congress and the White House. And because the Republican-controlled Senate refused to consider an Obama appointee to replace Justice Antonin Scalia, who died in early 2016, Trump was able to nominate a conservative Supreme Court justice right out of the gate. Trump’s cabinet and advisors consist largely of defenders of either Wall Street or White Christian America.

The evidence, however, suggests that Trump’s unlikely victory is better understood as the death rattle of White Christian America—the cultural and political edifice built primarily by white Protestant Christians—rather than as its resuscitation. Despite the election’s immediate and dramatic consequences, it’s important not to over-interpret Trump’s win, which was extraordinarily close. Out of more than 136 million votes cast, Trump’s victory in the Electoral College came down to a razor-thin edge of only 77,744 votes across three states: Pennsylvania (44,292 votes), Wisconsin (22,748 votes), and Michigan (10,704 votes). These votes represent a Trump margin of 0.7 percentage points in Pennsylvania, 0.7 percentage points in Wisconsin, and 0.2 percentage points in Michigan. If Clinton had won these states, she would now be president. And of course Clinton actually won the popular vote by 2.9 million votes, receiving 48.2 percent of all votes compared to Trump’s 46.1 percent. The real story of 2016 is that there was just enough movement in just the right places, just enough increased turnout from just the right groups, to get Trump the electoral votes he needed to win.

Trump’s intense appeal to 2016 as the “last chance” election seems to have spurred conservative white Christian voters to turn out to vote at particularly high rates. Two election cycles ago in 2008, white evangelicals represented 21 percent of the general population but, thanks to their higher turnout relative to other voters, comprised 26 percent of actual voters. In 2016, even as their proportion of the population fell to 17 percent, white evangelicals continued to represent 26 percent of voters. In other words, white evangelicals went from being overrepresented by five percentage points at the ballot box in 2008 to being overrepresented by nine percentage points in 2016. This is an impressive feat to be sure, but one less and less likely to be replicated as their decline in the general population continues.

Updating two trends with 2015-2016 data also confirms that the overall patterns of demographic and cultural change are continuing. The chart below plots two trend lines that capture key measures of change: the percentage of white, non-Hispanic Christians in the country and the percentage of Americans who support same-sex marriage. The percentage of white Christians in the country fell from 54 percent in 2008 to 47 percent in 2014. That percentage has fallen again in each subsequent year, to 45 percent in 2015 and to 43 percent in 2016. Similarly, the percentage of Americans who supported same-sex marriage rose from 40 percent in 2008 to 54 percent in 2014. That number stayed relatively stable (53 percent) in 2015—the year the Supreme Court legalized same-sex marriage in all 50 states—but jumped to 58 percent in 2016.

Despite the outcome of the 2016 elections, the key long-term trends indicate White Christian America’s decline is continuing unabated. Over the last eight years, the percentage of Americans who identify as white and Christian fell 11 percentage points, and support for same-sex marriage jumped 18 percentage points. In a New York Times op-ed shortly after the election, I summarized the results of the election this way: “The waning numbers of white Christians in the country today may not have time on their side, but as the sun is slowly setting on the cultural world of White Christian America, they’ve managed, at least in this election, to rage against the dying of the light.”

One of the most perplexing features of the 2016 election was the high level of support Donald Trump received from white evangelical Protestants. How did a group that once proudly identified itself as “values voters” come to support a candidate who had been married three times, cursed from the campaign stump, owned casinos, appeared on the cover of Playboy Magazine, and most remarkably, was caught on tape bragging in the most graphic terms about habitually grabbing women’s genitals without their permission? White evangelical voters’ attraction to Trump was even more mysterious because the early GOP presidential field offered candidates with strong evangelical credentials, such as Ted Cruz, a longtime Southern Baptist whose father was a Baptist minister, and Marco Rubio, a conservative Catholic who could talk with ease and familiarity about his own personal relationship with Jesus.

The shotgun wedding between Trump and white evangelicals was not without conflict and objections. It set off some high drama between Trump suitors, such as Jerry Falwell Jr. of Liberty University and Robert Jeffress of First Baptist Church in Dallas, and #NeverTrump evangelical leaders such as Russell Moore of the Southern Baptist Convention. Just days ahead of the Iowa caucuses, Falwell invited him to speak at Liberty University, where he serves as president. In his introduction, Falwell told the gathered students, “In my opinion, Donald Trump lives a life of loving and helping others as Jesus taught in the great commandment.” And a week later, he officially endorsed Trump for president. Robert Jeffress, the senior pastor of the influential First Baptist Church in Dallas and a frequent commentator on Fox News, also threw his support behind Trump early in the campaign but took a decidedly different approach. Jeffress explicitly argued that a president’s faith is “not the only consideration, and sometimes it’s not the most important consideration.” Citing grave threats to America, particularly from “radical Islamic terrorism,” Jeffress’ support of Trump for president was straightforward realpolitik: “I want the meanest, toughest, son-of-a-you-know-what I can find in that role, and I think that’s where many evangelicals are.” Moore, by contrast, remained a steadfast Trump opponent throughout the campaign. He was aghast at the high-level embrace of Trump by white evangelical leaders and strongly expressed his incredulity that they “have tossed aside everything that they previously said they believed in order to embrace and to support the Trump candidacy.”

The 2016 election, in fact, was peculiar because of just how little concrete policy issues mattered.

In the end, however, Falwell and Jeffress had a better feel for the people in the pews. Trump received unwavering support from white evangelicals from the beginning of the primaries through Election Day. As I noted at the beginning of the primary season, the first evidence that Trump was rewriting the Republican playbook was his victory in the South Carolina GOP primary, the first southern primary and one in which more than two-thirds of the voters were white evangelicals. The Cruz campaign had considered Super Tuesday’s South-heavy lineup to be its firewall against early Trump momentum. But when the returns came in, Cruz had won only his home state of Texas and neighboring Oklahoma, while Trump had swept the southern states, taking Georgia, Alabama, Tennessee, Virginia, and Arkansas. Trump ultimately secured the GOP nomination, not over white evangelical voters’ objections, but because of their support. And on Election Day, white evangelicals set a new high water mark in their support for a Republican presidential candidate, backing Trump at a slightly higher level than even President George W. Bush in 2004 (81 percent vs. 78 percent).

Trump’s campaign—with its sweeping promise to “make American great again”—triumphed by converting self-described “values voters” into what I’ve called “nostalgia voters.” Trump’s promise to restore a mythical past golden age—where factory jobs paid the bills and white Protestant churches were the dominant cultural hubs—powerfully tapped evangelical anxieties about an uncertain future.

The 2016 election, in fact, was peculiar because of just how little concrete policy issues mattered. The election, more than in any in recent memory, came down to two vividly contrasting views of America. Donald Trump’s campaign painted a bleak portrait of America’s present, set against a bright, if monochromatic, vision of 1950s America restored. Hillary Clinton’ campaign, by contrast, sought to replace the first African American president with the first female president and embraced the multicultural future of 2050, the year the Census Bureau originally projected the United States would become a majority nonwhite nation. “Make American Great Again” and “Stronger Together,” the two campaigns’ competing slogans, became proxies for an epic battle over the changing face of America.

The gravitational pull of nostalgia among white evangelicals was evident across a wide range of public opinion polling questions. Just a few weeks before the 2016 election, 66 percent of white evangelical Protestants said the growing number of newcomers from other countries threatens traditional American customs and values. Nearly as many favored building a wall along the U.S. border with Mexico (64 percent) and temporarily banning Muslims from other countries from entering the U.S. (62 percent). And 63 percent believed that today discrimination against whites has become as big a problem as discrimination against blacks and other minorities. White evangelicals also stood out on broad questions about cultural change. While Americans overall were nearly evenly divided on whether American culture and way of life have changed for worse (51 percent) or better (48 percent) since the 1950s, white evangelical Protestants were likelier than any other demographic group to say things have changed for the worse since the 1950s (74 percent).

It is perhaps an open question whether Trump’s candidacy represents a true change in evangelicals’ DNA or whether it simply revealed previously hidden traits, but the shift from values to nostalgia voter has undoubtedly transformed their political ethics. The clearest example of evangelical ethics bending to fit the Trump presidency is white evangelicals’ abandonment of their conviction that personal character matters for elected officials. In 2011 and again just ahead of the 2016 election, PRRI asked Americans whether a political leader who committed an immoral act in his or her private life could nonetheless behave ethically and fulfill their duties in their public life. In 2011, consistent with the “values voter” brand and the traditional evangelical emphasis on the importance of personal character, only 30 percent of white evangelical Protestants agreed with this statement. But with Trump at the top of the Republican ticket in 2016, 72 percent of white evangelicals said they believed a candidate could build a kind of moral dike between his private and public life. In a head-spinning reversal, white evangelicals went from being the least likely to the most likely group to agree that a candidate’s personal immorality has no bearing on his performance in public office.

Fears about the present and a desire for a lost past, bound together with partisan attachments, ultimately overwhelmed values voters’ convictions. Rather than standing on principle and letting the chips fall where they may, white evangelicals fully embraced a consequentialist ethics that works backward from predetermined political ends, bending or even discarding core principles as needed to achieve a predetermined outcome. When it came to the 2016 election, the ends were deemed so necessary they justified the means. As he saw the polls trending for Trump in the last days before the election, in no small part because of the support of white evangelicals, Russell Moore was blunt, lamenting that Trump-supporting evangelicals had simply adopted “a political agenda in search of a gospel useful enough to accommodate it.”

White evangelicals have entered a grand bargain with the self-described master dealmaker, with high hopes that this alliance will turn back the clock. And Donald Trump’s installation as the 45th president of the United States may in fact temporarily prop up, by pure exertions of political and legal power, what white Christian Americans perceive they have lost. But these short-term victories will come at an exorbitant price. Like Esau, who exchanged his inheritance for a pot of stew, white evangelicals have traded their distinctive values for fleeting political power. Twenty years from now, there is little chance that 2016 will be celebrated as the revival of White Christian America, no matter how many Christian right leaders are installed in positions of power over the next four years. Rather, this election will mostly likely be remembered as the one in which white evangelicals traded away their integrity and influence in a gambit to resurrect their past.

Meanwhile, the major trends transforming the country continue. If anything, evangelicals’ deal with Trump may accelerate the very changes it was designed to arrest, as a growing number of non-white and non-Christian Americans are repulsed by the increasingly nativist, tribal tenor of both conservative white Christianity and conservative white politics. At the end of the day, white evangelicals’ grand bargain with Trump will be unable to hold back the sheer weight of cultural change, and their descendants will be left with the only real move possible: acceptance.

This article has been excerpted from the new Afterword in the paperback version of Robert P. Jones’ book, The End of White Christian America.

Investment Returns Will Shrink

My Comments: Putting money to work for the future is something we all try to do. Our expectations vary all over the map. If you use the past to predict the future, you’re probably going to be disappointed.

This is very relevant if we have money sitting somewhere that we plan to use tomorrow to support our standard of living.

If we’ve stopped working for a living, our only recurring income comes from Social Security, pensions, and whatever money we’ve saved. All of which makes it imperative we find a way to manage financial risk going forward.

by Dr. Bill Conerly, August 5, 2017

What will an investment portfolio earn over the long term? That issue is important to individual investors, state pension agencies and corporations offering defined benefit pensions. State pension agencies have been lowering their assumed returns. A decade ago, 8.0 percent was the dominant assumption, with some states higher and some lower. Now the most common assumption is between 7.0 and 7.5 percent. The sub-seven assumption was never used as recently as 2011 but is now embraced by several pension authorities.

What assumption should a family, a government agency or a corporate pension fund use? For a long time, it’s been best to go back to the long-term averages, but the current outlook is less rosy. I personally have revised down the estimate I use in planning the Conerly family’s spending and saving, and I concur with public bodies who do the same. I’m not fully convinced that I’m right; I just think the pain from erring on the low side will be less than the pain of erring on the high side.

The traditional approach is to look at long-run returns, and the book of numbers for that analysis is the SBBI Yearbook covering stocks, bonds, bills and inflation (hence the SBBI name). This research is based on pioneering work done by Roger Ibbotson and Rex Sinquefield.

Since 1926, when their dataset begins, U.S. common stocks have rewarded investors by 10 percent per year, counting capital gains and dividends, before taxes. Corporate bond returns averaged 5.6 percent returns. An investment portfolio split 50 percent in stocks (the Standard and Poor’s 500) and 50 percent in corporate bonds would have earned 8.3 percent per year over 1926-2016. That justifies a long-run expected return around 8.0 percent as was common.

But don’t stop reading yet! Remember two important points. First, past returns are not guaranteed in the future. Second, even if the past points the way to the future, the past includes whole decades with negative returns to stocks, albeit just slightly negative.

On the first point, the structure of the economy has changed substantially since 1925 when the good data begin. Jeremy Siegel in his book, Stocks for the Long Run, shows stock market data back to 1802. He finds a seven percent annual return from 1802 through 1925. This suggests that we cannot take investment returns fixed in stone; they can be higher or lower over long periods. (Siegel’s book is one of my top two picks for the average person making investment decisions. The other is Burton Malkiel’s A Random Walk Down Wall Street.)

Stock market returns have been pretty good recently. Look at the S&P 500 since 2012 (counting capital gains and dividends, before taxes):
2012 +16%
2013 +32%
2014 +14%
2015 +1%
2016 +12%

But high returns can be due to overly optimistic speculators rather than economic fundamentals. We know that economic growth has been below normal in recent years. We also know that interest rates have been well below long-run averages. That suggests – but does not prove – that returns on capital are lower now than in the historic average.

Low returns on capital might trigger a stock market gain in the short run, as lower interest expense makes corporate profitability look better. But in the long run, stock market returns must reflect the returns of investing capital in a business. So if low corporate bond interest rates today reflect low returns on capital, then stock market returns should be low in the future.

The story for low returns on capital now is simple: much of our new production requires very little capital. A steel mill or car factory requires lots of capital. A Google or Facebook requires far less. With less need for capital, the owners of capital will earn lower returns. And the global supply of savings is rising, partly due to aging baby boomers around the world and partly because a larger share of world income is in countries with weak social safety nets. I provided more detail in “Returns on Capital – And Interest Rates – Will Be Low In The Future.”

The second caution mentioned above is the tremendous variability of returns. The long-run average for stocks may be ten percent, but the entire decades of the 1930s and the 2010s had negative returns. An investor ended a ten-year period with fewer dollars than at the beginning. And don’t forget the spectacularly bad years: 1931, -43 percent, and 2008, -37 percent.

The long-run average tells you little about next year’s return. If the next bad decade starts just as you retire, you may feel pretty uncomfortable waiting for the long-run average to return. And if you can’t stomach the occasional bad year, then you’re likely to shift into a low-return investment when the stock market rebounds.

If I have to make a best guess as to how the next 100 years will look, I roll with the long-term average and say that stocks will return about ten percent. But I have arranged my personal affairs so that long-run returns can be much lower and I’ll still be able to eat.