Pension, no? When you retired, after decades of work and devotion to the firm you virtually gave your life to, and now can spend your time fishing, vacationing, and taking your ease, I say, NO? I’ve done a bit of research on this, and here’s the prices of stuff in 1962, which, had I retired at age 62, admittedly 27 years ago, here’s what I would have paid for stuff then. Compare this, 27 years ago, with now, and had I retired at age 61, with a pension and Social Security, and had no picture or imagination of what prices and income would be now. Honestly, I am shocked at the prices and wages 27 years ago! Here they are, and maybe you can retire in a few years, at today’s prices, and shudder to imagine what they will be 27 years hence. If you’re healthy as I am, you may retire and live an additional 27 years. In that 27-years, your pension will remain about the same, as mine would have been. Imagine what yours will be in the future, what it might buy then, as to what mine would buy today. Here’s prices 27 years ago:
New home – $12,550
New car – $1924
Gas – 27 cents a gallon
Milk – $1.04 per gallon
Stamp – 4 cents
Eggs – 32 cents a dozen
Average income – $5,556 per year
Average rent – $110
Average Social Security income husband and wife combined – $991 per year.
Price of gold – $340, and went down to $298 the following year.
Dollar value – 1962 – $1.00 – 2023 – $1016.64
Here’s the point. Had I retired at age 62, which is the average age of retirement today, my pension payments, even with a cost-of-living increase, which are a joke, compared to the dollar value, consider the value of the dollar now, vs. 1962. 1962 – $1. 2023 – $1016.64, to buy what a dollar bought then. A $200 a month pension in 1962, which was not a bad pension, now would be what? $500? Would I be comfortable? I’d be starving. Had I taken my pension, cashed it out, and bought gold, paid off my home, bought a rental home, a new Ford, or anything tangible, which would require no insurance, taxes, storage, etc., I’d be doing fine now, rather than depending on $500 a month, which may not even pay the electric bill. The problem with a rental home, is the vacancy, repairs, taxes, neighborhood changes, insurance costs, which may not generate a great profit, if any, and to keep than new Ford in a garage for 27 years, is taking a great chance, to put it mildly. 27 years from now, an antique Ford may sell for nothing, as there would be no gas to put into it, as cars then, might all be electric. Gold requires none of the hazards of tangible investments, or paper ones either, as they all are denominated in dollars. Selling the tangibles in the future, as well as now, requires taxes on capital gains. The obvious solution, would be now, to cash out your pension, and buy something tangible, which requires no taxes, maintenance, rental, storage, or risks of the previously mentioned expenses. I can’t think of any, but there may be some. Put the gold away and be secure.
A 30-year mortgage interest rate in 1962, I can only guess, because the charts do not go down back that far, but I can estimate them to be about 3%. Had I bought one of the $ 12,550 houses in 1962 at a 3% interest rate, with $1255 down payment, my $10,000 mortgage payments would have remained $42 a month, plus taxes and insurance, CONSTANT OVER THE 30 YEARS, and with the dollar sliding in value, to a mere less than 1% of its value when I took out the mortgage, I would have been paying it off probably in pennies each month, and probably would have paid it off years ago with no effort at all.
Thus, a pension with decreasing value dollars, and constant or close pension payments, is an economic loss, but a mortgage, with constant interest rates, over the years, becomes easier and easier to satisfy, and I’ll guarantee you my $10,000, 30-year payoff at $42 a month, would be laughable, as each year passed. A mortgage today, which sounds huge, payments may be a pittance in the future, unless someone can tell me that the presses will stop printing dollars, making them useless in 27 years perhaps, with your mortgage payments being the same as today.
I have never had a mortgage or pension, and want neither. I have only done some figuring at both, and the pension looks bad, and a mortgage looks good, with gold being the best or all. Also, I have not considered the 401K’s or other paper things people sometimes are forced to ‘invest’ in, denominated in dollars. I can’t answer those questions. I am really surprised at prices and income a short 27 years ago, and can only imagine what they will be 27 years from now. I have always preached that in the last hundred years, the dollar has lost 95% of its value, and now I see it has lost practically all of its value in 27 years! don@coloradogold.com