The Five Personalities and Retirement Planning

I received an interesting email this morning from a PR person for Allianz Life (I’m not getting paid to post this) about a study that Allianz conducted recently about Americans’ readiness for retirement. They also placed the respondents into five different categories or personalities. From the email:

Allianz Life’s Reclaiming the Future study polled 3,247 Americans, ages 44-75, with a minimum household income of $30,000. Via a statistical technique called cluster analysis (I know nothing about this), consumer segments were identified based on attitudinal, behavioral, psychographic and demographic characteristics. Five distinct financial personalities emerged as the respondents’ demographic data were analyzed and correlated with their responses about economic resilience, concerns, attitudes and financial needs.

A Closer Look at the Five Personalities

Overwhelmed – 32 percent of respondents

The largest segment of respondents, “Overwhelmeds” feel unprepared for retirement and lack confidence in their ability to put together a strategy for their financial needs in retirement. They have the highest level of credit card debt and low asset levels. They are depending heavily on Social Security for their retirement.
Resilient – 27 percent of respondents

Pragmatic and grounded, this group was hit hard psychologically during the recession. “Resilients” have finally woken up and now recognize the need for better planning – while also restoring their battered portfolios. They are most concerned with outliving their income and realize they may have to work longer than expected to achieve retirement goals.

Iconic – 20 percent of respondents

“Iconics” can be thought of as “role models” – “true blue” retired Americans who’ve worked hard and lived within their means. They’re middle class, live mostly on a pension, and are extremely disciplined and traditional in their viewpoints and values. “Iconics” may have reduced some of their spending recently, but they have a clear understanding of their retirement expenses.

Savvy – 14 percent of respondents

Those in the “Savvy” category are financially sophisticated, affluent boomers who pride themselves on having prepared well for retirement and being informed about most financial concepts. This group is living comfortably in retirement and appears to be the best-prepared of the five personalities. They are financially independent and comfortable taking risks.

Distracted – 7 percent of respondents

The youngest of the segments, “Distracteds” are caught up in the complexity of modern life and tend not to focus on planning for retirement. They have the highest income of any segment and tend to spend freely – with family and home expenditures taking priority over saving for retirement. Although they have substantial assets, they may still be worried that their savings won’t be adequate for retirement and have no real plan for growing those savings.

“Despite recent financial turmoil that may have negatively affected their retirement savings, a key takeaway from our research is that a majority of boomers now understand the role that guaranteed lifetime income can play in their retirement strategy,” added Libbe.

For more detail on each of the five personalities and a series of videos that bring those personalities to life, visit

Did you see that quote? “Despite recent financial turmoil that may have negatively affected their retirement savings, a key takeaway from our research is that a majority of boomers now understand the role that guaranteed lifetime income can play in their retirement strategy,” added Libbe.

I would expect an insurance company to say such a thing. Unfortunately, many insecure people are going to get bamboozled by fee-ridden annuities in the name of “security.” Sorry I’m so skeptical but that’s the way I feel.

I would suggest that anyone who reads this blog, check out this posts I did several years ago on the Graangard Strategy (here and here).

Housing Market’s Not Looking Good in “Stable” Areas

One of my facebook friends linked to this article in the NY Times: Housing Market Looks Sickest in Cities That Once Seemed Immune

We’re experiencing a buyer’s market in my part of the country. Prices are depressed, though not as bad as other parts of the country. Still, I’m seeing houses on the market for longer periods of time. I’m also seeing them cheaper than in the past. And, I’ve heard that buyers are expecting sellers to pay closing costs. Those who have a chunk of cash for a down payment and the ability to get a loan, will be able to get themselves a bargain.

Fortunately, we aren’t in need of moving.

Gold vs. S&P 500 Index 1973 – 2010

This post expands on my post from last week.

This first graphic takes a look at the price of gold vs. the S&P 500 Total Return Index going back to 1973. The website I used for the gold price data, had daily data going back to the beginning of 1973. The data prior to that was restricted to monthly averages and that only went back to 1970. Regardless, there is enough data to create an interesting chart. To create this chart, I began with $100 worth each of gold and the S&P 500 Index.

As you can see, gold stayed relatively flat—except for the spike in the late-70s when it nearly doubled in price—until the beginning of 2006. People buy gold when they are scared and 2006 gave them plenty of reasons to be scared.

Another interesting way to look at gold vs. the S&P 500 (thanks to AFM reader, BG, for the suggestion), is to divide the S&P 500 Index by the price of gold. To perform this task, I had to do some backtracking in order to get a value for the index. My numbers will be off due to rounding but they’ll still give us an idea of the relationship between gold and S&P 500 Index over the last four decades. My beginning value for the S&P 500 Total Return Index was 59.65 on December 31, 1972. The price of gold on that day was $63.91 for a ratio of .93:

As you can see, when the price of gold stayed flat during the 80s and 90s, the S&P grew to be worth nearly eight times the value of gold. It peaked in late 1999 to early 2000, which was when the dot com bubble burst. It’s been on a jagged descent since then. The S&P 500 Index is now worth about 1.5 times the price of gold.

On a total return basis, gold has had an average annual growth rate of 8.47% (1973-2010), while the S&P 500 TR Index has had an average annual growth rate of 9.84%. Neither of these numbers reflect sales and management expenses or transaction fees.

Gold’s 2010 Performance

Gold’s ride in 2010:

The price of gold closed at $1,087.50 on December 30, 2009. It closed at $1,405.50 on December 31, 2010. That’s a 29.2% increase for 2010. Wow! Compare that to the S&P 500’s total return of 15.06% and you have double wow!

I spent a little time putting together a couple of graphics showing gold’s ride since 2000 and also compared it to the S&P 500 Index.

I wanted to do a comparison of the monthly performance of gold vs. the S&P 500. I only have monthly returns for the S&P so I had to make a couple of adjustments in order to get a side-by-side comparison. So, for this graphic, I assumed a base value (beginning value) of 100 and then computed monthly values for both from 2000 – 2010. This is what I came up with:

What’s interesting is that through all 132 months, the S&P 500 had only four more months with the negative returns than gold. But, gold had seven months with returns over 10% while the S&P 500 had none.

Looking at all this brings to mind a few questions:

1. Is gold in a bubble?

2. How high can gold go?

Unfortunately, I don’t know enough to speculate on either one.

Source: My source for daily gold price numbers was USA Gold

My Frustrating Tassimo Direct Experience

My wife has had a Tassimo machine for several years now. She loves it. A couple of years ago, Tassimo redesigned the machines, making them more modern-looking, sleeker, and maybe a tad smaller so that they don’t take up as much counter space. Anyway, her machine is getting pretty old and I have been thinking about replacing it.

The last week or so of January, I received an email from Tassimo Direct regarding a sale on all their machines and two free packages of coffee. The price was pretty good, so I ordered my wife a new machine (the T-65 if you’re interested). I placed the order on January 28. I immediately received a confirmation email. A week goes by…no machine. I log into my account and see that it says, “Shipped the week of 01/01/1900.” Odd. Then I see in a different section that it says that it was shipped via UPS on the day that I logged in to check the status.

So…I let a few more days pass. Still no machine. I log back into my account and see the same thing as before but the “shipped via UPS” has changed to a new date, which just happens to be the date that I logged in again to check the status.

I send customer service an email asking them what is up with their website. This is the response I got back:

We apologize for the inconvenience.

Please be advised that when you see 1/1/1900 that indicates there is an item in your order that is unavailable.

Currently, the T-65 is temporarily unavailable. The system continually updates the ship date in anticipation of the arrival of this product but it has not shipped yet.

What kind of rinky-dink operation is this? They need to spend some money on web development. I’m just glad I didn’t order this as a gift and needed it by a certain date.

Question of the Day – Goals

I’ve been doing some reading on goal-setting. Sadly, I have never really been a goal-setter. Yes, I have goals floating around in my head, but I have never really taken the time to write them down or track them. Subconsciously, I probably do this so that there’s no accountability. The problem is that I’m also not reaching my potential.

So let me ask you:

Do you regularly set goals? Do you have them written down somewhere? Do you keep track of them and your progress?

I don’t have a problems with financial goals. They are easy to set and administer:

Goal: $3,500 in a savings account to pay property taxes by then end of the year.

Meeting goal: Automatically deposit $350 per month into a savings account until taxes are due.

Pretty simple stuff. With retirement planning is much the same. My goal is to save as close to the maximum amount as possible. I only wish personal/professional goals were as easy.