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welcome everyone uh welcome back to one of our uh qff financial fundamental videos so today we're gonna continue our series with the next stop which is called demographics as always i want to welcome the team i have terrell sonia and skova thank you for joining us today we're going to be talking about some of the elements of demographics as far as as far as the united states and how they affect and could affect your financial plan and your overall financial security down the road so obviously there's a lot to know about this topic today we're just going to have a quick conversation over the next 10 minutes so don't forget guys down in the description we're going to have a link so you can download the some of the material and some of the data that we're going to be sharing with you we have an actual pdf there for you to read an article you're welcome to download it and share it with anybody else that you think should have this information so so let's get started all right so i'm going to start with you i have a couple questions for you and the first one is is the obvious one why are demographics even important when discussing financial planning issues or wealth building issues well one major issue demographics will eventually address is the notion of social security and the social security payments so a lot of people feel that the money that's taken out of their check is kind of like a savings account that when they retire they get that same money back but that's not technically how it works people that are paying social security now are paying for the people that are retired now to get those distributions and we're relying on when we get older somebody younger working will pay into the system and that's the money that'll get distributed to us when we retire so looking at the change of demographics population wise you have to notice that the trend for example in 1950 we had slightly over 16 people working for every one person that was retired as of 2020 last year we had a little over four people working for every one person that retired you know by 2100 we might be one person working for every one person retired that means eventually there will be fewer people paying into the system that are withdrawing from the system the government will have to find another way to either supplement the social security network or or raise taxes or let social security i don't know whether on the vine and i mean that's not something that is going to happen anytime soon but it needs to be addressed as soon as possible so we can be prepared for when that event does happen exactly right and we know that by 2030 all boomers the youngest boomer will turn 65 and so the grand majority if not all of them will be in retirement so we're talking about a third a third of the country so so when boomers retires how do you think will that affect uh national policy and with the national budget and all the governmental finances how will that affect all of us well we're already working with a national debt that is is it's huge um i know they're going to talk about that later in the trillions and then 2030 and we're talking now nine years if there will just fit it's just spending more money it'll get to the point where you're not going to fix a problem by spending putting more money into it right so other solutions will have to arise exactly not that there weren't solutions before but yeah you just won't be able to throw money on it and expect it to to resolve itself yeah because not only we won't probably have it have it but also because all these boomers will be asking for medicare benefits and social security benefits and for the ones that didn't get secured they want to get you know sdi and disability so we have all these services that are just going to balloon right because we're going to have so many people uh retire and that's a very good point that you made that we only have affordable working around that time for everyone retired is going to put a a a lot of pressure on the governmental finances so if that's true and now so thank you scott let me go to suny now so that's true sonia that we're going to have this mass amount of people heading into retirement obviously living longer right now because we live longer how how do you think that's going to affect the budget deficit and the overall uh national debt well i just to give you a clue um let's let's even go to the debt clock you know our debt clock is showing that we have over 27 trillion um national debt and then the u.s federal spending is now at six point six uh point six trillion and then the budget deficit is at three point almost 3.2 million so we're spending way more than you know way more than what we have or budgeted for yeah almost twice as much right and it's true a lot of that is because of covid again we're recording these on january of 2021 so kobe 19 is still happening uh so a lot of that is being created by that but that's a trend that was already there that is just being exacerbated because of copied 19. and so if this trend continues which is what we all expect do you do should we expect higher taxes higher income taxes higher property taxes down the road yeah i don't see how it could be any other way that is the direction we're going in i mean that's the government's main source of revenue is tax revenue so right now exactly right and for those of you that live in california you may realize that last year uh prop 19 uh passed in california in which it was a proposition to tax uh property uh owners of commercial property tax them higher than they had been in the past so again is the government looking for sources of revenue so thank you sonia and and i guess that's uh that kind of leads me to uh to ask you a question to rail in in that regard so if that is true that again we're ballooning the deficit we're spending all this money we expect access to grow down the road then does it really make sense to to keep keep putting money in tax qualified plans like 401ks and iras i love this question django because uh so many times when we talk with our clients um we've kind of been you know back to it's like the morpheus matrix answer like you know red or blue pill you can stay doing what you've always been doing and what we've been taught and that that's just what we know right and that's our 401ks our iras and people just do it because that's what they're told um but a funny thing i i do especially when i'm talking to someone i haven't met i give them a funny analogy hey i have a hundred thousand dollars i'm gonna give you all right their eyes will get lit up right i'm like yeah i'll give you a hundred thousand dollars in 20 or 30 years though i'm gonna come back for interest but i'm not sure what's that what it's what it's gonna be you still want that hundred thousand dollars all of them say no right all of them 100 no never mind no no no but i go the government uses these fancy words tax deferred oh you get to write off your money now in your taxes bring down your cost right all this fancy window dressing i go they're doing the same thing and so with taxes at a then you have to tell people do you think you're paying a lot of taxes and everybody says yes but then we show them the historic numbers no we're at one of our lowest tax histories in the state of our country so you know i don't care red blue green whatever you are right just do the simple numbers as sony was just saying 27 trillion dollar deficit one of the lowest tax levels of all time so do you think money that you're putting in a tax later bucket is not going to be taxed higher than what you're at right now and i don't once again it doesn't matter your color of affiliation it's just basic math two plus two is eight right come on do your math it's simple and you'll know that you're gonna end up paying more taxes later so you have to start changing where you're putting some of your money and most people don't understand that exactly right and actually we don't have to go back that far most people don't know that in 1990 the highest marginal tax bracket was 28 and then he went all the way to 37 under obama and then he came down 35 under under trump but it's already scheduled to go up in a couple of years back to 37 and a half not counting the medicare surcharge and all that other stuff right so you are correct exactly so uh we're exposing ourselves uh unnecessarily and this is what we call transfers right in our industry parliaments we call these world transfers so the idea here is to help you reduce those wealth transfers as much as possible uh and i guess my other question terrell and i asked is because in this call we have two gen x's and we have two millennials here so we don't really have any boomers on the call even though we're talking about him but how how does this tremendous amount of massive borrowing how has this affected uh people in our generation for example and obviously the upcoming gen series as well how is how has that affected all of us involved even though we're not boomers yeah well it's funny because you know obviously our parents are boomers and i joke with my mom and uncles and family members sometimes depending how harsh i want to get right like you guys think because you just won a world war you got to have that life easy for the rest of your life right you set up the economy to make sure you have all the social security all you guys got this retirement fund all that's there for you guys but on the flip side there's this humongous debt that you and i are taking on my kids are gonna take on and future generations so the lifestyle that's been set up by them nothing against them it was great i'm glad they enjoyed it but we're finding out that it's not sustainable and there's no way we're going to be able to duplicate what they did so if we try to do the same thing um and even some of the boomers right if boomers are didn't capitalize in some area and they jumped into these ira funds a lot of these boomers are still working right that's why we have all these people still working because they were the guinea pigs of the ira 401ks and now they're getting there they're like wait i don't have a million bazillion dollars in here like they promised me exactly exactly right and and underscore and i will be doing a podcast in the future so if you guys are watching this make sure to look for it about how millennials today own only about four percent of the of the u.s total wealth when the boomers at the same time in their lifetime they already own over 20 of us wealth so this is being a massive non-transfer wealth that has been invested in many ways and we're all bringing a great point there that the kids are going to have to pay more more in taxes but what about education you know most people 40 50 years ago we're not borrowing a hundred thousand dollars to go to college like we had to but the question is why did we have to well because as state budgets came down because of the massive amount of spending they have to reduce their budgets and what was the first thing they got higher education so now we have to come up with the difference and the second place what is also acting up is in is in housing and actually that's another question that i want another factor that i wanted to bring up to to you guys the audience which is how how this non-transfer well how this economic distortion is going to affect the housing market and also the stock market so think about think of let's think about and i'll make this point myself think about what what what school was talking about that you have one retiree and you have 16 people right and now you're going to have one retiree and you're going to have 40 people working think about of all the money that they're not putting in the stock market think about of all the money that they're not using to buy homes and to buy second homes and to buy vehicles so the point i'm trying to make is that the boomers are gonna have to stay in the market invested to be able to continue to go into retirement however it's gonna be less money of actual workers going into these places and it's a low supply and demand right you have less people buying stocks you have less people buying houses potentially especially for those owners that are counting on their homes a little you know golden golden eggs right or their nest eggs they may not get as much we are seeing the trend already where the average millennials actually are choosing to buy smaller homes so what about all these mansions the boomers have of 5 000 6000 square feet that we can afford who's going to buy those right so all this creates problems not only for the working population but also for the retirees themselves so demographic does plays a tremendous um a tremendous uh role and i'll guess i'll ask one more question um for you for you uh terrell since again we were both millennials can boomers really rely on gen z's and millennials to make up the difference to make up via taxes and via well transfer the money that they did not save is that is that realistic for the boomers i mean i think it's realistic for them because you know they're we're talking the next five 10 15 years these are going to be retired and um i don't think in most people can see to say this already it's not an issue for them it's can it be sustained after them you know can the gen x's still have it you know they say best of luck if we have it anybody younger than us they don't even think it's going to be there they don't even plan on it at all i mean i don't think we plan on it we might hope but we don't plan on it because um the way it's set up we know it can't sustain yeah yeah it's one of those let's throw it in the air hey put all your money in the stock market and close your eyes and you can be rich same idea can i just say one thing is that i don't even think there's that much left for the gen xers either right well you know that the point that you brought up with housing in the stock market is that it's i mean yes it's supply and demand but you know the the the price point is not really what something is worth it's what you can get for it and if you if no one's buying houses it doesn't matter how much your house is worth because if no one is buying it then it's essentially worth nothing and it might be negative if you're still putting a mortgage on it people are saying the same thing is true with the stock market companies get a lot of their value through the stock certificates that they sell if no one is buying them the prices of stocks goes way down and if the pricing of stocks is down i mean trading might be up but the actual dollar value that you're getting is not going to be low and the word turrell used is that it may not just be low it may not be sustainable to the people that are purchasing them exactly right and i'll make one last point because if somebody watching these will be saying like well hold on timeout you guys are posting videos right now the market is uh record highs the dow jones over 30 000 points and so on and so on and say yeah that's true but also we have uh 10 to 15 million people unemployed so when we do financial planning we have to help our clients understand that the market is not the economy the market is not the economy and what we what we're seeing right now is stimulus we're just throwing money throwing gas at the fire right trying to make it stable but it's not real it's not real people buying stocks real people investing long term they're actually unemployed they're actually taking money out of the market because of coping and trying to uh you know pay their bills and keep their homes and stuff like that so i guess the overall point we're trying to make here is that if you're making your financial plan under the assumption that you're going to get some security that you're going to pay lower taxes when you retire and you're going to have a very stable non-volatile market to carry you through your golden years uh you're dreaming that might not be that one of the reality that you face so obviously guys there's a lot more to know about how demographics and we didn't even talk about productivity and some other things that we want to talk to you guys about today but i think this is enough of an intro to to to get you into the conversation if you want to learn ore about these topics go ahead and subscribe we're going to continue our series of videos talking about these these issues also we're going to have the you have to go to download or white paper that is going to be also on the description on this topic of demographics if you have any questions feel free to reach out but in the meantime escoba sonia and terrell thank you for your time and we'll see you in the next video bye