By The Numbers - May 2019
Source: Direxion Funds
May 15, 2019
- FUTURE PLANS - 48% of households in America headed by individuals at least age 55 have no retirement savings, 26% have a defined contribution (DC) plan (e.g., 401(k) or IRA) but no defined benefit (DB) pension plan, and the remaining 26% have both a DC and a DB plan (source: Government Accountability Office).
- PREPARE FOR IT - A 65-year old American couple has a 48% chance that at least one of them will live to age 90, i.e., at least a 25-year life expectancy (source: Social Security Administration).
- END OF LIFE - 1 out of 3 Americans at least age 85 has Alzheimer’s (source: The Atlantic).
- JUST A SELECT FEW - The US Supreme Court receives approximately 7,000 requests each year to hear cases that have already been adjudicated in a lower court. The nation’s top court accepts just 100-150 cases for their review from the 7,000 petitions (source: Supreme Court).
- DOWN THEN UP - The S&P 500’s 4th quarter 2018 loss of 13.5% (total return) was followed by a 1st quarter 2019 gain of +13.6%, just the 6th time in the last 50 years that a “double-digit loss” quarter has been followed by a “double-digit gain” quarter (source: BTN Research).
- HALF WORK, HALF DON’T – 156.7 million Americans have full-time jobs today, 48% of our 328.7 million citizens (source: Department of Labor).
- TRADE SCHOOL, NOT COLLEGE - There are 30 million full-time jobs in the United States today (19% of all jobs nationwide) that pay at least $55,000 per year and don’t require a bachelor’s degree from college (source: Georgetown University Center on Education and Workforce)
- CAN’T CATCH UP - Student loan debt reached $1.46 trillion as of 12/31/18, up +8.6% per year over the last decade. An estimated 2 million millennials are living in rental housing today or they are back living with their parents instead of owning a home due to high student loan debt. Millennials were born between 1981-97 and are ages 22-38 in 2019 (source: J. P. Morgan Chase & Co.).
- UNPREPARED - 58% of Americans have not executed a will and other estate planning documents, e.g., a medical directive that specifies what actions (if any) should be taken to prolong an individual’s life (source: Caring.com).
- DOLLAR CUT-OFFS - For tax year 2016 (the latest year that tax data has been released), it took $480,804 of adjusted gross income (AGI) to rank in the top 1% of taxpayers, $197,651 of AGI to rank in the top 5%, $139,713 of AGI to rank in the top 10%, and $80,921 of AGI to rank in the top 25% (source: Internal Revenue Service).
- 3/29/51 - The top 3% of taxpayers in tax year 2016 made $256,673 of adjusted gross income (AGI), received 29% of all AGI nationwide, and paid 51% of the federal income taxes paid by all US taxpayers (source: Internal Revenue Service).
- STUFF HAPPENS - 45% of American adults surveyed are “concerned” that a major health event (e.g., surgery, sickness or disability) could force them into a personal bankruptcy filing (source: Gallup).
- IN LESS THAN A GENERATION - The average cost of 1-year of college at an average 4-year public institution (including tuition, fees, room and board) has tripled over the last 22 years, rising from $7,142 for academic year 1996-97 to $21,370 during academic year 2018-19 (source: College Board).
- HOME BUILDING - 876,000 single-family homes began construction in 2018, the 7th year of increasing home starts since this measurement bottomed at 431,000 in 2011. The all-time US record for home starts in a single year: 1.72 million in 2005 (source: Census Bureau).
- DOWNTURN - The United States has been in a recession during just 83 months over the last 50 years, equal to 14% of the months during the last half century (source: National Bureau of Economic Research).
- WOULD THEY EVER SELL? - At the end of 2018, China owned $1.12 trillion of US Treasury debt, 7% of the $15.61 trillion of Treasury debt that was outstanding as of 12/31/18 (source: Treasury Department).
- EXPORTS TAKE OFF - For the week ending Friday 4/12/19, the US exported 2.4 million of barrels of crude oil per day. 5 years earlier (4/11/14), the US was exporting 67,000 barrels of crude oil per day or just 3% of its current export level. The surge in US oil exports started in late 2015 following the lifting by Congress of a 40-year ban on most overseas oil sales (source: US Energy Information Administration).
- NOTHING?! - 45% of the 76 million “Baby Boomers” in the USA have no retirement savings. “Baby Boomers” were born between 1946 and 1964, i.e., the oldest “boomers” turned 65 years old in 2011. “Boomers” reaching age 65 in 2019 represent the 9th year of 19 years of “Baby Boomers” (source: Insured Retirement Institute).
- GOTTA HAVE IT – Americans pay “out-of-pocket” on average just 15% of the total health care expenditures they generate in a year. “Out-of-pocket” expenses include deductibles and co-payments for services and prescription drugs but does not include the cost of health insurance premiums. The remaining 85% of annual health care expenditures is covered by insurance (source: Health Care Cost Institute).
- TALENT DROP-OFF - 44% of employers surveyed report they are “having difficulty” hiring new employees with skills equal to that of the firm’s retiring employees (source: Robert Clark, Willis Towers Watson).
- WHAT’S YOUR PERCENTAGE? - Americans pay an estimated 84% of the federal income taxes that would be collected if all taxpayers were 100% honest. The nation’s “net compliance rate” is equal to “tax paid voluntarily and timely” plus “enforced and other late payments” divided by “total true tax” (source: Internal Revenue Service).
- IN THE YEAR 2034 - Social Security trustees announced on 4/22/19 that the trust fund backing the payment of Social Security benefits (OASI retirement benefits) would be zero in 2034. A zero “trust fund” does not mean the payment of Social Security benefits would also go to zero, but rather would drop to 77% of their originally promised levels through the year 2095. When the trustees released their report in 2009 (i.e., 10 years ago), the Social Security Trust Fund was projected to be depleted in 2039 (source: Social Security Trustees 2019 Report).
- HALF AS MUCH - Inflation, as measured by the “consumer price index” (CPI) was up +2.2% annually for the last 25 years, i.e., 1994-2018. Inflation was up +4.3% annually over the 50 years before that, i.e., 1944-1993. The CPI is a measure of inflation compiled by the US Bureau of Labor Studies (source: Department of Labor).
- NEW JOB SKILLS NEEDED - Employers in 12 different industries worldwide anticipate that the split between “work performed by humans” vs. “work performed by machines” will shift from 71/29 in 2018 to 58/42 within just 3 years. The 12 industries include automotive, aviation, energy, financial services, infrastructure, oil & gas, and professional services (source: World Economic Forum, The Future of Jobs Report 2018).
- ONE OUT OF FOUR - 24% of the 535 members of Congress today are women, including 25 (out of 100) senators and 102 (out of 435) House members (source: Congress).
- FOURTEEN – The best 14 trading days for the S&P 500 over the last 10 years (2009-2018) gained +86.2% (total return), more than the +84.2% gained by the other 2,502 trading days in the decade (source: BTN Research).
- LONG-TERM ISSUE – The estimated Social Security shortfall today (i.e., a present value number) between the future taxes anticipated being collected and the future benefits expected to be paid out over the next 75 years is $13.9 trillion. The entire $13.9 trillion deficit could be eliminated by an immediate 2.70 percentage point increase in the combined Social Security payroll tax rate (from 12.40% to 15.10%) or an immediate 17% reduction in benefits that are paid out to current and future beneficiaries (source: Social Security Trustees).
- MOVED MONEY AROUND – The Disability Insurance (DI) Trust Fund had been projected to be depleted by the 4th quarter 2016 per a 7/22/15 Social Security Trustee report. This forced Congress to allocate more of the 12.4% combined payroll taxes collected from employers and employees for 3 years (2016-17-18). The additional funds (from 1.8 percentage points to 2.37 percentage points out of the 12.4 percentage points) has now pushed the DI Trust Fund’s exhaustion date to 2052 or 33 years out (source: Social Security Trustees 2019 Report).
- MEDICARE – Per a 4/22/19 report, the trust fund supporting Medicare Part A (hospital insurance) is projected to be depleted by 2026. The long-term (75-year) present value shortfall in the trust fund could be corrected by an immediate 0.91 percentage point increase in combined Medicare payroll taxes (from its current 2.90% to 3.81%) or an immediate 19% reduction in Medicare expenditures (source: Medicare Trustees 2019 Report).
- DOLLARS IN, DOLLARS OUT – At the end of 2018, Medicare was covering 59.9 million Americans (18% of our population). The program was cash positive in 2018, taking in $756 billion of income (including $10 billion of interest income) while paying out $741 billion in benefits (source: Medicare).
- MAYBE NEVER? – 34% of American workers surveyed anticipate that they will be at least age 70 before they retire (source: EBRI 2019 Retirement Confidence Survey).