Real Yields & A Synthetic Pension
My father, who worked his whole life for the US Federal government as a scientist, had something wonderful—a pension. Since I worked for the private sector, I have savings and, if it’s still there, at some point Social Security, but no pension. The US has a pretty primitive pension system, certainly compared to places like Canada and Australia that force people to think long-term via forced savings.
But given the wrenching changes in the bond market, it is now possible to create a “synthetic” pension not quite as good as my father’s but not terrible either. While about half the readers of this Substack are outside the US, I’ll explain an idea I am exploring because it helps reveal what is going on in the markets more broadly. To do so, we have to wade into a topic that is both important and boring—real yields.
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