Warren Buffett’s Phenomenal Run
In this issue:
- Latest in Retirement Savings & Personal Finance: Social Security Early Claims Surge, Student Loan Collection Resumed, …
- Warren Buffett’s Phenomenal Run: The Oracle May Retire, But His Legacy Endures
- Tools & Tips: Rolling Return Calculator
- Market Overview
Latest in Retirement Savings & Personal Finance: Social Security Early Claims Surge, Student Loan Collection Resumed, …
Social Security Claims at 62 Surge
A growing number of Americans are claiming Social Security at 62, mostly out of fear—fear that benefits might shrink, that costs keep rising, that they just can’t wait. And in the short term, that early check can feel like a relief. But it comes with a cost: lower income for life. Once you lock it in, there’s no going back. If you live longer than average, which many people do, that decision might not age well.
The Social Security fund is projected to fall short by 2033, after which only about 79% of benefits might be paid. That’s not collapse, but it’s not exactly reassuring either. Some still recommend holding off, or at least running the numbers. Because the tradeoff isn’t simple. And depending on your situation, maybe it never was.
401(k) Withdrawals Rise
Rising prices are starting to show up in retirement accounts too. More people are dipping into their 401(k)s—not just small loans here and there, but larger withdrawals and more hardship claims, according to Fidelity and Vanguard. It’s a sign that day-to-day pressures are outweighing long-term planning, at least for now.
Delinquencies are also ticking up, which points to deeper strain. Maybe it’s not just a one-time emergency for some folks. Maybe it’s getting harder to juggle everything—mortgage, debt, groceries—and the 401(k) becomes the fallback. Problem is, tapping it now could mean coming up short later. But for many, the future is already being traded just to get through the present.
Super 401(k) Catch Up
Starting in 2025, the SECURE 2.0 Act will let workers aged 60 to 63 put even more into their 401(k)s. It’s called the “super catch-up.” Instead of the usual $7,500 catch-up for those over 50, this group gets to add $11,250 extra each year. That pushes the total annual limit to $34,750 if you include the standard $23,500 deferral.
Over those four years, that’s $45,000 ($11,250 × 4) more than what someone under 60 could contribute. It’s a big boost, especially for people trying to catch up late in the game. Whether they can afford to max it out is another question. But the option is there, and for some, it might be the final push to shore up retirement savings before stepping away.
Student Loan Collection Resumed
As of May 5, collections on defaulted federal student loans are back. The Department of Education officially ended the pause that started in March 2020 under the Trump administration and was extended multiple times under Biden. That pause lasted almost five years. Now the system turns back on, and so do the penalties.
This affects a lot of people. Out of 42.7 million federal student loan borrowers, over 5 million are in default, meaning they haven’t paid in over 270 days. Another 4 million are seriously delinquent. That’s nearly a quarter of all borrowers. Altogether, they carry about $1.6 to $1.8 trillion in debt. For those who’ve fallen behind, the restart won’t just be a bill—it might feel more like a wall.
Warren Buffett’s Phenomenal Run: The Oracle May Retire, But His Legacy Endures
Warren Buffett, the famous beloved investor and business operator who truly represents capitalism at its best—profit seeking with benevolent intention for the greater good—has announced he will retire by the end of this year. In the following, we highlight his phenomenal run in his 60-year investment and business career.
First, here is what Bloomberg shows, to compare with some of the best and longest-running mutual funds:
We may also add the annualized total returns of S&P 500 (using MyPlanIQ’s SPX500 symbol) is 10.4%, way behind Berkshire Hathaway’s 19.9%.
A few observations:
- $1 invested in Berkshire Hathaway has grown to $54,903 since 1965, compared with $390 if it was invested in the S&P 500 index.
- 19.9% per year, or let’s say 20% per year, is the upper bound or ceiling for any investor over a long period (more than 20 years). Of course, this has to exclude those high frequency trading people. But this 20% is a good rule of thumb figure to remember. So next time, if you hear someone claim they can consistently return more than 20% a year, you’d better run away at all cost.
In our opinion, Buffett’s legacy lies in his common sense approach to stock investing:
- It’s actually business investing. So paying attention to the underlying business performance is the ulterior most important.
- It’s about the long term, as no one (even a business owner or a CEO) can predict their near-term business performance such as profits and revenue, let alone their stock prices that are mostly driven by speculators in any short period of time.
- Of course, you’d better invest in those businesses you understand (circle of competence).
For average 401(k) and other retirement investments, we resort to finding ‘solid’ businesses through index funds or diversified funds. In this case, the S&P 500 index represents an extremely hard-to-beat ‘solid business’. The following figures are from Berkshire Hathaway’s latest 2024 Annual Report:
Actually, for the past 15 years from 2010 to 2024, Berkshire returned 13.7% annually while the S&P 500 returned 13.8% annually. As the S&P 500 is simple to understand and not subject to individual stock risk, what’s not to like about relying on it to deliver inflation-beating returns for a long-term (more than 20 years) investment?
Tools & Tips: Rolling Return Calculator
The Stock, Fund or Portfolio Rolling Return Comparison Calculatoris extremely useful for understanding and comparing stocks or ETFs in terms of their continuous rolling returns over any given time period. In the following example, we compare the rolling returns of BRK-A (Berkshire Hathaway Inc) with VPMCX (VANGUARD PRIMECAP FUND INVESTOR SHARES) using the calculator. We’ve previously made the claim that VPMCX is “the best stock fund in the long term”.
Run Comparison would result in the following charts with tabs representing the parameters you entered in the Rolling Period input:
You can enter whatever rolling periods you want. In the above, we see that Berkshire actually has underperfomed VPMCX for many 20 year periods since 1994. Here we only started to compare BRK-A and VPMCX from 1990 as our system only has BRK-A data since 1990.
Market Overview
US stocks continued to rise last week. Investors were encouraged by the latest earnings report and still have high hopes for a possible positive outcome in the tariff negotiations between the U.S. and the rest of the world, even with China. We want to point out, on the other hand, that the positive earnings so far might be positively affected by extra business from front-running tariffs. The real tariff impact has yet to be felt. At any rate, we believe it’s best to stay the course.
The following table shows the major asset price returns and their trend scores, as of last Friday:
| Asset Class | 1 Weeks | 4 Weeks | 13 Weeks | 26 Weeks | 52 Weeks | Trend Score |
|---|---|---|---|---|---|---|
| US Stocks | 2.2% | 11.7% | -5.5% | -0.5% | 10.4% | 3.7% |
| Foreign Stocks | 2.6% | 12.6% | 6.5% | 4.8% | 8.9% | 7.1% |
| US REITs | 3.2% | 6.6% | -0.9% | -3.6% | 12.6% | 3.6% |
| Emerging Market Stocks | 3.0% | 12.6% | 5.1% | -1.0% | 7.0% | 5.3% |
| Bonds | -0.4% | -1.5% | 0.7% | 0.5% | 4.1% | 0.7% |
More detailed returns and trend scores can be found on MyPlanIQ.com Market Overview.
Struggle to Find Your Old Retirement Accounts?
Find Tools and Calculators That Provide Quick Help