01/18/2006
I don't know if Americans think they are going to have perennial youth or if they just need a good swift kick in the pants, but the reality is that Americans are falling down on the job when it comes to saving for retirement and maximizing retirement options.
The average working American has $24,000 saved for their golden years —- sounds more like the rusty years. An unbelievable 66% of Americans over the age of 55 have less than 50 grand! There are 76 million people filling up the retirement pipeline and most of them are in serious trouble. The cold, harsh reality is that most Americans are either not going to retire or they are simply going to outlive their money.
Are you doing everything you can to prepare and maximizing your retirment options? If you are relying on your company's pension or you are a government employee, you would be very unwise to depend on future benefits to carry you to the endgame.
Strap yourselves in, folks, it's time for some tough love, Doug style:
If you are a government worker, a teacher, a county employee, a tax collector, the bloom has fallen off the proverbial rose and the time of reckoning is here. There are big changes coming your way, as taxpayers are sick of taking out new bonds for hundreds of millions of dollars to cover the obligations of pension liabilities. Corporate pensions are taking their place in the history books and yours is following closely behind.
If you are relying on the pension of a corporation, check out the list of defaults with the PBGC, they're the bailout for the corporations who defaulted on their pension obligations. If your company ends up on their list, you can expect about 25 cents for every dollar you've been promised.
Pension freezes are the latest rage in corporate America. IBM did it just last week and Verizon hopped on its coattails.
There is a huge change going on in the way companies and municipalities manage their retirement plans and it's not favoring the employees.
The bottom line: For better or for worse, you are the master of your own destiny and you have to get ready for the changes that lie ahead as you shift your livelihood from one that relies on a paycheck to one that relies on an income stream generated from what you have managed to accumulate in the years of your employment.
How can you amass as much money as possible to generate the income to replace what you are now earning?
HERE'S A START TO MAXIMIZING YOUR RETIREMENT:
MAX OUT YOUR 401(k): If your company has a matching program, contribute as much as you can.
CONTRIBUTE TO YOUR IRA: If your company does not offer a 401(k) plan, get an IRA. A Traditional IRA is for everyone. You can contribute up to $4,000 a year for you and $4,000 for your spouse. If you're over 55, there's a catch-up provision which allows a contribution of $4,500.
ROTH IRA: If you make less than $110,000 a year and you are single, or $160,000 and married, you qualify for a Roth IRA. The best part about these little babies is that all of the withdrawals are tax-free. That can mean as much as a 38% difference to you.
SELF-EMPLOYED? GET A SEP IRA. The provisions are generous here. If you are self-employed, talk to your CPA or accountant about getting started.
IRA ROLLOVER: Don't leave your old 401(k) with your former employer. It's simple to transition it to a brokerage house where you can have control over it.
ANNUITIES: When you have exhausted all of your qualified retirement savings options, annuities will help grow more money and not have to pay any taxes until the money's withdrawn. Stay away from these if you are 60 or over.
VARIABLE UNIVERSAL LIFE: Basically an annuity with a life insurance policy attached to it, these little babies offer investment options within an insurance policy.
TAPPING INTO THE HOUSE: Home equity and reverse mortgages can help retirees who are strapped for cash.
The most important aspect to keep in mind when maximizing your retirement options is to not rely on a single source of income. Diversification will enable you to secure a better retirement.
Also, remember that your retirement is not about spending a wad of dough, it's about maintaining your lifestyle. In that respect, it's crucial that you have enough money to make more money through investing your principal
Strong selling in the Nikkei prompted an early close of that market in early Wednesday trading and a spillover has occurred on Wall Street. I have advised my Successful Investing subscribers to take defensive action to protect their gains. If you own international or technology funds, I strongly advise you to pay close attention to those positions and aggressively abide by your pre-established stop-loss parameters as they will protect profit and principal. The Fabian Plan is doing its job.
If you need help establishing or enforcing a sell discipline, a subscription to Successful Investing will give you the important directives you need to navigate the market swings.
The major stock market indexes slipped on oil prices as tensions continue to mount over Iran's nuclear ambitions and possible sanctions against that country. Iran is our second-largest oil provider and there is no doubt that their reaction to UN sanctions will hit us at the pumps. Oil ratcheted back up to $65 a barrel, the highest price in three months; $70 a barrel oil is a foregone conclusion. Get ready for $3 a gallon gasoline--again.
It's fairly self-explanatory why the market reacted to the surge in oil prices. It's an inflationary indicator, for one. For another, higher oil prices directly impact consumer spending as they just don't have as much disposable income. Consumer spending equates to 66% of our economy.
We are keeping a watchful eye on the flattening interest-rate yield curve, as inversions have proven to be precursors of the last four economic recessions. Good news came from the manufacturing sector as capacity utilization hit a five-year high -- a good sign for the economy. However, spending and the ability to keep spending is what drives our economy forward. Therefore, we maintain a cautionary stance as we keep an eye on oil and the yield curve.
Now that I have detailed your remedies for amassing more money for your retirement, let's talk about the best ways for protecting your retirement. There are two things you have to do with this money:
Simple enough, right? One would think so. However, did you know that bear market losses ravage portfolios by an average of 35%? Did you also know that bear markets come along an average of once every five years? It's hard for many people these days to believe the latter statistic because we went more than a decade without a bear market. The 90s turned in an unbelievable performance in which the bulls ran wild on Wall Street for more than 10 years and led so many investors to believe that the bear had been outlawed. No such luck. The bear did return to Wall Street and dragged down the S&P 500 down 45%. The Nasdaq lost an incredible 70%. It was at that time that a lot of investors realized that they could actually lose money and never get it back.
That's an extremely painful lesson to learn and many investors are still suffering, so much so that they have simply stepped out of the game and refused to ever play again. Big mistake. You see, you have to invest wisely to grow your retirement money. And you have to protect your assets by having a bear market plan in place.
Just listen to this 2 minute clip from last week's radio show. It highlights exactly what I am trying to illustrate here. Just right click the link and click "save target as":
http://easylink.playstream.com/fabian/progressive/mitchsirius.mp3?dl=true
Mitch suffered a loss during the last bear market, but he's back in the game and he's incorporating the tools for protecting his retirement from a devastating loss while he seeks to grow his assets for his family and his future. Mitch's sell discipline that he has in place with his stop losses will protect him from suffering another catastrophic loss.
You can grow while protecting your retirement assets to create future in which you will not outlive your money. In fact, you have to. It's not optional. I can help. Successful Investing will give you the buy and sell recommendations that will help you grow and compound your assets while giving you the ultimate bear market protection to prevent a devastating loss. Successful Investing can help ensure that you won't outlive your money. Successful Investing will keep you from making inappropriate investments. Successful Investing will help you sleep better at night as you move safely toward a better retirement. Successful Investing will give you the bear market protection you must so you never experience another bear market loss again. Try it now:
http://www.fabianssuccessfulinvesting.com/order.php?offer=12
My dear friends, you have the opportunity to improve your prospects for your future. You have access to the tools and the awareness to make a permanent change for the better. You have the wisdom and experience to know that if it's going to get better, it has to start with you and it has to start right now. And remember this:
"You will never find time for anything. If you want time you must make it."
--Charles Buxton