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we have all heard that in real estate it’s about location, location, location. Well if you think about it, retirement should be income, income, income. This is where we believe Wall Street does not have the answer.
Kind of a telling line here about income income income right?
Quote:
The old adage of save 10% of your income, invest it in the market and make 8%, and you can safely withdraw 4% and your money will never run out is at best a gamble.
They mention this old adage saying that it is out dated and out moded? Is it really? Is this just some financial advisor wanting to sell you something?
I believe the author same Klaesse who is with the Paradigm Financial group out of Denver who was recently interviewed on Fox Business. Note his last paragraph and the reference to our clients. I am on my Pad and multitasking is a pain so I may have misspelled his last name.
Good article about the headwinds. I'd just say that I hope the guys younger than me read it and get hip to the new way of the working world. That 'paternalistic' feel is over, dead and gone.
Yes, it's income but I'all add the word 'you!'. The onus now jumps alot more on the individual to protect his quality of life for the future not his employer. Oh yes they supply suggestions just short of EXACTLY telling you where to put your money but ultimately one is now more responsible for one's financial fate if we take the employer out of it. Frankly, I just think those that fare ONLY say with Social Security will have a difficult time with that 'income' question. I wonder how they feel when they read about all these new ways to approach 'financial investing'. I can't even venture to know what they actually make of all the talk.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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"The old adage of save 10% of your income, invest it in the market and make 8%, and you can safely withdraw 4% and your money will never run out is at best a gamble"
Ask the many people that are still working at age 70+ because they lost all of their investments 5-6 years ago. One that I know had a very successful chain of stores and invested heavily in what were considered "sure thing" stocks. Now he's working in the one store he has left at age 72, having sold the others for what he could get to get out from under the leases.
"The old adage of save 10% of your income, invest it in the market and make 8%, and you can safely withdraw 4% and your money will never run out is at best a gamble"
Ask the many people that are still working at age 70+ because they lost all of their investments 5-6 years ago. One that I know had a very successful chain of stores and invested heavily in what were considered "sure thing" stocks. Now he's working in the one store he has left at age 72, having sold the others for what he could get to get out from under the leases.
I don't know what to say to that except that there had to be other underlying causes other than the market. A business owner of stores should not have been depending on investment income from equities.
This author's points were that investing early is important and should be done inspite of risks associated with equities. His conclusions are this for investors in equities.
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Conclusion
You can moderate returns-compounding risk by continually reducing your equity investments after 45 and buying bonds that mature at retirement; returns-compounding on bonds is positive if held till maturity. This positive feature of bonds is useful as you can apply the rule of 72 (72 ÷ return is approximate years to double your investment) to achieve your objective, especially in the 10 years leading to your retirement. So, start your retirement savings early!
The process of reducing the risk of total equity investment is to have a good mix. It has been said many times. Don't put all your eggs in one basket and do not expose yourself too much to risk when you are not prepared for the swings up and down.
If I were preparing for retirement in today's economic environment, I'd avoid the stock market like the plague. Thanks to Citizens United and the rest, Wall Street now runs Congress and financial regulatory agencies and laws have gone to live in the Cayman Islands. There has yet to be one single person from the financial industry called in to account for his actions before a court of law, much less be pay for the consequences of their actions by going to the federal pen for the next 1,000 years.
They got away with it once, they'll get away with it again. My bet is on the fracking industry for the next big financial disaster as the result of the actions of corporate scammers.
If I were preparing for retirement in today's economic environment, I'd avoid the stock market like the plague. Thanks to Citizens United and the rest, Wall Street now runs Congress and financial regulatory agencies and laws have gone to live in the Cayman Islands. There has yet to be one single person from the financial industry called in to account for his actions before a court of law, much less be pay for the consequences of their actions by going to the federal pen for the next 1,000 years.
They got away with it once, they'll get away with it again. My bet is on the fracking industry for the next big financial disaster as the result of the actions of corporate scammers.
Sector market. Only one aspect of the total market. What happens if fracking is stopped for environmental reasons. That industry is toasted. Granted it might not be but putting money in one sector of the market is more than risky.
Silver bullet bulls-eye.....30 years ago I started working for an employer who had a defined benefit pension. No muss no fuss, professional pension managers so I didn't need to be. Too much complex investing advice from grey hairs who if they REALLY had a clue, should have been able to retire but couldn't!
I am now retired at 55 and receive very nice lifetime payments. If it works for my employer why aren't others doing the same for their employees!
Edward: Because most employers dropped pension plans years ago. The 80's was bad and they were trying to survive. 401K plans replaced them.
The key is not income. By the time you actually get close to retirement, there isn't much you can change anymore. So the solution is either reduce expenses. Here lots of people could, but few want to. Most Americans are not into cutting back their lifestyle. The other solution is to work longer full time, which lots of folks are doing or work part time, ditto on that one too.
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