Back on January 1, 2011, the first wave of baby boomers began celebrating their 65th birthdays. All told, 77 million Americans were born from 1946 through 1964, and, for the next 17 years, 10,000 a day will be entering retirement. The Woodstock generation has become a generation of senior citizens.
Even at the best of times, saving for retirement is not an easy task. Throw in economic uncertainty and low savings rates, and the well-intentioned idea of saving for retirement can become a distant memory.
A recent report shows that Americans’ confidence in their ability to retire comfortably is at an historic low. Just 14% are “very confident” they will have enough money to live comfortably when they retire; on the other end of the scale, 23% say they are “not at all” confident. What’s more, approximately 60% of middle-class retirees will likely run out of money if they maintain their pre-retirement lifestyle and don’t cut spending by at least 24%.
Even though the majority of Baby Boomers view retirement as a crisis, few understand how much money they’ll actually need to retire and what they need to do to get there.
The future doesn’t look much brighter. Many American workers believe they just don’t have enough extra money to set aside for retirement. Not surprising when you consider that 43% say that job uncertainty is the most pressing issue facing America today; with many saying they have virtually no savings or investments.
To make sure you’re on track for a secure retirement, it’s important to understand your retirement plans and set goals. When it comes to creating an investment strategy, there are many things to consider.
When creating a retirement savings plan, it’s important to decide how much you need to save and when you need to save it by. While there are no easy answers to retiring in comfort, investors do have retirement options that can help increase income and reduce market risk.
On a recent show on CNBC, a financial planner surprised everyone when she said a person should have about $2.5 million in his or her retirement plan. Of course, those on hand were aghast by the comments, including myself. But having since thought about it, it does make some sense.
Four Percent Rule No Longer Sufficient for Retirement Savings?The thing is that the old rule used by financial planners that those in retirement can withdraw four percent annually to live for another few decades simply doesn't pan out for the majority of people, given their retirement savings and retirement plan. The problem with the four percent rule and the savings process are the extremely low interest rates and res ... Read More
When it comes to creating an investment strategy, there are many things to consider. Getting back to the basics, there are four points that everyone must accomplish to get the biggest bang for their buck. 1. Reduce Credit Card Debt While many might not consider reducing credit card debt as an investment strategy, it clearly is., the reason being that you are paying a very high interest rate on that debt. It is not easy to generate massive returns in the stock market, so if one’s credit card interest payment were 20%, one would need to generate a bigger return than that in the stock market to justify not paying off that debt. Reducing or eliminating unnecessary credit card debt is an easy initial step to ge ... Read More
There’s more to renewable energy than just wind and sun. And thank goodness for that, because our interest and investment in traditional renewable energy sources like solar panels and wind farms seems to be on the decline. The amount spent on deals to finance clean energy and efficiency projects tanked 12% in 2013 to $254 billion—a quicker pace than the 9.1% drop in 2012 from a record level of $318 billion in 2011. (Source: Goossens, E., “Clean Energy Support Falls Again to $254 Billion in 2013,” Bloomberg, January 15, 2014.) The drop in investment and interest in traditional renewable energy sources is a setback when you consider annual investments in renewable energy sources ... Read More
Nothing helps create volatility on the stock market like the threat of war. And just a few short days after the close of the bloated $52.0-billion behemoth in Sochi, Russia has embraced its ne’er-do-well Olympic spirit and invaded the Ukraine. Or, according to Putin, “pro-Russian soldiers” have simply moved into the Ukraine to defend Russian interests. With a growing threat of war/retaliation on the horizon, investors have been pulling their money from riskier assets, like stocks—sending global financial markets reeling. Crude oil and gold prices, on the other hand, have been on the rebound. While it seems utterly crass t ... Read More
Two things have been consistent this winter: bad weather and bad economic news. And both just keep on rolling. With spring just around the corner, the weather will clear up; the U.S. economic news, on the other hand, might not be so lucky. Over the course of the last week or so, a raft of weak economic news and earnings has welcomed the markets. For starters, a higher number of Americans filed applications for unemployment benefits for the week ended February 8. Jobless claims climbed by 8,000 to 339,000; the four-week moving average for new claims increased to 33 ... Read More
“I am going to buy BlackBerry Limited [NASDAQ/BBRY] and leverage heavily. Maybe buy options rather than the stock. I believe the company’s stock prices are going to go much higher than where they stand now. They look like a takeover target soon. I’m going all in.” These were the first few words my friend Mr. Speculator blurted out when I received a call from him the other day. “Why would you do something like this?” I asked. His response is something that long-term investors can learn from—and should avoid. He wants to buy Blackberry stock because Facebook, Inc.’s (NYSE/FB) purchase of “WhatsApp”—an instant messaging app for smartphones—will make “ ... Read More
“What should you do when the house isn’t in order?” A good friend of mine asked this question back in 2011. At that time, key stock indices were plunging lower due to issues regarding the U.S. debt ceiling. There was uncertainty, and many wondered what would happen next. I remember this question now because the key stock indices nowadays are falling due to troubles in the emerging markets and there seems to be panic—similar to what we were experiencing when I first heard this question. When key stock indices are declining, instead of panicking and selling ... Read More
Are the long-term retirement plans of working Americans being held hostage by the Federal Reserve? If the point of quantitative easing was to stave off a recession and spur jobs growth, I think it’s fair to say the Federal Reserve’s $85.0-billion-per-month money-printing scheme has been a failure. At the very least, I’m not so sure the money was well spent, and that the end does not justify the means. I enter as evidence almost $4.0 tril ... Read More
One of the basic rules that investors should follow when it comes to portfolio management is to not have a bias. What biases eventually do is either hinder investors from making better decisions or cause investors to not even recognize an opportunity that can take their portfolio to new heights. For example, take the Affordable Care Act, more commonly referred to as “Obamacare.” A friend of mine, who is saving for his retirement, has a bias when it comes to this topic. He says it’s not worth it for Americans, and it’s just another expense to add to the budg ... Read More
A growing number of American retirement nest eggs are cracked, and the fault lines are getting bigger. While the S&P 500 and Dow Jones Industrial Average are enjoying record highs, the same cannot be said for the employment rate. In fact, stubbornly high unemployment and underemployment mean a growing number of Americans have had to dip into their retirement funds—and sacrifice their future stability—just to get by. While the official U.S. unemployment rate sits at 7.4%, the U.S. Bureau of Labor Statistics reports that the underemployment rate—those who are unemployed, want work but have stopped searching, or are working part time because they can’t find full-time work—remains stubbornly ... Read More