MOST PEOPLE AREN’T SAVING ENOUGH FOR RETIREMENT

#retirement #pensions #savings
Most everyone knows or suspects that people aren’t saving enough for a decent retirement.
But a World Economic Forum report spells it out: People are living longer. Investment returns have been disappointing. Therefore, within three decades there will be a $400 trillion shortfall worldwide in retirement savings.
The report was cited in an article by Katherine Chiglinsky for Bloomberg News. It was published June 4, 2017, in The Atlanta Journal-Constitution.
The shortfall includes a $224 trillion gap among the six large pension-savings systems: the U.S., U.K., Japan, the Netherlands, Canada and Australia, the article quotes the report.
Employers have been moving away from pensions and offering defined-contribution plans, which include 401(k)s, and individual retirement accounts. Those categories make up about 50 percent of global retirement assets, Chiglinksy writes.
The report warned that the savings shortfall in the U.S. is growing at a rate of $3 trillion a year, and may climb at an annual rate of 7 percent in China and 10 percent in India – countries with aging populations, growing middle classes and a higher percentage of workers in informal sectors, Chiglinsky writes.
So, how are you set for your retirement?
Have you got a pension lined up? If so, it’s entirely possible that it won’t be there when you are ready to take it, or it could be reduced.
Social Security by itself won’t let you live a decent life. And, if Washington doesn’t act, benefits could be reduced eventually. Many experts say we needn’t fear that Social Security will go away entirely. But benefit reductions are a possibility in a few decades.
Think of your retirement planning this way: if it is to be, it’s up to ME.
If you are young, and just starting your career, make retirement savings a priority. If you aren’t raking in big bucks, start with a small percentage of what you are making. Put that money away. Don’t touch it!
Once your savings have grown to an investible amount, say, a few thousand dollars, get it out of your bank savings account and put it into something that will pay you higher rates. Get good advice from a financial planner that you trust. You may want to start with fairly safe – everything outside of insured bank deposits carry some risk – investments, and diversify more as your money grows.
If you are older, you need to put more of what you earn into retirement savings. Young folks have lots of time to balance gains and losses. Middle-aged folks have much less time. Talk to a financial planner about you goals, and let him or her guide you as to how much to save, and in what vehicles to invest.
Of course, cutting spending is a must. Increasing income may give you a leg up on your retirement savings. To learn about one of best vehicles for doing both, message me.
In short, you can take matters into your own hands. It’s all about setting priorities, making good choices and sticking to your plan.
Whatever you sacrifice now, be it $100 a month in lattes, taking too many expensive trips etc., will pay you back in spades when your job goes away. And you don’t have to live in complete deprivation to do it.
Just look for value in what you buy, and make good choices in how you save.
Peter

NOT BUYING LUNCH CAN CREATE $90,000

#LunchMoney #savings #retirement
On average, Americans eat out lunch twice a week.
It could be more than that, if you buy your lunch at work every day.
The average American forks over $11.14 twice a week for lunch, according to a Visa survey.
If a person skipped that meal – or made or brought his own lunch – and redirected that money into an investment account earning 6 percent, he’d have an estimated nest egg of $88,500 30 years later.
These numbers were quoted in an article by Adam Shell for USA Today, also published in the June 8, 2017, edition of The Atlanta Journal-Constitution.
OK, sometimes dining out for any meal is a nice treat. And, one does not want to live a life of deprivation.
But if you are having trouble saving for retirement, or you believe you don’t have the money to do so, perhaps one can find the money in places he never thought to look.
As a child, if your parents gave you an allowance, it usually was meant to teach you how to make the most of your money.
If you got a weekly allowance, did your spending habits cause you to run out of money before your next allowance installment?
Ask the same thing, now that you are an adult, about your paycheck. Are you accustomed to cashing the check and spending the money until you run out? Put another way, how much of your money do you spend without first giving it a thought?
Some people are well off in retirement because they had a great job, with great benefits and a great pension plan or 401(k). Others have a nice retirement because, from the beginning of adulthood, they earned a paycheck, and knew where every cent was going. These folks also made sure that a certain percentage went into savings.
Once they saved enough money, perhaps they parlayed it into a house, which, for them, was probably a good investment. As they kept saving, they then began to invest in other things so that, when they reached retirement, they didn’t have to worry how they were going to live.
The younger you start this process, the more you will have when you get older.
So, let’s pose the question again: is skipping a couple of lunches out every week worth close to $90,000? Some might say that $90,000 won’t go far in retirement, which is true. But eating lunch at home, or bringing your own lunch to work, is just one way to build a bigger nest egg, even if your job is hardly lucrative.
Another way is to use some of your non-work time to find, and work on, other great ways to make extra money. There are many such vehicles out there that don’t involve taking a second job. To check out one of the best, message me. Perhaps you will also find other ways to save money, besides not buying lunch.
So, it is possible to have a nice retirement, even though your income is hardly a rich person’s tally. You may have to do without some things that give you a moment of pleasure. Naturally, don’t cut ALL fun out of your life, but just take great care in your spending habits. Perhaps you could not only bring your own homemade lunch to work, you could brew and Thermos your own coffee.
Then, you have to be disciplined enough to put that money into safe savings at the start. As your nest egg grows, you can graduate into investing, without being overly aggressive at first. Then, as the money grows you can parlay it into more diversified investing – all with the help of a trusted adviser.
So, to borrow from Stephen Sondheim, here’s to the ladies (and gentlemen) who lunch – without spending $11 a pop.
Peter

NEW RULES FOR INVESTING: HOW WILL THEY AFFECT YOU?

#retirement #investments #NewRulesForInvesting
Like eating and sleeping, choosing how to invest for retirement is a necessity of life.
The number of options makes the choice more difficult.
What may be good news is that new federal rules encourage brokers and other investment sales folks to make the client’s interest a priority, regardless of how much the broker may lose in fees.
Russell Grantham, a business reporter for The Atlanta Journal-Constitution, discussed these new rules in an April 24, 2016, article.
Baby boomers are starting to retire in large numbers, and these new rules are designed to ease the burden of choosing the correct investments for them.
As Grantham’s article points out, though, the new rules may discourage some brokers from dealing with clients that have small nest eggs. It could increase brokers’ costs, he writes.
The rules are among the biggest changes in the financial industry in generations, Grantham writes.
The financial industry sometimes gets a bad reputation. Not everyone in the industry looks out for his or her own interests over his or her clients’ interests.
The bottom line for investors, regardless of how much money they have, is to find someone trustworthy to manage their hard-earned money.
Someone trustworthy will always have your best interests at heart. Someone trustworthy will manage risk according to his client’s tolerance.
Someone trustworthy won’t be calling his clients daily, attempting to generate trades that may or may not be in the client’s best interest.
Also, the financial industry is extremely competitive. Those who work in it must not just make a living, but also must make money. A great way to judge an investment adviser is by how much he or she is making for YOU. Generally, advisers don’t last in the business if their clients are making puny returns, or are sustaining heavy losses.
Know, too, that the financial markets don’t go up in a straight line. There will be some down times throughout any investment market.
But good advisers will get clients through the tough times with minimal, if any, losses.
Though the markets don’t generally go up in a straight line, they generally go up over time. Beware the financial adviser who predicts doom, and encourages clients to pull everything out and turn everything to cash. Although it’s nice to have some cash available, cash by itself generates little or no return.
All this discussion about rules for advisers begs another question: how much money do you have for your retirement, and are you investing it properly? If you don’t believe you have enough for your retirement, and don’t know how you are going to get what you need as you age, visit www.bign.com/pbilodeau. There are many ways to generate extra income, and this is one of the best.
So choose your investment adviser carefully, if you haven’t done so already. Talk to several before you decide. Make sure the person you choose understands how much risk you can stand. Make sure, too, that he or she creates a balanced portfolio for you, and isn’t so conservative that your returns will be puny.
You’ll know by talking to different advisers whether you can trust them. Regardless of the rules they have to live by, trust is the main thing to look for in an adviser. The adviser’s job is not just to make you money, but also give you peace of mind.
Peter

RUNNING, RETIREMENT, SAVING

#running #retirement, #RaceForRetirement

Road races have become a popular fund raiser for charities.

The Susan G. Komen Foundation’s Race for the Cure has raised millions for breast cancer research, for example.

In its advertising, Prudential Wealth Management has taken a different tack on running to raise funds. It shows a Race For Retirement, in which the runners pledge to put a certain percentage of their income toward their retirement.

If you are one of those in which running a race motivates you to do something, this idea might appeal.

If you are disciplined enough to train for road races to win them, this also might appeal.

But saving for retirement requires a different sort of discipline. One must pledge to save a certain amount from his paycheck every time, without fail, a check is paid. Also, one must be disciplined enough not to touch the money until he reaches the proper age. It also requires the discipline to manage the money, often with trusted professional help.

Many people at or near retirement age today do not have enough money to retire comfortably. Obviously, some circumstances have inhibited their progress. One cannot control what an employer will do to an employee. One cannot control what markets will do to diligently-saved money. But many are not where they want to be financially because they did not have the proper discipline.

Many of us don’t have the interest, and, therefore, the discipline to train for road races. But we all should have the discipline to look after our own financial futures.

As teenagers, we often get jobs to save money for specific purposes, i.e. a college education. We expect those savings to be tapped out by graduation.

As young adults, we should make a pact to take a certain amount of our paychecks to put away into investments for retirement. We may only be able to afford, say, $5 a week at first. A technique to augment that is to add any pay raises to that amount, and learn to live on our original salaries. Some may say that’s easier said than done, and it certainly is. That does not make it undoable.

Life circumstances also change. Some of us get married, have children etc. A disciplined person does not let circumstances ruin goals. Circumstances change, so the disciplined person adjusts tactics to mesh with those circumstances. The disciplined person also doesn’t create circumstances that would ruin his or her goals.

Disciplined people also look for ways to save money on things they need to buy. They may also look for ways to earn extra income to augment their savings.

There are many ways out there to do one or the other. For a way to do both, visit www.bign.com/pbilodeau.

Often, to get something good, one must sacrifice. One must forgo present pleasantries for future enjoyment. Disciplined people NEVER expect the future to be given to them. They ALWAYS expect that a good future requires planning, and doing little things consistently over time, without fail.

Darren Hardy’s book, “The Compound Effect,” illustrates that success comes not from one or two “big things,” but from a lot of little things, plus time.

The lesson: be disciplined. Do lots of good, little things that may be painless, or may even deprive you of some present pleasure. You may need some good advice to select those good little things, so make sure you trust who is advising you.

If running a race will help motivate you, lace up your sneakers and go for it.

Peter

HOW WILL YOU RETIRE WITHOUT AN IRA, 401(K)?

#ira #401(k), #retirement #savings
The share of American families that have IRAs or 401(k) retirement plans has spiraled down in the past decade, while the amount of assets in the accounts of people who have them has been climbing during that time.
So reported Tim Grant of the Pittsburgh Post-Gazette, quoting the Washington, D.C., based Employee Benefit Research Institute. It reported that the percentage of all families with an individual retirement plan, such as an IRA or 401(k), decreased from 52.8 percent in 2001 to 48.2 percent in 2013.
“For many families, individual account retirement plan savings constitute most of whatever financial assets they have,” Grant quotes Craig Copeland, senior research associate at EBRI.
The bevy of concerns these numbers produce is staggering. What will happen to fewer than 50 percent of the 76 million Baby Boomers, who for the next 18 years will be turning 65 at a rate of 8,000 a day? Grant quotes Thomas Mackell, former chairman of the Federal Reserve Bank in Richmond, Va., who believes many people are unable to save for long-term financial needs because U.S. wages have gone down, not up.
Yet, Grant quotes Mackell, those who have had the ability to save for retirement have benefited from a rising stock market.
Certainly, during the recent Great Recession, many have tapped into their retirement plans early, just to survive. But, they will pay a potentially huge price for that decision down the road.
When one is in middle age and loses a job, and can’t readily find another – or at least one that pays as well as the one he lost – he can feel very desperate. Not only has he lost current income, he potentially has lost the pension he was counting on. Social Security alone isn’t going to provide anyone with a good retirement.
If you are feeling desperate and are tempted to liquidate your retirement savings, stop! Get some financial counseling. Find a way to get through your rough times without sacrificing your future.
Remember, people are living longer. Retirement periods are lasting longer. Don’t let your money run out before you die.
Fortunately, for as many concerns about retirement savings that the ERBI numbers raise, there are many solutions as well. There are many ways to make a potentially great income that have nothing to do with traditional employment. For one of the best, visit www.bign.com/pbilodeau.
Not every income solution is for everyone, so examine them with care. But don’t shy away from looking if you believe you have to dip into your retirement savings early.
If you are young, start an IRA or 401(k) immediately. If you can, contribute the maximum amount you are allowed to. It wouldn’t hurt to check out other income streams, too, because even if you have a great job now, don’t expect it to be there for your lifetime.
Most of all, as we plunge headlong into the holiday season, first and foremost, be grateful for the good things you have in your life. If you are having financial issues, don’t hesitate to ask for – and look for — help. Don’t do anything rash with your money. Think not only about today, but the many years you potentially have left to live.
It’s not good to solving a financial problem today by messing up your financial future. The “help” you thought you were going to get in your elder years may not be there when you need it. YOU have to act, and the sooner, the better.
Live as well as you can for as long as you can. Remember, everything in life is about your choices. Choose wisely.
Peter

CAPITAL, LABOR AND ECONOMIC FUTURE

Are we, or have we been, moving into a trend in which capital surpasses labor as the economic engine?
New York Times columnist and Pulitzer Prize-winning economist Paul Krugman thinks so.
From the working person’s viewpoint, the economy is still quite depressed. But economic figures are improving and corporations are making record profits. Many of these companies are holding on to their cash for dear life, fearing the investment and regulatory climate now and to come.
Krugman points out that manufacturing is moving back to the U.S. from overseas. He uses the example of manufacturing computer mother boards. They are made largely by robots, so the cheap, Asian labor is no longer needed. Perhaps that’s why we hear that China’s economy is contracting.
But let’s look at the way things are, from where you sit. Chances are, if you are still working, you have at least some fear that your job is going to go away before you want it to. Perhaps you are saving your pennies, and not spending frivolously, in anticipation of being shown the door at work. The U.S. savings rate needed a shot in the arm, for sure, but how it is getting it is quite disconcerting.
Perhaps you are out of work, and have been for a while. You scratch your head because the job you had, which you had thought, or even had been told, was vital to your company just went away. It’s not as if you had done a lousy job at it and were replaced. Your job just went away, and it’s not coming back.
Meanwhile, you hear about record profits for companies and wonder why they are not putting some of that money back into their operations, i.e. in creating new jobs. Well, they probably don’t have to. Technology has improved to the point at which machines replace people in big numbers. No matter how much money they have, companies will not create jobs they don’t think they need. Some will actually cut jobs they should maintain.
This phenomenon is detrimental to what we know as the middle class. Because those with the capital have political benefactors, they may be creating a political system that lets them get richer at others’ expense. When the successful are protected in this way, the less successful become more vulnerable. As Krugman says, we’re not talking about a gap between the educated work force and the less educated. In this milieu, EVERYONE gets paid less. When the less successful become more vulnerable, they not only get paid less for what they do. They pay more for what they need.
INHERITANCE TAXES CAN HURT
Krugman says that the rich also are fighting to eliminate inheritance taxes. He may find some disagreement here, because inheritance taxes can prevent family businesses from being given to future generations of that family. Sometimes, families have to sell their businesses to cover the tax bill, and there is something wrong with that. On the other hand, there could be large amounts of wealth being easily transferred to people who are already wealthy, without adding to the economic engine.
If this trend of forced idleness continues, it bodes ill. Look at what is happening in other countries, where young, often educated people can’t find work. Such free time among a disgruntled group can lead to all sorts of bad things.
However, in all this, there is good news. There are lots of ways out there to make money, without worrying about having a traditional job. To check out one of the best, visit www.bign.com/pbilodeau. Hear and see the stories of how average people are making above-average incomes, and helping others do the same. It also attacks the notion of paying more for what one needs.
So if you are working, think about your plan B. Savings will certainly help you, but they may not cover all your bills without a paycheck. If you are not working, don’t be discouraged. Check out one of the many opportunities there are, through which average people, regardless of education, are prospering. Sometimes, becoming successful just requires being open to looking at something different.
It has been said that the best way to help the poor is to not be one of them. The best way to fight the capital vs. labor battle that Krugman illustrates is to find ways to generate more real capital. Kurgman calls the capital guys robber barons. If you help people prosper with you, that’s makes you a benefactor.
Peter