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Beyond Buy-and-Hold #88
By Rob Bennett
 I’ve seen a number of articles in recent years arguing that middle-class people need to continue working in retirement. The argument that is often made is that we live longer than we did in the days when age 65 became the conventional retirement age. If we are going to live longer, we cannot expect our retirements to survive until death unless we are willing to work through retirement, the thinking goes.
No. The logic here does not follow.
It IS true that adding some income from work to your retirement plan in the early years makes a huge difference. So adopting a plan to work in the early years of retirement makes a lot of sense for a lot of people. If you don’t have enough saved by the time you want to retire, the best way to cover the shortfall is to agree to work during the first ten years of retirement or so.
Why saving more doesn’t necessarily make retirement assets last longer
Continue reading Longer Retirements Don’t Cost Much More →
Beyond Buy-and-Hold #65
By Rob Bennett
In all areas of life endeavor outside of stock investing, the word “safe” has a similar meaning. A trampoline is “safe” if it does not cause injury or death to the kids who jump on it. A food is “safe” if it does not cause sickness. A driving speed is “safe” if it does not cause you to get in accidents. An action is described as “safe” when the chances of a devastating result are small.
That’s not how the word is employed in InvestoWorld.
What do you think it is that aspiring retirees are looking for when they enter “safe withdrawal rate” or “safe retirement” into a Google search engine? They are looking for information that will help them to know whether their retirement plan is almost sure to work. They don’t want to be taking chances on that. A failed retirement is a horrible life setback that they very much want to avoid.
The existing studies do not serve this purpose.
Continue reading Few Investing Experts Understand the Meaning of the Word “Safe” →
By Kevin M
 What happens if you aren’t able to build up a large retirement investment stash—are you doomed to live on the streets in retirement? Probably not.
While retirement investing may be the single best way to prepare for retirement, there are other strategies that can at least help to offset the impact of inadequate savings.
One of them is to pay off debt.
The elderly are drowning in debt
Debt has become a chronic problem across the board, but it’s also affecting retirees. A Yahoo Finance/Wall Street Journal article,
Debt Hobbles Older Americans reports that debt has become quite common among current retirees and near retirees:
Continue reading Not Enough Retirement Savings? Try Paying Off Debt →
By Kevin M
 We all know about the importance of investment diversification, especially it comes to retirement planning—today I’d like to focus another type of diversification, one that’s even broader in scope. It’s income diversification, and it could quite possibly be the most neglected part of retirement planning.
With investment diversification you’re looking to create a portfolio that has the right mix of mutually exclusive investments that will improve performance by lowering risk. Fair enough. Income diversification is the process of creating income streams from several sources which not only increases cash flow, but also lowers the reliance (risk) on any one of them.
With retirement, this can be done with investment earnings and Social Security, but if you want to create a third income source, you can do it through a retirement business.
It’s even entirely possible that an income stream from a business may provide a more secure retirement than a large nest egg (more on that later). And the combination of a business and a nest egg and Social Security may provide the best retirement plan possible—especially if your retirement savings aren’t where they need to be. It’s something to plan for.
A Million Dollars is A LOT of money!
Continue reading “Retiring” on Business Income →
Beyond Buy-and-Hold #54
By Rob Bennett
It’s Sunshine Rob here again to bring you more happy face news on the wonders of Buy-and-Hold. The topic of today’s sermon is: Your Retirement Plan Is In More Trouble Than You Realize.
Everyone knows that we have experienced a Lost 12 Years in the stock market. Stock prices are today close to where they were at the top of the bubble. Investors have earned a small gain from the receipt of dividends but most of that has been eaten up by inflation. We have essentially been standing still.
All acknowledge that that’s bad news. But few realize how bad.
Twelve years doesn’t sound like all that long a time. Most of us have life expectancies of perhaps 80 years. We certainly never wanted to go 12 years without seeing the numbers on our retirement portfolios increase, but into every life some rain must fall. My sense is that the general feeling is that this too will pass.
Continue reading Your Retirement Plan Is In More Trouble Than You Realize →
By Kevin M
 A few weeks ago I did a post on retirement from a different direction. In Preparing for Semi-Retirement I made the case that due to economic conditions, many people would be forced to accept a modified version of retirement, and that such a retirement should be fully anticipated and prepared for. I believe most people will do no better than some form of semi-retirement.
Today I want to take that idea a step farther, and suggest that for many people, non-retirement is more than a remote possibility. And I’m not just referring to people in the lower income ranges either. Economic conditions are changing rapidly, and no one has been more affected than people over 50. No matter how well prepared you might be up to that point, if your economic future is threatened in the last decade and a half of your working years all of your retirement assumptions will be subject to change.
Here’s a critical point: you won’t be exempt from this outcome just because you’re in your 20s or 30s now. One day you will be over 50 and you’ll be facing all of the problems older workers are dealing with now and maybe even a few more.
Continue reading Are You Preparing for Non-Retirement? →
By Jessica Wagner
 Saving, whether it’s for retirement purposes or otherwise, is tough enough without having that added difficulty of being self-employed. Many people have found the benefits of being their own boss and making their own hours but putting money away isn’t as easy when you don’t have a company with good retirement plans.
It’s important to know that you can do this even if you are self-employed. Small business owners and online entrepreneurs alike have found ways to build up their retirement and savings funds. There are many ways to do this and there isn’t just one savings plan that you can invest in and IRAs have long been one of the most popular avenues for retirement savings.
Tax deferred retirement plans
An IRA is an account held by a custodial institution such as a bank or brokerage firm. Generally, IRA’s are designed for middle-income investors. There are no income restrictions for most middle class taxpayers and an IRA is available to everyone.
Continue reading Saving and Investing Tips for the Self-Employed →
By Kevin M
 If you’ve spent much time on this site, you know that I’ve taken aim at the assumption that homeownership is good for everyone. It’s not that I think owning a home is bad, but more that I don’t think it’s right for everyone. In addition, I think that the advancement of- and unquestioned belief in- universal homeownership was one of the root causes of the real estate and mortgage meltdown.
Today I’d like to zero in on homeownership as it relates to retirees, and by extension, to retirement planning. I’m going to risk committing a heresy to make the case that many would be better off renting in retirement.
Why might some retirees be better off renting?
Continue reading Are Retirees Better Off Renting than Owning a Home? →
By Kevin M
 While nearly everyone in the industrialized world is practically fixated on the importance of a comfortable retirement, reality may be heading in a very different direction. A report from US News (via Yahoo! Finance) entitled Why the Middle-Aged Are Missing Out on New Jobs, highlights the reasons why full retirement is getting harder to achieve for so many people.
“Numerous surveys show that perhaps half of all Americans heading toward their retirement years lack enough savings to maintain their current standard of living as they age… Add to that fears of cutbacks in Social Security and Medicare, due to the skyrocketing national debt. The golden years, for many, aren’t shimmery at all… Many seniors say they plan to postpone retirement or work indefinitely, and the data shows they’re doing just that… rising later-life employment is probably a sign of economic stress that could last awhile.”
On the surface, the article is dealing with the absence of jobs for the middle aged. But the reason it spends so much time discussing the retirement prospects of the elderly may be the more significant story. Apparently the reason middle aged workers can’t get jobs is because the elderly are working longer to delay or forgo retirement and reducing the number of jobs available to middle aged workers. That in and of itself means that fewer current middle aged workers will have the financial resources to retire when their turn comes—a vicious circle with no end in sight.
Continue reading Preparing For SEMI-Retirement →
By Kevin M
It’s become almost fashionable these days to talk about the impending bankruptcy of Social Security, as if its demise is all but a done deal. But is that even the case? And how should we plan for what ever we might expect to get from the system when our turn at retirement comes along?
Let me state at the outset that I’m not a blind optimist cheering on the “company line” about Social Security as if dark clouds weren’t looming on the horizon. The fiscal ship that is 21st Century America is not an enviable one and the bill will certainly come due either gradually (let’s hope) or suddenly, but either way Social Security is likely to be there in the future—in some form or fashion.
Continue reading Will Social Security Be There When You Retire? →
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