Posts Tagged ‘ Retirement Planning ’

Not Enough Retirement Savings? Try Paying Off Debt

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:
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“Retiring” on Business Income

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!

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Risk-Free Stock Investing?

Beyond Buy-and-Hold #60

By Rob Bennett

I was talking over the wonders of Valuation-Informed Indexing with a fellow money blogger at the recent Financial Bloggers Conference in Chicago and, effusive fellow that I am, I uttered a phrase that shocked even me. I was explaining how the academic research of the past 30 years (the research that must not be mentioned when Buy-and-Holders are in the room) allows us all to achieve far higher returns while taking on greatly diminished risk. “That’s investor heaven!” I often cry.

This time a different catch phrase popped out of my mouth — “Risk-Free Stock Investing!”

“I don’t know if I would go that far,” she laughed. And in a technical sense, she’s right. There is no such thing as entirely risk-free stock investing.

Risk-free stock investing may be closer than we think

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Your Retirement Plan Is In More Trouble Than You Realize

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.
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Are You Preparing for Non-Retirement?

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.
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Saving and Investing Tips for the Self-Employed

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.
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You Should Be Rooting for Stock Prices to Fall

Beyond Buy-and-Hold # 40

By Rob Bennett

It’s 1980, you’ve just turned 35, and you have only saved $10,000. You believe that you will need to accumulate $1,000,000 to finance a decent retirement. All of a sudden, it hits you — you had better buckle down or you are not going to make it.

You write your first budget and that makes it possible for you to put aside $10,000 each year for the next 30 years. And we see good returns during most of those years. The average long-term U.S. stock return is 6.5 percent real. For the 30-year time-period from January 1980 through the end of 2009, we saw an annualized return of 7.39 percent real, nearly a full point higher.

Did you make your goal?

Not quite.

A neat little gadget to calculate real returns on stocks

I have a new calculator at my site that does the math for us. It’s called the Returns-Sequence Reality Checker. It reports that you ended up with a portfolio balance of $896,080.
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Charting Your Own Course with a Side Business

By Kevin M

Even in the face of an apparent economic recovery, many millions of people are stagnating in their jobs, unable to get a promotion or to move to a more promising position with a competing company. Many more are still unemployed or even under-employed. That may be the reality of our time, but should we sit still and wait for better times? Is that even a strategy?

Cutting living expenses is one way to deal with a comatose employment situation, but I’ve argued in the past that frugality has its limits. When all is said and done, you can only cut your expenses so much before finding new income sources becomes an absolute necessity.

If you aren’t content to continue to just muddle through, and want to make things happen in your life, increasing the number of income streams will be the most constructive way forward. And starting a side business is the single best way to do this.

How can starting a side business build a better future?
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Are Retirees Better Off Renting than Owning a Home?

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?

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Will Social Security Be There When You Retire?

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.

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