Posts Tagged ‘ retirement ’

Few Investing Experts Understand the Meaning of the Word “Safe”

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.
Read more »

“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!

Read more »

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.
Read more »

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?

Read more »

Preparing For SEMI-Retirement

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.

Read more »

Is Money Your Obstacle – Or Your Opportunity?

By Kevin M

Money Reasons did a review on a book called How Rich People Think. I commented on the post, and it got me to thinking about some issues that may go deeper than rich versus non-rich. As much as we might want to think of rich and non-rich as a state of being, there are components to each that make them happen—a mechanical process perhaps.

Much of that seems to come down to how we think about money. Money is the conventional dividing line between rich and poor, but it seems that our attitude toward it—whether we see money as an obstacle or as an opportunity —seems to have a huge impact on where we go with it.

So how exactly do we define obstacle and opportunity mindsets as it relates to money? Rather than attempting a deep analysis, we might be better to focus on examples of each type of thinking. In this way, we can not only see our own thinking, but we might also see how it either holds us back or pushes us forward.

Read more »

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.

Read more »

Over 50 – No Pension, No 401K – What Now?

By Kevin M

Let’s be honest, most retirement posts in the personal finance blogging world are aimed squarely at people in their 20s and 30s. Those over 50 are presumed to not exist. It’s almost ironic, isn’t it, talking about retirement to people who are so far away from retirement that it’s very nearly irrelevant while ignoring those for whom it’s right around the corner?

Maybe it’s that the vast majority of people on the web are under 35, or maybe it’s just easier making multi-decade projections to a group of people so far from retirement that they’ll never remember any bad advice they’d gotten early in life. And in a different direction, all things are possible when your time horizon is 30, 40 or 50 years. Those magical retirement projections that’ll turn us all into millionaires just wouldn’t work without all those decades!

But what if you don’t have decades to accumulate a retirement fortune? What if you’re over 50 and retirement is just a few years away? If you don’t have at least a healthy six figure portfolio, how do you prepare for retirement now that the luxury of time is no longer available to work in your favor?

Read more »

Save for Retirement Now or Payoff Your Mortgage First?

By Kevin M

Two of the most important components of retirement planning are a generous retirement savings plan and a mortgage free home. But if limited resources force you to make a choice, which goal should get the lion’s share of your extra income?

There are three basic choices:

1) Emphasize retirement and let the mortgage slowly amortize itself into extinction
2) Throw all extra funds at the mortgage, and once it’s paid you’ll have even more money to put into retirement
3) A hybrid plan where you try to do both at the same time

This isn’t a good solution-bad solution debate. There are plusses and minuses no matter which way you go, and fortunately all three can get us where we need to go. Which one we choose will depend largely on individual circumstances and preferences.

Read more »

Good Retirement Planning Should Include a Low Cost/Debt Free Lifestyle

Low Cost/Debt Free lifestyle as part of retirement planning

Kevin M

Most articles on the subject of retirement planning focus completely on growing tax sheltered retirement savings plans like 401k’s and IRA’s. It’s an effort to build a large capital base as a way of creating a strong retirement income to enable us to maintain the lifestyle we’ve become accustomed to during the course of our lives.

Few pundits ever deal with the flip side of that effort—establishing a low cost/debt free lifestyle early in life. For a generation addicted to McMansions, late model cars, eating out, vacations at five star resorts and the like, no amount of money salted away may ever be enough.

Read more »


Follow Me On:
Subscribe RSSFollow me on Twitter


Financial Management

Budgeting

Personal Budget

Enter your email address for FREE Updates:

Delivered by FeedBurner



I'm on Money Index


Page Rank Check