Safe Money Advisory ArchiveListed below are the past issues of Safe Money Advisory. These were written with the cautious and conservative who cannot afford to take losses because they are at or near retirement and don’t have time to recover from financial setbacks. They address topics of general interest, give solutions to problems faced by ordinary Americans, and are written for easy understanding. Receive the Safe Money AdvisoryWant to receive the latest Safe Money Advisories for free via email? Then click here to sign up now! December 2011 - Is Your Retirement Market Determined?The stock market fluctuates wildly some days – 300 or more points, representing a change of 3% or more, is common. For a retiree with $500,000 of her retirement money in “the market”, losses could easily be $20,000 in one day, even if her portfolio is diversified. Wall Street’s recommended withdrawal strategy is 4% annually; thus, our hypothetical retiree could be running on empty for the next 300 or more days after one bad day in the market. What might the future bring? Another meltdown or a sustained rally! History will tell but there is one certainty: money in the market is at risk... CLICK FOR FULL REPORTNovember 2011 - The Forgotten Safe Money Retirement OptionThe stock market, as measured by the Dow Jones Industrial Averages, is rising and falling by hundred of points daily, setting growth records one month and reversing directions the next. The “new normal” gyrations make retirement planning next to impossible because the next prolonged downturn could be the very time you need your money. If your greatest fear is running out of money, and it is for most retirees, being in “the market” could be a self-fulfilling prophecy. Is there a better way... CLICK FOR FULL REPORTOctober 2011 - Three Most Important Retirement QuestionsThe stock market is dropping in a volatile frenzy, interest rates are near zero and the economy is anemic. Will there be improvement? The fact is: no one knows what will happen, ever. If you’ve been advised that “selling now would be a huge mistake” or “all will be fine in the long run”, remember that economic forecasting is not a science. Those who forecast are guessing, and basing retirement on guessing is hazardous... CLICK FOR FULL REPORTSeptember 2011 - Making Your Lifetime Retirement Income CertainCan stocks and bonds lose value simultaneously? They most certainly can as a cursory review of history reveals. Also, how do you know stocks will recover? Currently the Dow Jones Industrial Average (“DJIA”), a closely followed index that measures movements in the stock market, is at the same level as mid-1999. That’s 12 years without gains and that’s before we take inflation into account. If adjustment for inflation were made, the DJIA would be much lower today than it was in 1999. Twelve years is roughly one-half of a typical retirement and too long for most retirees to wait in hopes that stocks will recover... CLICK FOR FULL REPORT August 2011 - Two Better Ways for Guaranteed Lifetime IncomeIn recent months the financial press has been filled with recommendations to use immediate annuities to lock up a lifetime income. Even the Government Accounting Office (“GAO”) recommends supplementing Social Security with a lifetime income annuity. In today’s low interest rate environment, immediate annuities that lock in historically low rates might not be a smart move because logic says stay in “short maturities” when rates are low. How can a lifetime income be locked-up now, yet not locked into today’s low rates? Here are two alternatives... CLICK FOR FULL REPORT July 2011 - Managing Your Retirement RisksRetirement is a marathon, not a sprint. The finish line could be over thirty years away and conditions early in the race will have a substantial impact on how you hold up in the final leg. While you may have saved adequately for the retirement race there is still concern about what could happen. Like a marathon where foul weather and leg cramps are uncontrollable, retirement has medical problems, investment losses, inflation and more. Just like the marathon runner, retirees cannot control all the risks they face but some risks can... CLICK FOR FULL REPORTJune 2011 - Retirement Money: Conflict of Safety & ReturnEvery time money is put aside for later use, two competing emotions must be balanced: the desire to safeguard principal and the urge to make higher returns. These two concerns are always competing objectives: financial home runs are hit only by taking risk. There are numerous stories of savers who put their money in what was represented as safe and high-yielding investments only to learn later that their money was gone: scams, misrepresentations or misunderstandings. Oftentimes higher risks are rationalized because in the “long run” all will turn out well. What if the trends of past history shift? After all, we’ve never had two market meltdowns in the same decade, current market... CLICK FOR FULL REPORTMay 2011 - Retirement: Does Life Insurance Have a Place?Most people would love to avoid paying taxes on money they earn. Also, most people hate the thought of life insurance. Would you believe these two are related? Bankers have been rewarded with FDIC insurance and investments get favorable tax treatment from capital gains and dividends, but life insurance offers “tax free” earnings for policyholders: tax free “living benefits” and tax free “death benefits”. Below are several, but certainly not all, ways to use life insurance in your retirement years... CLICK FOR FULL REPORT April 2011 - Retirement: Avoid Running Out of MoneyThese are retirement facts: your non-working years could be one-third of your life; the need for medical care will rise; the greatest fear is running out of money. Additionally, worries include higher taxes, inflation, losing Social Security, bad investments, medical problems and insufficient savings. Retirement money must be protected as there is no time to replace it. The following are common mistakes that result in running out of money in retirement... CLICK FOR FULL REPORT March 2011 - The ABCs of Retirement PlanningThe ups and downs of the market make for an uncertain financial future while more stress is added with near-zero interest rates that fail to cover inflation. If retirement looms, what can be done? It is all so complicated, and you’re getting conflicting advice. Is there a common sense guide that can be used to simplify money management in retirement? You’re in luck... CLICK FOR FULL REPORTFebruary 2011 - A Guaranteed Lifetime Income for RetirementIs running out of money one of your biggest worries about retirement? That’s normal! In fact, it has a name: longevity risk. How can you get rid of longevity risk without risking your retirement money? There are several options, but all except one have a fatal flaw. What’s best for you will depend on your circumstances, proclivities and situation; therefore, it is best to work with a financial professional that can steer you clear of unsuitable risk that retirees generally take... CLICK FOR FULL REPORTJanuary 2011 - Retirement Update: Social Security 2011Many of the 50 million Americans now receiving Social Security could have afforded to postpone benefits, but unfortunately they did not. The result is a lifetime of lower benefits to be “inherited” by surviving spouses (mostly wives). In addition to being adjusted for inflation yearly, postponed benefits grow 8% annually and are never 100% taxed when taken. No other safe investment is guaranteed to do as well. Let’s look at ways to manage your SS for higher retirement benefits... CLICK FOR FULL REPORT December 2010 - Will a Black Swan Appear in Your Retirement?The "Black Swan Theory" refers to unexpected events that have dire consequences. Since retirement is associated with a financial world that is not fully understood and the knowledge to make good decisions is not always present, unwelcome surprises do occur. Even without retirement’s Black Swans, small mistakes can lead to unfortunate consequences, but with their unexpected arrival catastrophe can strike... CLICK FOR FULL REPORT November 2010 - Retirement: Caution Bond Could be a Four Letter WordBank CD rates are at historical lows and as a result the incomes of many retirees have also plummeted to new lows. Retirees that have historically kept retirement money in the stock market have been rocked by violent feast-to-famine cycles. With the stock market roughly halfway between its last peak and trough, there is widespread fear about the future direction. Many risk-averse safety conscious retirees have found a compromise in bonds: fixed rates like bank CDs, but less volatility than the stock market. Could it be that danger also lurks here? Let’s look at how bonds really work... CLICK FOR FULL REPORT October 2010 - The Cruel Tax Faced by RetireesLet’s consider a married couple, both aged 65. Actuaries say that at least one of them is likely to be alive at age 91.5. Since ladies are the stronger gender, they’re more likely to be the last survivor. This means that conservatively our hypothetical couple should plan retirement for at least 30 years. Think back to 30 years ago and compare the prices in that world to the present one. Inflation is especially hard on retirees living on fixed incomes. At an annual inflation of 8% [current inflation for medical care], what cost $1,000 today will cost $8,000 in 27 years – years before our couple’s retirement will end. What is the outlook for future... CLICK FOR FULL REPORT September 2010 - Can You Earn Higher Interest Rates Without Risk?Interest rates are currently at historical lows and expected to stay there for the foreseeable future. If you had $500,000 in a 5-year bank CD paying 6% your annual interest was $30,000. Currently the national average rate for 5-year CDs is 1.84% to yield $9,200 a year – 70% lower than before. Lower interest rates have left many retirees with perplexing choices: live on less money, invade the principal or find something paying 6% to replace the matured CD. What are many retirees doing to make up their loss... CLICK FOR FULL REPORTAugust 2010 - Market Myths that Sway InvestorsAs this is being written, the market is surging upward by 200 points – this comes after a matching downward spiral a few days before. Some sages say the market’s headed higher while other pundits say lower: my position is “you know, you never know”. The recent movements in the market are stomach churning for those in retirement’s red zone or already retired. This group is tired of speculating, too short on time to recover from another meltdown and fearful of outliving their money. Notwithstanding these concerns, the risk averse stays in the market because those benefiting by investing other people’s money have used myths to keep them there. Let’s review several myths used to keep you coming back or stop you from leaving. CLICK FOR FULL REPORTJuly 2010 - When Will the Next Big One Arrive?History always repeats itself – never exactly, but enough to make certain that periodic interruptions are a way of economic life. What is the next big event? The economic disruption that again rips the heart out of your retirement takes away your lifestyle, undermines the value of your money, fosters market losses you can’t afford or threatens your economic well-being! We don’t know what it will be, when it will come, how big, how long or the exact effect, but we know for certain it is coming. CLICK FOR FULL REPORT June 2010 - Don't Follow the Herd: A Book ReviewRemember when your parents told you to think for yourself and avoid giving in to peer-pressure? Yet, when we reach adulthood this sage advice is forgotten as we follow the herd when it comes to managing our retirement money. We listen to the loud voices of Wall Street screaming “we manage everyone’s money and we should manage yours”! This incessant message is blaring in TV and radio commercials, ever-present in newspaper and magazine advertisements and delivered to homes daily via direct mail. CLICK FOR FULL REPORT May 2010 - Are you Prepared for the Higher Taxes of 2011?The Bush Administration tax cuts implemented from 2001-2006 will sunset in 2011. Unless Congress acts, the New Year will bring higher personal tax brackets, steeper taxes on capital gains & dividends, re-instated estate taxes and other tax bites out of your retirement lifestyle. Furthermore, several other new taxes will be added over the next few years and a dollar paid in taxes is one dollar less for your retirement. So, what is your plan to protect your retirement money? Here are some ideas to ponder before 2011... CLICK FOR FULL REPORT April 2010 - Stress Testing Your Retirement PlansAuto companies test cars by crashing them into concrete barriers, driving at high speed in extreme temperatures and deliberately trying to break them. They analyze the results and engineer around weak parts and problems. Testing in extreme conditions improves performance and adds to safety. This same principle applies to retirement plans. CLICK FOR FULL REPORT March 2010 - Roller Coasters and Other Retirement Rides“The market” has made a spectacular recovery in the past 12 months. The closely watched Dow Jones Industrial Index (“DJIA”) rose from 6,547 in March 2009 to 10,550 in March 2010 – an astounding 61% rise. The previous high was 14,165 in October ‘07 – meaning the March ‘09 low reading was 54% below the ‘07 peak. A gain of 61% following a loss of 54% punctuates the volatility, and risk, of the market. Nevertheless, the loud voices of Wall Street are shouting bull market, prices have recovered and this is where your retirement money belongs. Let’s take a closer look. CLICK FOR FULL REPORT February 2010 - Can You Earn 16% Annually Risk Free?I recently was presented an opportunity to earn a 16% annual return with only “modest risk”. The investment was called a “fractionalized life settlement” and the sales pitch was compelling… but I’m wondering if the risk is “modest”. This investment is fractions of the death benefits from life insurance policies on strangers. These policies were sold because the policyholder (insurer) no longer needed, wanted or could afford to pay the required policy premiums. The policies were not surrendered for their cash values, because the “present value” of the death benefits is worth more to Life Settlement Companies that could repackage them for ... CLICK FOR FULL REPORT January 2010 - Making Your Retirement Money LongWhat will you do if you run out of money during retirement? What are the consequences if your surviving spouse doesn’t have enough money? These serious questions are reality for many retirees. Nonetheless, the fear of running out of money has not kept many retirees from speculating with their retirement money. Much of this “speculative mentality” is driven by ... 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Retirement: Does Life Insurance Have a Place?Date: 02/16/2012 03:00 PM Previous webinar: Financial Literacy and Retirement Ask Us AnythingWe can help. Have questions? Call or email. The Retirement Pros
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