If you believe what is happening to the Dow then a miracle happened this week. The Dow effectively fell out of a 10 storey window and got up and walked away.

If you believe that then you may have a problem grasping the reality.

I’ll grant that with the government manipulations going on the save the stock market, sorry I mean the economy, they may well put a temporary floor under the market. But does everyone believe this is the end of the subprime mess, the credit crunch the derivative scams and any number of things that have not even come to light yet? I don’t think so Tim!

Read the rest of this entry »

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

I came across a special report today entitled “Uncovering and Understanding Hidden Fees in Qualified Retirement Plans 2nd Edition” ­ Published February 1, 2007. (The download document is now in its 3rd Edition.)

It is written by Matthew D. Hutcheson a professional independent fiduciary expert and who is acclaimed for his determination and efforts to protect the retirement income of American workers. His firm claims that;

“Working closely with your team of existing service providers, I can increase your employee’s future retirement benefits by up to 40% and virtually eliminate your risk as Plan Sponsor, along with any significant probability of being sued in the future.
Ask me how.”

After reading his report you might want to talk to your employer and then talk to him. You will need someone like him in your corner. You can reach him at his firm Matthew D. Hutcheson LLC.

The report starts out by telling you the rising cost associated with 401(k)’s is becoming a major concern in the USA. Whilst it is quite detailed it is readable and all workers who are participating in a company 401(k) should read it and keep a copy handy.

A major problem with Employer sponsored 401(k) is the employers are really not equipped to manage them properly and the time it takes to do so distracts them from their own business. Nevertheless company executives have a fiduciary responsibility to be aware of all fees and charges on a 401(k) plan and to manage and control such fees.

Read the rest of this entry »

The Stock Market is going through some high volatility at the moment, as I am sure you know. The daily swings in the value of stocks is enough to give even the coolest of Baby Boomers some heart pounding moments, especially if their nest egg is fully invested. The US markets are down 11% from their highs of 2007.

If Baby Boomers are to learn anything from the recent past we must study what happened and learn from it. It was George Santayana who said “Those who cannot remember the past are condemned to repeat it”. Are we to forget the crash of 2000 and suffer the same fate in 2008 as Baby Boomers who retired in 2000 and who have just recovered much of their nest egg, only to be hit again by the sub-prime debacle and the credit crash?

In my research for better and more secure ways for Baby Boomers to invest when in retirement, I have come across many sites that talk about the effect a down market can have on a nest egg in retirement.

Many of these quite correctly talk about the dramatic impact of negative stock market returns on a nest egg in the early years of our retirement. But I have found none that actually tried to show a scenario that I can relate to and do it in a simple way. Read the rest of this entry »

Hands up all those Baby Boomers who want to survive in retirement? I know I don’t. I want to live in retirement. That means not having to check our retirement nest egg every month to work out how much we can take to live on.

I don’t intend spending up big, but I do want to maintain my lifestyle in retirement.

I don’t want to wake up at night in a cold sweat wondering if I will be able to draw some of my nest egg this month because the Dow dropped 3%. This is just going to make me ill and I’ll probably die younger than I should.

The problem is that many Baby Boomers have ALL their Nest Egg invested with a financial planner. Most if not all are in Mutual Funds. So this could be their lot unless they change some things around.

Okay, I know our nest egg is probably invested in balanced, properly allocated and fully diversified funds. Everything is done according to the “book of financial planning”. But is it in our best interest when we are in retirement? Read the rest of this entry »

As Baby Boomers we must protect our Nest Eggs in Retirement by avoiding large losses. Why is this?

For this article I have assumes a 10% loss because it appears the average loss in stock Mutual Funds for the first quarter of 2008 is 8.8%.

"U.S. stock mutual funds plunged 8.8 percent in the first quarter, the most in more than five years, as technology and financial stocks succumbed to the slowing economy and a lending pullback. " http://www.startribune.com/business/17070456.html

One of the best articles on how long it can take to recover a large loss was written by Craig L. Israelsen entitled The Math of Recovery in Retirement Portfolios. He compares the investment returns needed to recover from losses when in retirement vs. when working and owning a "Buy and Hold Portfolio", over periods of one to five years.

The article makes many good points and is recommended reading, but this post will only cover the percentage return needed to recover from a 10% loss.

Here is the table for the Buy and Hold Portfolio. No pension is taken.

Read the rest of this entry »

If you are a Baby Boomer AND in or near retirement your Financial Advisor should be advising you on how to protect your Nest Egg in Retirement. If they are not actively working with you to control your Nest Egg you could be in serious trouble.

With the financial markets in turmoil and the stock markets tumbling, if your your Nest Egg is in the Stock Market it is likely to be down 20% or more. Do you understand that if you are drawing a pension from your Nest Egg, then being down 20% or more is critical to the long term survivability of your Nest Egg.

Craig L. Israelsen, Ph.D. is an associate professor at Brigham Young University. In his article The Math of Recovery in Retirement Portfolios he states “The Primary Goal of a Retirement Portfolio is very simple; avoid large losses.” If your financial advisor isn’t telling you this, there is a problem. If you suffer large losses just as you start taking a pension from your Nest Egg you could be in serious trouble. This article shows you just how much trouble. I recommend you read the article in full.

10 Questions you should ask your financial advisor:

Read the rest of this entry »