Baby Boomers should start to worry in my view. My title could become fact. The level of apathy displayed on the part of many if not most Baby Boomers about managing and protecting their nest egg is frightening. Government may be forced to take control to save us from ourselves.

I have to say I was not at all surprised by the survey results I read in the Australian Financial Review yesterday. The article written by Barrie Dunstan was on a survey conducted be Mercer Financial into what I assume is Baby Boomer awareness of their imminent retirement and the state of their nest eggs.

What they found was very concerning and in my view and could end up with governments taking control of the distribution of our nest eggs in the belief they can do a better job of managing, protecting and tracking our retirement nest eggs after retirement.

Just take a look at some of the findings:

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It’s seems there is deep seated apathy in Baby Boomers over their retirement nest eggs. Despite all the posts I have written on this blog there seems very little concern out there or at least any that is being expressed. This seems to be the only rational explanation. Every day there are new headlines about:

• stock market losses seriously eroding retirement nest eggs.
• financial fees and charges of up to 30 times declared costs eating into retirement funds.
• subprime crisis destroying house values everywhere including those owned by baby boomers
• baby boomers may have to work for much longer to replenish their nest eggs after the bear market and recession few admit is happening.

So why aren’t baby boomers making their presence felt?

Read the rest of this entry »

The DOW is only 0.8% off 20% losses the technical level for declaring a Bear Market. What does a Baby Boomer do now?

In these volatile times cash is a position for Baby Boomers in retirement. But it may be too late to exit those poor performing buy and hold mutual funds.

It is time to review your retirement nest egg and consider each investment. If there are significant losses in some of the investments then it makes no sense to sell them right now. But if you have some investments down around 10% it might be worth considering putting them into cash.

This will at least provide you with some income to hopefully ride out any further market turmoil without forcing you to sell those investments with large losses against them.

It may be best to look at the Fixed Interest/Income Investments first. Read the rest of this entry »

More and more US employees are borrowing against their 401(k). This is equivalent to a retirement nest egg funds suffering a stock market crash and could be the equivalent of committing Hari Kari with their nest egg. Taking funds out of the 401(k) depletes your retirement nest egg and is almost the same as the stock market suffered a major loss.

This is because that money is not in the 401(k) anymore helping the compounding of the capital over time. That $30,000 can no longer compound itself to help grow your funds. Only the $30,000 remaining is now working for you.

It breaks Rule #1: Avoid Large Losses (in retirement) but in this case while working.

Okay I know you have the money in another account to pay for whatever you borrowed the money for. Unless you are re-investing it to get a return somewhere else you are spending it by definition. Make no mistake it will seriously affect your final nest egg amount. The National Center for Policy Analysis has done some work on this phenomenon and it is not a pretty picture.

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How does a Baby Boomer find a good financial planner? This is an important question and should not be taken lightly because you may have a relationship with them for 30 years or more. So you need to do your due diligence on anyone you select.

There are plenty of Internet articles on selecting a financial planner but many of them focus on the qualifications and longevity of the financial planner and are written by the financial planning industry themselves.

I believe you have to interview them as if you will be their employer which in fact you will be for those 30 years.

You also need to get away from thinking in terms of a local financial planner. If you find a local one who qualifies then that is great. But I think you need to look nationally for the best one you can find. Try some on this list as a start.

Wealth Manager List

Or look at the Top 100 Wealth Manger List

You need to meet and talk with them first and ask them all the routine questions and some awkward questions like the ones I listed in my

10 Questions Baby Boomers should ask their Financial Advisors Now!

You must not be embarrassed about putting them on the spot. This is your money and your life. Here is an example of my questions.

The planner wanted to charge me $2,800.00 to put a portfolio together for me and then on-going fees of about $7,000.00 a year for putting all my money in Index Funds. I wanted the fees justified for an Index Fund which supposedly did little trading. But I think this was the cruncher. Read the rest of this entry »

The Pension Research Council stated that Investment Advice is misleading and can be potentially harmful to investors. This is in their report “An Analysis of Investment Advice to Retirement Participants. They also talk about escalating annuities that protect us against large losses. Could this be the Holy Grail for Retirement Income?

At last I have found something that begins to make sense regarding a way to protect our nest eggs and avoid large losses in retirement. A report written by Zvi Bodie entitled “An Analysis of Investment Advice to Retirement Participants” gives a real insight into what we should be demanding of the financial planning industry.

Don’t let the title put you off - this is really valuable information and a “must read”. Here are the highlights, but I urge you to download the 27 page PDF report and read it thoroughly. Its only 13 pages of text as the rest is graphs and tables.

To all those Baby Boomers who responded to the Survey on Baby Boomers and their Retirement mentioned on a post on the blog The Survive and Thrive Boomers Guide and are not sure what steps to take next - read this Zvi Bodie’s Report. Take a copy with you to your next financial planners meeting and go through it with them.

Here are some of the highlights that should make you want to grab your free copy to discuss with your financial planner.

Zvi Bodie states: Read the rest of this entry »

Baby Boomers face financial uncertainty in retirement because the main source of money stops or is considerably reduced. Not only does this affect our pocket it also affects us psychologically.

Whether this is a positive or a negative depends on how we handle it. If we chose not to take control then we will be at the whim of the market and its henchmen - the wealth management industry that needs our money to sustain itself.

Unless you can find a financial planner who understands the difference between accumulating a nest egg and distributing one you will have to come up with your own strategy to protect your nest egg in retirement.

You can be one of the few that takes control and directs your financial planner to set up an investment strategy you are comfortable with, protects you against large losses, minimizes fees and let’s you sleep at night.

The hand-drawn model below is meant to be a draft model of how we might set up our retirement income so that we are buffered from the day to day market volatility and able to draw a regular income. It is not meant to be all-encompassing. My aim here is to show a possible strategy for handling financial uncertainty in retirement.

My Three Bucket Retirement Income Strategy Model #1

How does it work? Read the rest of this entry »