“Hang on, pops! You'll be returning to work – if you know what's good for you.” (Photo Credit: CC BY-SA/Sean Fornelli/Flickr)

Some people look forward to retirement at 65 as the time when they’ll finally be able to focus entirely upon the things they want to do. However, retiring at age 65 may be a thing of the past, suggests the Los Angeles Times. According to geriatrician Dr. Katherine Schlaerth of the USC School of Medicine, the U.S. retirement age may even be unhealthy.

Working longer for your health

Intellectually and physically, Schlaerth has found that her retirement-age patients who worked later into life were more healthy. Retirees who had suffered from high blood pressure, memory lapses and other ailments improved dramatically upon returning to work. They lost weight, experienced much less hypertension and avoided the kinds of depression that prey on idle minds. And considering the current U.S. economic landscape, returning to work was also a welcome financial boost for many of her patients.

Research suggests that the decline in physical and mental activity that often comes after retirement place great burdens upon a retiree’s health. A 2007 study of British civil servants corroborates this, as the risk for cognitive decline increased after for subjects after retirement. A more recent study by the Rand Corp. and the University of Michigan found that “men and women in countries where people worked longer did better on a test of cognitive skill involving memory than those in countries where early retirement was the norm,” writes Schlaerth.

Similarly, an Israeli study of septuagenarian workers found that the activity involved in the completion of daily work duties kept people healthy and increased individual feelings of independence and satisfaction.

The troubles with Social Security have paved the way

As Social Security slides toward complete collapse – and more people are taking it early – younger workers are looking toward a future where the retirement age will be significantly higher. Those who receive Social Security today grew up in a time when families averaged four children, while post-1960s families have averaged two. This means that there will be fewer worker contributions to the pool over time, which in turn will contribute to Social Security’s decline.

Where the septuagenarians are

According to RetirementJobs.com, employees 50 and older tend to cluster in the following industries:

1. Airlines (American Airlines is the top employer)
2. Utilities
3. Insurance
4. Retail
5. Chemicals
6. Aerospace
7. Packaging and containers
8. Forest and paper products
9. Food production
10. Beverages

Sources

Los Angeles Times

RetirementJobs.com

Retirees: Back to work, back to school

More than half of Americans have insufficient amounts saved for retirement. Photo Credit: Miki Yoshihito/Flickr.com/CC-BY

The number of people who feel financially confident about entering retirement are an increasingly small portion of the population. Falling real estate values and a volatile stock market have made soon-to-be retirees fairly nervous. To make matters worse, energy prices could be due for a large increase, and politicians may be gunning for Social Security.

Survey indicates most don’t save enough for retirement

The Employee Benefit Research Institute recently released a survey that found about 50 percent of the people who were surveyed did not feel confident about their finances after retirement, according to USA Today. In the survey, 33 percent said they were “not too confident” and 27 percent they were not confident at all. The survey also found that 56 percent of subjects had less than $25,000 saved or invested for their retirement, not including their homes. And 29 percent had less than $1,000 set aside for retirement. The survey also found that 74 percent of workers planned to find other work post retirement, and 22 percent said they have major debts.

Traditional bedrocks of retirement not so solid

One of the traditional foundations of a solid retirement plan is real estate. Some people finish paying off their homes before retirement and thus don’t have to worry about paying for housing. Homeowners also have the option of pocketing the cash from selling their homes. However, home values have fallen 31 percent since the pre-recession peak, according to CNN. Since it is also being predicted that real estate values will fall again, or “double dip,” people staring down the barrel of impending retirement are not likely to realize nearly as much of a profit from the sale of their homes as they planned. Since very few people ever pay off a mortgage in full, the profit realized from the sale of a home is likely to be very modest in the current market.

Social Security could be in Congressional sights

The climate in Washington D.C. is currently favors cutting spending. The largest single budget item, Social Security, ran a deficit last year for the first time in more than two decades, according to MSNBC and will need an overhaul before it depletes all the surplus cash in the Social Security trust fund in 2037. There is a lot of speculation that the Social Security Administration is going to experience major cuts, especially in benefits, in the near future as the Baby Boomers will put further strain on the national pension plan. Few workers enjoy a traditional pension, or defined benefits pension plan that lasts for life upon retirement. Only 33 percent of private sector workers had that luxury in 2005, according to Forbes. As Social Security becomes less dependable and investments like real estate become less valuable, retirement may soon become a luxury reserved only for the wealthy.

Sources

USA Today

CNN

MSNBC

Forbes

Having a Roth IRA can give your retirement fund teeth. (Photo Credit: ThinkStock)

Retirement planning is a frustrating yet necessary process, especially with the precarious position of Social Security. Here are the top five reasons a Roth IRA retirement account is for you, courtesy of Smart Money.

Make tax-free withdrawals upon retirement with a Roth IRA

A Roth IRA enables you to put your contributions in after taxes. Thus, it is unnecessary for you to pay taxes on that money once it is withdrawn upon your retirement. More money is always helpful. Payday loans are fine in a pinch, but they don’t constitute a retirement plan.

Social Security won’t enable you to maintain your standard of living

You’ve heard the debates over whether Social Security will actually continue to exist forever. But let’s assume that it sticks around, and you believe it will cover you post-retirement. The government hasn’t let you down before, right?

Wrong. It’s all too common to read something like this on a Social Security statement: “You can retire on the princely sum of $2,000 per month. You may already be a $24,000 winner!”

Roth IRA beats 401k mutual funds

A 401k retirement account gives a retiree the option of choosing from one of two different types of mutual funds. That is very limiting. With a Roth IRA, you have a greater ability to manage your retirement funds.

Flexibility is always nice

Smart Money points out that Roth IRAs give the retiree a great amount of flexibility when it comes to managing their funds. Contributions can be withdrawn without establishing a compelling cause. Furthermore, a Roth IRA can be used to save for a child’s education. There are other benefits to being flexible, too. Check with your financial adviser.

Diversity in numbers

Putting all your eggs in one basket is never a good idea, and this old saying holds true with your next egg. Some people look to both a Roth IRA and a traditional IRA or 401k in order to more readily absorb the bumps and bruises of fluctuating tax rates. It’s a sound strategy that anyone concerned about retirement should discuss with a financial adviser. Be prepared and minimize your need for short term loans.

Sources:

Smart Money

Roth IRA basics

Wikipedia entry on mutual funds

When former news anchors hawk IRAs

The changing economy and investments

The result of failing credit is people want to put away cash. A recent Gallop poll showed that over 60% of Americans are more focused on saving than spending. That means that people are listening to the news about retirement funds and taking matters into their own hands. Social Security is expected to be gone in upcoming years and people will have to be prepared with their own cash reserves to manage through retirement. Though it is difficult, there are reasonable ways to save, but consumers are cautioned to be aware of things that could eat away at their hard-earned savings. Here are some things to watch for as the economy still shifts to regulate itself.

Federal income taxes

Everyone who has retirement accounts needs to know how funds will be taxed once they tap into the money. Changing rules can quickly diminish savings and leave consumers with considerably less money than they had anticipated. For any consumer who has 401k, SEP plans or IRAs, they need to be aware of the tax ramifications. Experts caution that consumers should consider putting money into tax-free vehicles like Roth IRAs and Roth 401k accounts. Tax-exempt bonds or capital assets like stocks, mutual funds and real estate are also good options that hold up well to any changes in the federal tax rate.

Changing interest rates

Another issue consumers need to be aware of is a change in interest rate. For example, if consumers look at the average CD interest rate, it is considerably lower than it was a few years ago. The interest rate on a year-long CD barely reaches 1%, while in 2002 the rate was at 6%. Consumers need to be aware of how anticipated funds can be much lower if the interest rate continues to fluctuate. CD laddering is one way to mitigate losses due to interest rates. This method will generate higher income from long-term interest rates and reduce losses of short-term changes in the market.

Pensions are reduced

Payday cash is not the only inflow of funds consumers need to be aware of throughout their lifetimes. There is also the pension to worry about. For example, a few years ago United Airlines filed for Chapter 11 bankruptcy. Though workers’ overall pensions were insured, that didn’t mean that some had to take considerable hits to the amount. One pilot who worked for United Airlines took a $7,200 a year cut in his pension without notice as a result of the company’s restructure. Retired consumers need to be aware of how their former employer’s changes can affect their payout. It’s a hard lesson to learn, but the key is to be prepared for it with additional cash reserves if it does happen.

The future of investing

Consumers are being warned by experts to change their way of viewing retirement funds. Although a worker can pay into funds for the duration of their working years, that no longer means the money will remain stable. Market fluctuations, changes in interest rate and changes in taxation all can affect funds. The best thing for consumers to do is to be aware of the potential changes and either move money to different savings vehicles or compensate in other ways for the losses. Payday cash should be a high priority for consumers today, but so should their retirement plan. Experts are warning people to be vigilant about what could happen in the future. The recession taught people a hard lesson on how investments’ values can change quickly in a volatile market.

Saving habits have changed

Studies are showing that the economic downturn changed consumers’ savings habits. The hefty unemployment rate and the lack of credit options worked together to create a difficult situation for consumers. Adding to that problem were the mortgage issues and the suspension of corporate 401k matches. Combined, all these things caused Americans to have to tap into savings and that move left them with diminished nest eggs for the future.

The result of a decline in savings

The decline in savings is set to make some serious changes in the future of Americans. First of all, without a nest egg squared away, many people are already accepting the need to postpone retirement. No longer are workers looking to exit the workforce in their mid-60s. In today’s world, they are looking for a much longer work-life that extends well into their 70s. A growing number of Americans say they will continue in the workforce for as long as they are able.

What seems to be changing as the years go by is less Americans are focusing on saving and more are focusing on getting by. Experts attribute the change in focus to the credit lending crash of the recession. Prior to the recession, many people relied on credit for emergency bills and monthly expenses. Lenders extended unwarranted credit to sub-prime borrowers and handed out millions in funds to consumers who had little ability to realistically repay the money. When the recession began, lenders quickly shifted their priorities to mitigate loss, rather than extend more credit. That mitigation meant increasing interest rates to unmanageable levels, cutting limits and tacking on fees. Lenders were focused on maximizing their income due to the huge number of defaulted loans. Increasing the cost of credit only caused more consumers to fall into trouble.

Consumers focus on debt

Saving cash now is a priority, but many Americans are just getting back on their feet financially after suffering huge losses as a result of the recession. Surveys are showing that most money is still going to paying down debt. Consumers see the problems debt can create and are suffering through heightened interest rates. They understand the cost of credit and are trying to get rid of it as quickly as possible.

Retirement in the future

Experts say that retirement savings, including Social Security benefits and pensions, should add up to 80% of pre-retirement income. They tell customers that making that 80% goal is not difficult. In general, most consumers can meet the goal with a strict rule to save 7-10% of their monthly payday cash now. Though budgets are stretched, most Americans can reasonably find the money to save. Most savings goals for retirement can be reached if people understand how to manage time and budgeting.

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Some people worry that retirement will be boring

Today, lots of people over age 60 are saying they’ll never be able to retire. Lots, however, is one thing; seventy-two percent is quite another. According to a new survey conducted by CareerBuilder, 72% percent of workers over age 60 are now delaying retirement because they cannot afford it, and need more time to come up with a cash advance towards their own retirement.

Pessimism is on the rise

The 72% figure is significant increase over survey the results from CareerBuilder’s survey on the same subject last year. According to last year’s survey, 60% of retirement-aged workers were postponing retirement due to economic conditions. They may not be candidates for debt settlement relief, but older workers are worrying about money now.

Women have more to worry about

The new survey, which included more than 700 U.S. workers age 60 and older, was conducted between November 5 and November 23, 2009, showed that pessimism about retirement is higher among women than men. Seventy-six percent of women and 64% of men surveyed said they were not financially secure enough to stop working.

According to Tom Warschauer, a finance professor at San Diego State University, who was recently interviewed by CNNMoney.com, Women may have good reason to be more worried about retirement than men are. “Women live 4 to 5 years longer than men on average,” Warschauer said. “If men and women save the same amount, women would be less prepared.”

Pessimism is only one reason for putting off retirement

Clearly, people of retirement age are worried about the economy and afraid to leave their employers, although may of the workers who said they are not ready to retire cited additional reasons. Seventy-one percent said they enjoy their jobs and don’t want to leave them. Other reasons for continuing to work included the continued need for health insurance and other employer benefits (50%); the fear that retirement may be boring (24%); and the desire to feel needed (15%).

There’s some good news, too

According to the survey many employers are happy to keep experienced retirement-age workers onboard. Twenty-seven percent of hiring managers surveyed reported that they been approached by workers within the last year about continuing their employment beyond retirement age and were amenable to retaining them.

Put off retirement, don’t put off talking about it

Jason Ferrara, senior career adviser at CareerBuilder, advises retirement-age employees who do not wish to retire to speak up. Experienced and mature workers have much to offers employers in the way of intellectual and training abilities. “The key,” Ferrara says, “is to let your employer know sooner [rather] than later that you would like to put off your plans to leave.”

Job tenures have gotten shorter

Saving up emergency money for retirement can be considerably harder for consumers who job hop throughout their careers. According to a new study done by the Employee Benefit Research Institute, the median job residence was 5.1 years in 2008. That’s a startling fact considering that ten years prior it was over 15 years. The signs are showing that consumers are making more moves during their career, but it could be costing them in later years. Many pensions and long-term benefits are calculated based on the number of years an employee stays with a company. Job hoppers tend to move in and out of different retirement plans and cash out small 401k amounts when they change jobs. This can greatly diminish their retirement account balances when they exit the job market.

Craig Copeland, author of the study, (see http://www.usnews.com/money/blogs/planning-to-retire/2010/1/15/why-job-hopping-makes-you-worse-off-in-retirement.html) said, “Since defined benefit pensions that are final-average plans have a formula based on tenure and average salary, workers who frequently change jobs will not receive the maximum benefit from this type of retirement plan because they do not remain with their same employer for an extended period. In fact, short-tenure workers with less than five years in a job may not qualify for any pension benefit at all.”

Does it make sense to job hop

In today’s economy it’s a difficult call whether or not to job hop, but cutting down on retirement savings is another reason to stay put. Some 401k plans provide a good investment option or charge lower fees than others to convert. Plans vary widely though among employers and short-term employment. For example, only 37% of 401k plans offered immediate vesting in 2008, according to a Profit Sharing survey of almost 1,000 plans. That means employees got to keep their employer’s match as soon as it was deposited. The other plans had a stipulation tacked on requiring employees to stick with the company a certain amount of years before they were allowed to keep the matched deposits. With consumers so focused on emergency money funds and their retirement, that makes a big difference in the decision to leave a position or stay.

The study also showed

The study also showed that public sector workers job hopped considerably less often than private sector job holders. The median private sector worker stayed with a job for four years, while a public sector worker stayed for over seven. About 11% of all workers have been at their jobs for over 20 years. It’s telling that older workers stay longer, while younger workers tend to move more often. Copeland said, “It is part of the ‘now generation.’ Older workers were willing to put up with more, but many in the end benefit more for sticking it out. Today’s worker is much more impatient.” The days of instant gratification are upon us and the survey showed that more and more employees are ready to leave when signs of discomfort come along.

Thinking about a job move

Emergency money is never easy to find and in today’s economy, it is even harder to hone in on. The best advice a worker can heed is to look at more than a mild job issue to set them looking elsewhere for employment. It could mean the end of a paycheck and having a more difficult time in retirement due to lost savings.

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Changing model of retirees

Borrowing money, using savings and family’s financial aid may be necessary for senior citizens moving into retirement homes. Gone are the days of retiring in the comfort of a luxury facility overlooking golf courses and close to shopping malls. In today’s post-recessionary economy, nursing home operators and states are rethinking their decisions. According to home builder Del Webb a new survey is showing that Arizona, Florida, South and North Carolina are where aging baby boomers will be heading.

A new study on retirement

In the past, moving to a warm climate was the priority for those looking to retire but now the concern is primarily financial. The number one fear for seniors is maintaining their cost of living and that is opening the door for more states to attract the retired public. The Del Webb study showed that about 35% plan to move to a new home when they retire and about half plan to relocate to a different state. Samuel Ford, economist for Economy.com, said, “People going into retirement now, or in coming years, have gone through the worst recession since the 40s. Their nest eggs and retirement funds are tapped out or stretched at minimum, and that is causing them to rethink their retirement plan as a whole.”

What retirees want now

For consumers who want to relocate, there are also specific needs. According to a survey conducted by the National Association of Home Builders, those who are fifty-five years and older want the following in a home:

• Maximum storage space
• In-unit washer and dryers
• Easy-open windows
• Garage door openers
• Porches and private patios
• Large bathrooms
• Attached garages

In lieu of these things, they are giving up island work areas, wood burning fireplaces, exercise rooms and separate showers. Hi-tech additions are also no longer a priority. Rose Quint, the NAHB VP for study research, (see http://www.nj.com/business/index.ssf/2010/01/seniors_rethink_their_dream_ho.html) said, “The older buyers are frugal, probably on a fixed income and so expensive tech items are not that big on their lists…Retiring consumers don’t want to rely on borrowing money from families or personal loans to make their monthly budgets. The stress to them isn’t worth it.”

More care included in the home purchase

Another interesting result of the survey is that retiring homeowners want services added to their purchase. John Migliaccio, director of research at MetLife’s Mature Market Institute, said, “Very telling is that the younger group of mature consumers reported enthusiastically that they want services like home maintenance and repair as part of their next home purchase, along with services usually connected to older householders like housekeeping, onsite health care and transportation.” The group also wanted a larger variety of activities and social interaction built into their retirement communities.

Retirement in the future

Overall retirement is changing due to the economic recession. Though it is over, it has left millions of Americans with depleted savings and now they are looking for more cost-efficient areas and situations to retire in. Rather than borrowing money and relying on family help, the baby boomers are opting for cutbacks in retirement. It is telling of how the economy changed public perception and how as a whole society is remembering well the financial difficulties of the market.

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Consumers are using cash advance loans because their 401(k) accounts are being handled by their employers. A new study is showing that there is a new trend in the world of retirement accounts. Barclays PLC’s Barclays Global Investors are now telling employers to automatically build savings for their workers by putting 8% of their pay into a retirement account. T. Rowe Price Group has been moving workers retirement funds into target-date retirement funds, even if the worker previously opted out. Prudential Financial Inc. announced plans to persuade companies to prohibit their workers from borrowing from their individual retirement savings accounts.

Changes like this are making it more difficult for workers to take out money if they need it. A lot of consumers are saving for their futures, but also think of their 401(k) as an “emergency fund” that is there if they need it. There are penalties, but it is still money available. Many of the new laws regarding retirement savings are changing that.

Employers are getting more aggressive with IRAs

The move for employers to become stricter with retirement money is a new wave in the industry. Many companies already restrict their employees’ retirement funds and automatically enroll workers into a 401(k) plan. The worker can opt out of course, but traditionally, they don’t. This new method of employer control is not unlike a defined-benefit pension plan. There is one key difference, however. With the forced 401(k) rules, the individual employee has to bear the brunt of any investment risk.

Fund firms and retirement plan providers are looking at savings from a more controlled perspective. Studies have shown that people historically are not good with their retirement money. Some employees invest far too little, while others invest too aggressively. Straight across the board, employees don’t save enough. This has the ability to bring about a crisis in years to come. Now that Social Security is projected to be tapped out by 2016, consumers need to be ready to take charge of their own retirement funding. Without the necessary savings, it will be impossible for many hard-working people to survive. Without savings, consumers could be left to rely on cash advance loans, short term loans, or families for making it through financial difficulties.

The risk for workers dealing with aggressive employers

There is risk for employees who have to deal with aggressive companies managing their retirement funding. When employers are tasked with making decisions regarding savings, they are left to move these funds towards target-date funds. Many target-date funds were crushed last year due to the recession and that alone brings up many concerns by financial experts as to their reliability when times are tough. Lawrence Kotlikoff, a Boston University economics professor, said, “Automatically putting a big chunk of workers’ pay in stock-heavy, relatively high-fee funds is a form of financial malpractice.” The move is causing employers to not only put larger chunks of worker’s paychecks into their 401(k) account, but also they are increasing the contributions each year.

Retirement no longer in consumers’ hands

So this leaves the future of workers up in the air. Sure they need to save money for retirement, but are employers the best ones to handle the saving plan? Though historically people have not saved nearly as much as they should, does that automatically mean employers should police peoples’ accounts? Or should people be left to manage their own money? These and many other questions are being explored by the Senate Committee on Aging. The organization plans on examining risks, fees and potential conflicts of interest in retirement funds. Until a clear cut solution is found, employees may need to rely on other forms of savings, such as credit cards, cash advance loans and family aid to make it through their retirement years.

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Many people looking for fast cash converted their IRAs into Roth IRAs. The move may have been a quick one and now some consumers are rethinking the decision. The value of a Roth IRA can be considerably lower than its former value due to the conversion and the taxes that can eat away at any savings. The reason for the high taxation is because consumers have to pay taxes on the full value of the amount converted. This is because contributions to a traditional IRA are on a tax-deductible basis, whereas Roth IRAs are made on an after-tax basis.

There are three reasons why consumers choose to reverse the conversion:

1. The value of the Roth IRA is substantially lower due to the change
2. The consumer wasn’t eligible for conversion, but did it anyway
3. The consumer needs the money spent on taxes

The decision to converting back to a traditional IRA

It is possible to convert back to a traditional IRA, but consumers are warned to do it quickly. The first step is to make sure undoing the decision is the right one. Consumers who lost money due to the recession should make the change back if the losses were significant. A loss of a few hundred dollars most likely isn’t enough to turn back, but a few tens of thousands can warrant the change. For example, if an account holder converted a traditional IRA worth $100,000 with conversion cost at $20,000, then filing an amended return would add up to $5,000 for someone in the 25% tax bracket. That is a large enough loss to warrant a return to the old fund.

Talking to the IRA custodian

Talking to the IRA custodian is very important when it comes to converting back to a traditional IRA. Normally the custodian will be either a bank or a brokerage house. Customer service should be able to guide the account holder through the process and contribute the money back to the IRA. To make the conversion, consumers need:

• The account number
• Date of the first conversion
• Amount of investment gains

When converting back to a traditional IRA, there isn’t a lot of fast cash to be had. The transaction is beneficial for the future, but not necessarily an immediate gain.

Amended tax returns

A conversion of the IRA includes filing Form 8606 with an amended tax return. The custodian of the account should provide two Form 5498s and each will prove the amount of the conversion and the amount of re-characterization. The amended return must be filed by October 15th of the tax year in which the conversion occurs. The amended return, or 1040X, will also show how much a consumer paid as a result of the initial conversion and how much interest the IRS owes them on taxes already paid.

The IRA

Overall, the IRA is a safe savings tool that has helped millions of Americans to amass wealth tax-free. The conversion possibility was introduced and many people jumped to change their IRA to a Roth IRA before thinking the decision out. It may benefit some consumers, but it isn’t always a way to fast cash. That’s why so many people are opting to revert back to the tradition savings vehicle.

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Managing retirement cash now that layoffs are common can be tricky. Being laid off is not an employee’s fault. The economy is creating more and more issues for businesses and often the only option is to let go of good employees when finances get too tight. If you are laid off, there are some ways you can protect your retirement assets. It’s important to take the necessary steps to safeguard savings.

Cashing out

Many workers choose to cash out when they are laid off. Though this may be an immediate solution, it isn’t always the right decision. Cashing out is expensive and involves taking on a big tax liability. The reasoning is different for a consumer, though. They believe that taking a small unemployment check combined with a long period of job searching is just too much to deal with. In today’s market, the average unemployed American has been looking for work for 14 to 17 months. That’s a long time and many consumers are considering taking as much emergency money as they can upfront to make it through as many months of bills as they can.

If you are laid off and are considering cashing out, remember that you will be penalized. You may have a good chunk of money to make it through the time of unemployment, but your retirement savings will be gone. There are some other options to consider before cashing out.

Evaluate the other options

If your company downsizes and lays you off, there are normally three things to do with your retirement money:

1. You can leave it in the existing account
2. You can take the lump-sum
3. You can transfer the money to another retirement account

If you choose to stay with your existing play, it normally means your balance is over $5,000. This is the best way to avoid taxes and continue compounding interest without interruption. You won’t be able to contribute to the plan, but you still have a say in how the money is invested. The good news is that keeping it live means that you keep reaping the benefits of what cash now is saved.

The other option is to cash out the retirement account. Though this may seem like a good idea to have some cash to fall back on, it isn’t always the best long-term option due to the repercussions. There is a 20% withholding on the pre-tax contributions and earnings portion of the eligible rollover distribution. The rollover distribution is what the plan has to pay the IRS to cover the federal taxes. There is also a 10% withdrawal penalty for the cash out.

Finally, there is the roll-over option. You can move your retirement plan to another account using a “direct” or “indirect” rollover. With the direct rollover, the money goes directly from the current employer’s retirement plan to the new one. With the indirect rollover, you’ll get the cash distribution, less a 20% withholding fee, but you have to redeposit the qualified plan assets to another IRA within a 60-day time period. When the money is invested into the new IRA, you’ll have to replace the 20% withholding with an out-of-pocket deposit.

Decide what is best

Managing cash now is difficult, but when you add a lay-off to the mix, it can be twice as hard. There are options with retirement funds and each one comes with strict rules. Be sure to assess your individual situation and decide which option is best for you.

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Managing personal loans, mortgages and finances for aging parents can be difficult. For your entire childhood and young adulthood your parents managed their own finances. They made payments and grew investments on their own. Now they are aging and showing signs of needing help. Despite the difficulty of facing the responsibility of taking over for parents, it is necessary to be aware of their situation and know how to help.

Money management for aging parents

So what are the priorities when it comes to managing finances for aging parents? The biggest hurdle is to bring up the situation tactfully. Once that is done, then it’s time to get down to business and get everything in order. Here are some tips to handling money management for aging parents:

• Get the financial paperwork together. The first thing to do is get all paperwork together. You want to find out where your parents keep their wills, bank statements, investment paperwork and any other revenue documents. If they are scattered around, now is a good time to help parents organize and keep everything in one place.
• Organize other paperwork. You also want to have birth certificates, marriage certificates and general paperwork together. It should be kept in the right place for easy access in an emergency. This location should also include dissolution certificates, Social Security and military service records.
• Ask questions. A lot of parents make financial decisions without consulting their adult children. They could have investments and accounts that you have never heard about. For their own protection, it’s wise to at least know about the extra accounts and how to manage them if your parents can’t.
• Safety deposit boxes. Safety deposit boxes were more commonly used by older consumers than younger ones. It’s important to know where the keys are for access and to be listed as having approved access with the bank. Most banks won’t let someone with only the key into the box. You’ll have to be included on their list of approved visitors to gain access.

These are the first steps to gaining a handle on your parent’s finances.

Other issues to be aware of

Aging parents who are still capable of taking care of their finances may just need a little help, rather than a swooping takeover. For parents who are able to manage, their personal loans, mortgages, investments and day-to-day banking needs, there are some valuable questions to ask:

• Are they paying bills on time? If not, automatic bill pay can be a great way to avoid late fees.
• Are they using medications? Consider having medications delivered to the house so that parents don’t have to remember to go to the store and get them filled.
• Is their house safe? Do a walk-thru and make sure that carpets are bolted down for safety, handrails are installed and solid, and there are grab bars and nonslip shower strips.
• Check the perimeter of the house, too. Make sure the perimeter of the house is cleared of debris they may fall over. Make sure bushes are trimmed and out of the way and landscaping is clear and easy to maneuver through.

Planning for the future

It’s never easy to bring up the topic, but aging parents need to be prepared financially for the future. Talk to parents early and make sure there is a good amount of communication going on so that when you do have to step in, you’ll be prepared. Personal loans, mortgage loans, paperwork and investments can be difficult to manage if they aren’t organized. Take some time now to help aging parents streamline their finances now, so the future will be that much easier to manage.

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Wise moves made today will pay off tomorrow

Consumers may need personal loans to manage through retirement if they aren’t careful with their 401(k) accounts. A 401(k) account allows a working person to save for retirement, invest the savings and defer taxes until after retirement when, in most cases, the account holder’s income will be subject to a lower income tax rate.

To make contributions to the fund, an investor opts to have a portion of his or her paycheck paid directly into the 401k account. Many employers offer the additional benefit of matching an employee’s contributions by depositing additional money or by making profit-sharing contributions to the plan. Regardless of the added benefits, the basic 401(k) account is a simple and effective way for an employee to squirrel away money for retirement.

The downside of 401(k) investing

Although the idea is a good one, there are certain things a 401(k) provider doesn’t usually tell its depositors. Here are some of the most important things to know:

1.  Investment companies make big money on 401(k) accounts, even when account holders do not. The number of 401(k) investors has risen sharply in the past few years. According to Cerulli Associates, a research and consulting firm specializing in the financial services industry, that number has risen to 50 million providers. Though the companies are more and more efficient as a result of the increased competition, that doesn’t necessarily mean account holders see the financial benefit.

2.  The 401(k) account rarely offers top funds. The reason for this is simply that asset managers may not have top funds in each category. For example, a company may offer a great large-cap stock fund option but a mediocre small-cap one. In a recent Yahoo Finance article, Morningstar research director Russel Kinnel said, “If you see some lousy funds from the company that’s providing the plan, that’s probably why.”

3.  “Target-date funds” may not be accurate. As required by last year’s Pension Protection Act, 401(k) accounts have “target dates” as default options. Each 401(k) account allocates assets according to the account holder’s expected retirement date and becomes more conservative as the date nears. Research shows that some target-date funds may not earn enough for retirement. Kinnel added, “Retirees may need to supplement funds with personal loans, family help or part-time work to make it through their monthly expenses.”

4.  Account holders who quit their jobs may have to pay to keep their 401(k) at the former-employer company. A Hewitt study showed that 32% of people who quit their jobs ended up leaving their 401(k) accounts with their old employers. Leaving the account where it is may seem like an easier option than filing the intensive paperwork required for a transfer, but the hidden costs of doing so can be overwhelming.

5.  Roth IRAs may be more beneficial than 401(k) plans, although few employers offer them. Whereas traditional 401(k) accounts have tax-deferment features, Roth IRAs are taxed up-front rather than at the time of withdrawal. Only about 5% of retirement plans available through employers offer the Roth IRA option. The Roth IRA isn’t for everyone, but it can substantially benefit certain categories of employees.

Other savings may create more wealth

Other kinds of savings may create more wealth than retirement accounts. The 401(k) continues to be a work in progress and lawmakers are currently scrutinizing fees and procedures. Until the rules are finally settled, other savings vehicles may offer higher returns. In the same Yahoo Finance article, Brent Glading of the Glading Group said, “For those who are not averse to risk, high-end stocks and bonds can be great investments that offer a bigger return in a shorter amount of time…they aren’t for the faint of heart though. Only serious investors with a stable vision should even try to manage them.”

The 401(k) put to the test

The 401k account is a unique savings vehicle that offers a tax-deferred way to save money for retirement. Though many employees are relying on the accounts to carry them through their retirement years, analysts say that many account holders are not saving enough. They may need to rely on family help, personal loans or other types of savings to make it through retirement.

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Managing cash today wisely, can mean a secure retirement in the future. It’s difficult to get on a consistent plan to save for retirement, especially in today’s market. That does not mean it’s impossible or that consumers should forgo it for other priorities. The biggest catch with saving for retirement is to plan. Like the old adage, “Nobody plans to fail, but plenty of people fail to plan,” so retirement requires proactive preparation.

A crucial piece of the picture

The number one most important tool when it comes to planning for retirement is saving. Though it sounds mundane and simple, more and more Americans are having a difficult time with it. New studies are showing that 26% of Americans opt out of their employer’s retirement savings vehicles. The overwhelming reason for it is that they don’t have enough money to make ends meet now. Although it may be difficult in a depressed economy to stay strong and keep contributing to retirement accounts, it’s an integral part of creating a secure retirement future.

The great thing about saving is that many employers offer 401(k) matching. Although some companies cut their contributions when the recession was at it’s worst, they are now beginning to offer matching programs again. In addition, employees can set up automatic contributions to their IRAs. It’s best to make it an effortless activity that leaves no room for excuses.

Invest aggressively

Studies have shown that most returns on investments are dictated by asset-allocations. For anyone looking to earn quickly, CDs or other fixed-income investments probably aren’t aggressive enough to bring in huge returns. Add to that the fact that inflation can eliminate a big chunk of savings from these types of investments, and it’s difficult to save. Consumers should talk to investment specialists and diversify their investments. More aggressive tools will fluctuate over their lifetimes, but show higher returns in the long run.

Cut back on spending

For anyone wanting to save cash today, cutting back on spending is important. To maximize savings, spending has to be curbed. Good software programs like Microsoft Money or Quicken can help to manage money. Many people are surprised at the spending habits that can be revealed by a computer program that itemizes and categorizes expenditures.   The best thing to do is to create a budget and stick to it. Tracking income and expenses is an integral part of making a budget work.

Time is a valuable asset

The most valuable asset young people have have is time. They should start saving early and saving as much as possible. Compounding is a great tool but it needs a wide window of time to work. Anyone looking for a secure retirement should start investing immediately and effectively.

For those who are already well into their employment years and have not yet begun to save, now is the only time to get started. People should set their goals and either talk to a financial planner or start off with good software programs that can spell out their financial futures. Set goals and figure out exactly how much needs to be saved consistently in order to attain them.

Stick to a savings plan

Saving cash today is crucial for consumers wanting secure retirements. Although it may be difficult because of market fluctuations, it is not impossible. There are things every person can do to keep on contributing to retirement accounts and every person should be proactive in trying to find them. It may be as simple as cutting back on spending, getting serious about a budget or being more aggressive about investing, but in the end it will pay off. Consumers who are able to take relaxing, stress-free retirements, will be thankful they created and then stuck to their savings plans.

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Most people don’t. With more and more Americans retiring early in order to pursue other careers or small business opportunities, this question is being investigated more than ever. Myths abound, which lead people to believe that they must immediately roll all of their retirement savings into a single IRA account or, at least, cash out of their 401k plan all at once. This, of course, is not true, but without the benefit of good wealth education, few people actually know what their retirement plan options are.

Consider the following suggestions:

Suggestion Number One

If you were born before 1936 and have participated in your 401k for at least five years, it is possible that you qualify for an excellent tax strategy commonly referred to as a ten-year averaging. Such requires that you first withdraw your entire retirement savings at once. Upon doing so, you will figure your taxes on this amount by dividing the total by ten and then adding an additional $2,480 to the sum. Next, research the 1986 rate for single taxpayers and multiply that amount by ten. The resulting figure tells you how much you owe in taxes for your withdrawal using this option. If your 401k value is less than $400,000 in total, you may find that you can save a lot on taxes by using this ten-year averaging calculation.

Two things to note if you plan on using this strategy: First, the IRS will only allow you to use it once and, second, you can’t roll over part of your 401k and use ten-year averaging on the remaining amount. However, the benefit to using this strategy on your complete withdrawal is that taxes were a lot less in 1986 than they are now and using the rate for single taxpayers from that year will offer you far more savings.

Suggestion Number Two

Some companies allow retirees to leave some or all of their money in an existing 401k plan. Find out your company’s policy on doing so if you believe this will be of benefit to you.

Suggestion Number Three

Roll your money over into one or more IRA accounts. You can do this an unlimited number of times in as many IRAs as you like. Take the time to investigate this option on your own or with a qualified financial planner to determine if doing so fits your retirement needs. This might be an especially good idea if your company will allow you to leave some money in your 401k and roll over just a portion of the rest.

Suggestion Number Four

People who will be fifty-five years or older in the year that they retire may also consider cashing out of their 401k all at once or in part without penalties. Of course, ordinary taxes will be due on distributions, but, depending upon how much is in your account, this may be a smart option.

While these suggestions are meant to give you guidance on what to do with your 401k account when you retire, they should not be used in lieu of or to substitute the advice of a qualified professional. Also, do keep in mind that senior citizens age seventy and six months are required by law to begin taking money from all retirement accounts at this time. The only exception to this is money in a Roth IRA or if money is in a 401k with a company that still employs the person, provided that the employee does not own more than five percent of the company in question.

Start planning for retirement early.

A new study showed that older Americans are using installment loans to make ends meet. The retirement age of 65 is not a reality for a large group of citizens. Bad planning is the number one reason retirement plans don’t work. Next is failing to plan for emergency expenses and long-term care. Here are some steps everyone should take to plan for a comfortable retirement.

The pension is number one

The first thing to understand is where your money is going to be coming from after retirement. When you quit your job to head into your golden years, your company most likely will ask you if you want your money in one chunk or in payments over the years.

Robert Doyle, CPA with Spoor, Doyle and Associates, said, “Annuity payments are steady, which is a positive, and they last a lifetime, but you don’t know where you are going to be in 15 years down the road. You may have a catastrophic need, and a $500-a-month annuity payment isn’t going to help you if you have a $20,000 emergency medical bill. If you take a lump sum, you are in the driver’s seat.”

Seek professional help

It’s important to talk to a tax professional when you are on the verge of retirement to understand the rules you need to follow to best utilize your pension money. For example, it’s imperative that your pension plan deposits a lump sum into an IRA or you will end up owing a 20 percent withholding tax. Taking a lump sum also can end any additional health care coverage you may have had with the company.

Check out payment options

If you do choose to let your pension plan pay out in payments, remember that there are many options. Do you have a spouse? You can opt to take smaller payments now so your payments continue after your death and go to your spouse. On the other hand, you can opt to take the higher payments and just have them end when you die.

The caution here is that when payments are transferred to a spouse, they could be severed down 50 percent by your provider. Again, be sure to read the fine print and understand all the details of your payments. You want enough money so you or your spouse can count on payments, rather than have to rely on savings, installment loans or family for expenses.

Social security plans

Social security is up in the air these days. Most industry experts are predicting there won’t be much in terms of payments in years to come. For the sake of explanation, let’s assume it is around. Understanding your Social Security benefits are still a priority. The mistake too many people make is to retire too early.

Your Social Security payment is based on the average of your best 35 years of work. If you end your work years too soon, you are adding zero-income to your average. For example, if you earned $60,000 over your best 35 year analysis, your benefit would be computed at that number. On the other hand, if you cut five years off that and retire early, your Social Security would calculate 30 years of $60,000 and 5 years of zeroes. Those five years would bring your average down to about $51,000 and could limit your benefit substantially.

Retiring in peace

Everyone wants to retire in peace, but that takes some careful planning. If you have a good retirement plan, you can avoid having to rely on friends and family or rely on installment loans to get by. It may take some research and strategizing with professional tax experts and your accountant but when you are able to relax peacefully, you’ll be glad you planned wisely.

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Marriage can be romantic – but have you considered your financial plan?

If you go back a century or so, you’ll see how different marriage was than it is today. Recall the dowry? A dowry was the gift of money or property a woman had to bring to her husband in marriage. In essence the marriage was a financial exchange and the amount of the dowry told a man how much “value” his new bride had. Somewhere along the line marriage changed. Throughout the 20th century, people began marrying for love. Though that may sound romantic, it also brought about heightened divorce rates that skyrocketed throughout the later part of the century. People are getting wise to the potential deceptions of love and once again turning to the idea of a marriage being a business transaction.

Marriage is a Business

It may not sound romantic, but marriage is a business. There are a few things to be aware of these days when it comes to nuptials:

• How does each spouse feel about saving?
• How does each spouse feel about spending?
• Will there be a joint account or separate accounts?
• Will there be a house account in addition to separate accounts?
• How much should be given to charity?
• How much should be put into retirement?
• How much should be put into college funds?
• How much should be in the emergency fund? When should it be tapped into?

These are just some of the questions every couple on the verge of marriage needs to address. It’s imperative that there is some commonality in the answers, even if they don’t match. Can you live with a spouse who wants to save 12 percent of your paychecks when you want to save 10 percent? Probably. But if your spouse is accustomed to only saving three percent, you may have a problem.

The Prenuptial Agreement

Should you get a prenup or not? Granted, this is another “unromantic” issue, but if marriage is to be looked at as a business, it’s a necessary one to discuss. The trend today is for couples to wait until they’re older to wed. That means, in general, that there are more assets between each to distribute if the marriage doesn’t work out. Having a plan set in place before problems arise is the perfect idea for any couple. Remember that calm, rational and fair discussions between couples who are on the verge of breaking up are rarely had. Emotions fuel difficulties.

Preparing Your Financial Marriage Agreement

To prepare a financial marriage agreement, look at the following list:

1. Find out your financial starting point as a couple. As painful as it may be, pull up your credit reports and discuss them. Figure out a strategy to fix any problems and pay off debts.
2. Create a savings plan to reach financial goals. For example, if a couple wants to buy a starter home in three years, then they need to figure out how much to save starting now. A good financial calculator can estimate how much needs to be put away into savings.
3. Figure out who is going to be in charge of everyday finances. In every marriage there is one person who pays bills and expenses and oversees the monthly bills. Of course major decisions are done together, but there is no reason for both partners to pay the electricity bill together.
4. Learn to work out conflicts with finances. Inevitably there will be issues that arise that create differing opinions. Be committed to listening and compromising when it comes to money.

In the end, marriage is a financial blending of two entities. Knowing what the strategy is to move into the future is an important one. All couples should sit down and have an honest discussion about what their goals are and then find ways to reach them together.

(Photo Credit: http://www.flickr.com/photos/chadmiller/ / CC BY-SA 2.0)

Many consumers are worried about debt relief as they reach retirement age.  With news of Social Security and Medicare being tapped out within the next few decades, Americans are looking for other options to retire in comfort.  Fortunately, there are some jobs that still focus on pension plan guarantees.  Here are some industries that still support their retirees.

• Public-Service Sector workers.  Local, state and federal government positions are still highly attuned to retirement benefit payouts.  According to the Bureau of Labor Statistics, almost 80 percent of state and local government workers had traditional pensions last year. Olivia Mitchell, director of the Pension Research Council, stated “Police officers, firefighters, teachers and judges have always had pension plans.” She also noted that these careers are all putting more money into firming up their workers’ retirements to provide security for them.
• Large, private companies. Although pension plans are more difficult to find in the private sector, a recent study showed that 21 percent of private-sector entities had a plan for retirees. This is a huge benefit for employees who know they will have a guaranteed payout for their retirement years.  Consumers need to look for employment, but be aware of the retirement funding statistics. A recent poll showed that only 9 percent of companies with less than 100 employees and 34 percent of companies with more than 100 employees offer traditional pensions. Management and professional positions are also the most likely to offer  retirement plans, regardless of the size of the company.  Service-sector jobs are the least likely to have any retirement benefits.   Geographically, mid-Atlantic, Northeast and Pacific coastal regions are the most likely to have jobs with retirement benefits, in particular in their large metropolitan areas.
• Businesses with less than 10 employees.  Although most small businesses don’t offer retirement funding, exceptionally small offices normally do. This means offices with less than 10 employees, commonly doctors’ offices, law offices or family-owned businesses.  Author and expert on retirement Fran Hawthorne stated, “Very often, the owners of small doctor’s offices set up the pension plan because they want a tax-free way to put money aside for retirement. … The law requires that if you do this, you must provide the same pension for all your employees based on income.” This is encouraging news for Americans who want to work in the small business sector but still have a plan for retirement and debt relief in their elder years.

The key to success

Employees who are working for smaller businesses need to know that retirement funds are most beneficial when they stay with a company for an extended period of time.  Payouts are maximized based on time spent servicing a company.  It’s also beneficial to know that the sooner employees get retirement plans in place, the better they may fare at payout time.  Hawthorne added, “If you don’t get a job with a pension now, your (payout goes)  down every year because more and more pensions freeze each year.”

Planning for retirement

Planning for retirement is a number one concern of Americans today.  With unemployment running high, debt relief being sought and foreclosures increasing, people are wanting to store away money for the future.  There are still some ways to wisely handle the situation and live comfortably in the golden years.

For many retirees today, the golden years may less than golden (photo: creativecommons.org)

A retired couple sells the farm and moves to town to enjoy an easier life. They plan to travel and spend their golden years doing what they love. But as fate would have it, the husband dies a month after they buy the house in town.

The retirement annuity

A few days later the life-insurance agent arrives at the door with the settlement check in hand. The widow has $300,000 left in the bank after selling the farm and buying the house. The agent asks her how she plans to get by once her money runs out. Naturally, she doesn’t know, so the agent says, “What would you say if I could guarantee a lifetime income for you, tax free?”

The grieving widow welcomes the idea. She hands over her $300,000 nest egg, and the agent sells her an annuity as a means to safeguard her money. Now she now lives on $2,000 a month, and will continue to do so until she dies.

Considering the market today, that may sound like a fair deal. Or does it? Let’s take a closer look.

Annuities defined

Annuities are financial products marketed by insurance companies to provide lifetime incomes for investment or retirement purposes. Unlike whole-life insurance, annuities begin to pay out immediately, if desired. According to the insurance companies, buying an annuity is a good way to liquidate your assets.

If you are of retirement age and have accumulated a large sum of money, you can put it all into an annuity and immediately begin receiving monthly payments. If you have several years to go before retirement, you can pay into the annuity over time. Agents will tell you that you can accrue wealth this way, while being guaranteed a lifetime income once you retire.

What you really get

Agents earn larger commissions on annuities than they do on other types of insurance products, and are therefore motivated to sell them.  That self-interest leads agents to embellish the truth just a bit. They’ll tell you the truth, but they’ll also twist it, leaving you confused and leading you to believe that they are acting only in your best interest.

Am I saying that agents will lie to sell you an annuity? Not really. But I am saying that you need to look behind the curtain and see what’s really going on. Even quick payday loans can’t help you once you’ve been conned by slick marketing tactics.

Marketing vs. reality

Insurance agents tend to stress the positive features of an annuity in order to make a sale. To be fair, insurance agents aren’t the only people who do this: All marketing emphasizes positive features while minimizing negative aspects. But buying a junk financial product is a much more serious mistake than buying the wrong designer perfume. In fact, your future may depend on not getting caught up in the marketing hype of the financial industry.

The marketing ploy of annuities is that you are guaranteed to receive a lifetime income on your investment. The reality is that when you die, the checks stop coming and your heirs get nothing. You can, of course, arrange to have your heirs receive money when you die, but only if you settle for lower monthly payments.

Where’s your money?

What happened to your money? Where’s the principal you invested?

When you purchase an annuity, the insurance company invests your money in stocks and bonds. The money that will give you a lifetime of income is really just the interest and dividends paid on the stocks and bonds the insurance company bought with your money.

Your payments are not taken from the principal you invested. Your principal is never touched. After your death, unless you accepted lower monthly payments in return for a post-mortem pay-out, the insurance company does not pay the principal to your heirs. In fact, the company keeps it. And that’s why insurance companies that sell annuities make the big bucks.

Be smart with your money

How are the companies that sell annuities able to promise a lifetime income from your money without touching the principal you invested? They do something that you can do on your own: They purchase stocks and bonds, just like any other investor. If you were to invest your money yourself, you would still receive a lifetime income and you’d keep the principal for yourself and your heirs. (My next article will explain how to do this.)

Do your own investing

An annuity is nothing but another insurance product designed to take more money from you. With their obscure policy language, it’s easy for insurance companies to do just that. Your best bet is to do exactly what the insurance companies do: Invest in stocks and bonds and buy term life insurance. Don’t leave your heirs to pay for your funeral expenses with quick payday loans. Do your own investing, and leave your loved ones a true legacy.

Start planning now for your sunset years (Photo: wikimedia.org)

In this last article of the retirement series, you will learn how to create a sustainable lifetime income without having to resort to annuities or credit cards. You desire to live well and maintain your standard of living in your retirement years, but you do not know how to do it without depending on what may be shifty advice from a broker or financial advisor. It’s time to put some common sense into your retirement investing. Follow these strategies and you will be well on your way to creating the life you desire.

Start as young as possible

The younger you start investing in your retirement fund, the more you will be able to make in the long term. However, it is human nature to put this off until the last possible minute. This is not advisable…let me tell you why. Say you start investing when you are 25 years old, and you put in $10,000 in a retirement account with annual additions of $5,000. Your interest rate is a generous 6% compounded annually. In 40 years when you reach 65, you will have $923,095.60. Pretty impressive, right?

But what if you wait 10 years? At 35, you start with the same amount of principal, and the same amount of money added annually. Everything remains the same, except you only have 30 years instead of 40. Now, you would only have $476, 443.30. That is a LOSS of almost $500,000!! OUCH! And what a big loss!

The point is to start as soon as you can, so that you can save as much as you can by the time you are ready to retire, without the need to rely on credit cards consistently in your golden years.

No need for over-diversification

Warren Buffet once said about people who spread out their investments in an effort to diversify, “Only people who do not know what they are doing diversify.” And yet, financial advisors who are supposed experts tell you to diversify all the time in order to “spread out the loss”. Of course, in reality, you are spreading out the profits you could be making. The reason is that when you have more money in a stock, you own more shares. The more shares of a company that you own, the more money you can make when the share price skyrockets. Of course, the opposite can be true: The more shares you own, the less value those shares represent when the share price bottoms out.

Over-diversification means that you have a little money here, a little money there—all earning just a little money everywhere. However, if you put more money into fewer investments, your money has the potential to grow higher and faster. The key to success with this is to thoroughly research companies and hold on to your shares for the long term.

Buy low, sell high

You must buy when everyone else is selling, and sell when everyone else is buying. Basically, buy low and sell high. This is the logical way to invest.

When the market is in a downturn, you can buy more shares for less money when everyone else is losing out on a golden opportunity. When everyone else is thinking that it is the perfect time to buy shares as the market experiences its highs, this is the perfect time to sell or hang on to your shares. But never buy during this time! (You may regret it when you run out of cash and need to use your credit cards for basic survival!)

Don’t believe your broker ALL the time!

A man invested $10,000 in 1965, on the advice of his broker. Shortly after he invested, his broker suddenly dropped dead of a heart attack. Well, the man didn’t get any “advice” about when to take out his money, so he held on to his shares for about 35 years. At the end of those 35 years, his investment was worth over 2 million dollars! Imagine if his broker was still alive and told him to take out his money when the market had gone down during that time!

The point is, many financial advisers and brokers tend to go with the emotional flow of the popular sentiment, rather than applying logic to investing. Their clients then adopt this viewpoint. Not every adviser or broker does this, and you can get some pretty good advice from them occasionally. However, do not believe your adviser or broker all the time. Instead, take control of your future!