Sunday, January 29, 2017

What Are Your Retirement Years REALLY Going to Look Like?

What's your retirement plan? Are you planning to live your golden years drawing from social security and money from your 401K? Are you planning to take advantage of Medicare benefits to help you as your body ages? Financial experts say Medicare is in even worse shape than social security!

Many people have turned to a side business to help save for an uncertain future.  If you don't believe (or don't want to think about) the fact that social security, medicare and 401Ks may not be the most reliable ways to save for your retirement, please take a few minutes to do the following:

Calculate how much you will really need in order to retire. You can do this with the CNN MONEY RETIREMENT CALCULATOR.

Then, scroll down and watch the video by 60 Minutes that shows what happened to people who believed their 401K accounts would give them enough to live on. I know the economy has picked up since the video was filmed, but it could happen again. The video points out some major flaws in the 401K system.

If you're planning to retire with your 401K, YOU MUST WATCH THE VIDEO!

A little background on the 401K:

The video below is a great presentation by 60 Minutes, showing what happened to many people in their 50's or older, when they lost money from a 401K. They realized they won't be able to retire when they thought they'd be able to, and fear they could be working for the rest of their lives.

The 401K was never designed to be a retirement plan in the first place. It was created in the late 70's as a savings plan and tax shelter for ordinary Americans. The idea was for workers to make voluntary contributions, while employers would match a portion of it. The taxes would be deferred until the employee reached the age of 59 1/2.  It was only supposed to be a supplement to the two additional income streams employees normally had: social security and pensions.

401Ks turned out to be so much cheaper than funding pensions, that many companies decided to freeze their pension plans, and replace them with 401Ks.  This created a ton of jobs for investors on wall street and people in the financial community.

Brooks Hamilton, who has helped design retirement plans for some of the country's largest corporations, says: "The typical 401K investor is a financial novice. They don't know a sock from a rock." I'd say that's true. I remember being a receptionist in a private equity firm, looking at my 401K investments and having no idea whether I was choosing the right funds or not. When Brooks was asked, "What are generally the quality of the mutual funds in 401k plans?" His response was: "Mediocre.... I'm being real honest with you, with half the funds on the list... really what people would characterize as "dogs," shouldn't be on the list to start with."

Did you know it's typical that over a dozen undisclosed fees get deducted from a client's 401K account? These fees can eat up HALF THE INCOME in a person's 401K account over a 30-year span.

Again... if you are working in a corporate job, and are expecting to retire with money from your 401K... you absolutely need to watch this.

Here is a picture of what a 45 year old will need to save, in order to be able to retire by age 65. This is using a current income of $55K per year, with $20K saved in the bank.

If you haven't turned 25 yet.... you should definitely take a look at this chart from JP Morgan. It teaches you that saving early will really be to your advantage. Consider the fact that a person who saves 50K, between the ages of 25 and 35 (10 years), will save MORE than a person who saves for 3x longer (30 years), during the ages of 35 and 65, because the person who saves later is less able to take advantage of compound interest.  Please note, these figures are based on an annual return of 7 percent.

It would be to your great advantage to start saving $5,000 per year (less than $500 per month), if you are 25 or older.

There are many different home based businesses you could take advantage of.  Enagic is the one I like the most, because I really feel like it's going to help me during my retirement years... in more ways than one!  Not only is a good financial investment, but it's a good investment in my health. In about 20 years, I'm going to be 70, and glad I spent the last 20 years drinking lots of antioxidants.

How about you?

No comments:

Post a Comment