When you’re not a disciplined investor or saver, the madness of the moment can deprive you of your rational thought process. Remember, investor behavior is rarely rational, but quite predictable. Then it doesn’t take much to go from optimism and descend into panic and despondency. The emotional freight train is almost unstoppable as it picks up fear and panic along the way. And after going though a catastrophic market in 2008, the mindset of many has soured towards the market. Meanwhile the market recovered, albeit slowly for most investors. But many experienced a degree of psychological scaring from the market meltdown, so they stand on the sidelines, wounded and paralyzed. One possible remedy that can help you modify your investment behavior is to establish a financial profile that contains a risk tolerance test, financial goals, monthly funding of those goals and a timeline of events that have money milestones that mark accumulated achievements along the way. But sometimes you have to create cash flow to fund your dreams and money accomplishments. One tried and true way is to reduce your spending, especially five years out from retirement. And if you’ve created monthly cash flow, one important use of your money   Read more…

Every financial product has some associated costs. Some are declared, others are not disclosed. The average mutual fund may have costs exceeding 4%, and an additional 1% adviser fee. And non-qualified funds have taxes, whether dividend, capital gains or ordinary income, that can really take a bite out of your dollar before you even spend it. And shockingly, you may even pay taxes on a loser fund. Inflation can also erode returns and reduce the purchasing power of your retirement dollar. Don’t forget annuities. Like all financial products, some annuities are better than others.  Many annuity products have expensive fees attached to them that cause fee drag and eat into your returns, but other annuities have no fee drag. Case in point: single premium immediate annuities and deferred income annuities. These types of annuities have already priced the “spread” into the payout rate, similar to bank CDs that do the same. The Ibbotson “mountain” chart is a big picture with a timeline backdrop of decades. Sometimes it looks like the Rocky Mountains with sharp-rided peaks and deep depressions in its valleys. What isn’t incorporated in the picture is bad investor behavior, buying at the highs and selling at the lows.   Read more…

Outliving Your Money: In light of the recent passing of tri-centurion Susannah Jones, age 116, people are coming to terms with living longer. But longevity risk is not just one retirement risk but also a risk multiplier for every other risk. If you live longer you’ll need more income, more medical attention, just more of everything. Control of Your Money: The great myth among older investors is the illusion that they have control of their money. Anyone invested in the market knows that the market giveth and taketh away at its own discretion. Hoarding all your money in the bank can leave you with the feeling of control, but taxes and inflation are eroding what little returns the banks are offering. That’s not control, that’s fear. Dealing with Inflation: Over the last decade the government has released low inflationary numbers that don’t reflect gasoline, groceries, utilities and medical costs. You can’t depend on Social Security for annual increases anymore, so you need other investments to keep pace with the real cost of living. You can also buy blocks of income that have annual increases to combat rising costs. Leaving a Legacy: Retirees generally want to leave a financial gift to   Read more…

Knowing what you want out of retirement: You’d think this is obvious, but many seniors near retirement can’t articulate their vision of their golden years and those who do don’t know how to make it a reality. One thing is for sure, you need to be thinking about this no less than 5 years from your retirement date. You have to have a retirement plan that addresses your finances as well as your vision for your golden years. Taking Key Risks Off the Table: There are proactive steps you can take to circumvent risks that can derail your retirement. The new retirement paradigm is not the accumulation of assets, but the maximum income derived from them. And that includes lifetime guaranteed income annuities with a cost of living adjustment to pay for your essential obligations and discretionary spending. It also includes defending your assets against long term care costs. Divide and Conquer Approach: The newest methodology in successful retirement planning is dividing your assets for income and growth. This is a new partitioning approach, assigning dedicated assets to generate guaranteed lifetime or period certain income and grow the remaining assets for legacy, charitable gifting and enlarging your estate. Buy Income   Read more…