Judging by the questions we’ve been getting from subscribers, there’s a good chance you may have missed some of these 5 important recent stories…
1. New Wealth-Killing Revelations About Your 401(k) and IRA
While doing research for my new book (The Bank On Yourself Revolution, due out on February 11), I came across four stunning new revelations about 401(k)s and IRAs. If you have money in one of these plans, I urge you to read this exposé to find out how to protect yourself from making costly mistakes.
Here are short summaries of three of the most interesting and thought-provoking items that have crossed my desk this week. Enjoy… and tell us what you think!
Would you be prepared if you suffered a 30% pay cut?
A shocking new report reveals that the average person’s pay levels off when they’re in their 40’s. After that, about all you’ll be likely to count on will be cost-of-living adjustments to keep pace with inflation.
That will come as a real surprise to many people who assume their pay will continue to rise as they get older.
And if you lose your job while in your 50’s, you’re likely to remain jobless longer than when you were younger, according to the report.
Read this sobering and well documented article from the Wall Street Journal.1
What’s your best self-defense? When planning for retirement, assume the only salary increases you’ll get will be cost-of-living adjustments. And identify a worse-case scenario – such as a 20% pay cut during your final ten years in the workforce – and try living on that income and putting the rest into savings.
A typical pre-retiree taking withdrawals the way most people actually do would only be able to take $260 a month.
Oh, yeah – the article didn’t even mention you gotta pay the taxes you deferred all those years on that money!
How much do you think is going to be left for food, housing, utilities, car expenses, medical expenses not covered by Medicare, etc.? You’ll be lucky if you can scrape by at all, let alone enjoy even the smallest of life’s luxuries.
I hope you enjoy these short summaries of three of the most interesting and thought-provoking items that have crossed my desk this week…
Brave new world of financial planning?
Can a new blood test tell you how long you’ll live? And if you knew how long you would live, would you change your financial life?
A blood test showing how fast people are aging will go on sale over the counter in Britain later this year. It measures the length of your “telomeres,” structures at the tips of your chromosomes. Scientists now believe these are the most accurate measure of how quickly you’re aging.
From a financial point of view, it would be great information to have. But from a psychological standpoint – that’s a hard question. I don’t think I would want to know. I think it would make me depressed.”
How would you feel about knowing when you’re likely to die? And how would your financial decisions change as a result?
Tell us in the comments box below…
New Research: Most Americans in deep financial hole
71% of 401(k) investors believe – wrongly – they pay nothing to participate in their plan, according to a recent survey
On average, participants in small plans (which includes 90% of all employees) pay 1.9% in fees annually!
Even paying fees of just 1.5% could wipe out one-third of your nest-egg
In spite of all the noise about “fixing” the 401(k) through new disclosure rules that will be going into effect, they “could cause some 401(k) services to get even more costly.”
Why you need an 8-10% annual return just to break even in your 401(k)…
Here are summaries of four of the most interesting and thought-provoking items that have crossed my desk this week…
Is a “look out below” stock market crash looming?
By some key measures it is – corporate profits have only commanded as large a share of national income twice before – in 1929 and 2006, and those years preceded the past century’s two worst financial collapses.
Knowledge is power, so I encourage you to read this article on The Invisible Stock Bubble1 from SmartMoney.com.
Want to eliminate market risk from your financial plan?
I hope you enjoy these short summaries of four of the most interesting and thought-provoking items that have crossed my desk this week…
401(k) savings reach a 12-year high
However, half of all workers aren’tconfident about their retirement future. No wonder, considering 56% say they’ve saved less than $25,000.1
According to an article in USA Today2, many 401(k) participants increased their contribution some this past year. If you’re one of them, or are considering doing that, here are some things to think about:
After a “lost” decade for stocks, before the market turned around in 2009, the 10-year returns of the S&P 500 were negative. Even after a near-record recovery, the 10-year returns remain meager – just 2.7% on an annualized basis for the ten years ending in April.3
That just about equals the inflation rate for that period, wiping out any real gain you might have had for the decade. It also assumes you have no fees or costs (401(k)’s have some of the highest costs) AND assumes you’ll pay no taxes!
And speaking of taxes… what direction do you think tax rates are going over the long term?
If you think they’re going up, as most people we’ve surveyed do, and you’re successful in growing a nest-egg in your 401(k), you’re only going to pay higher taxes on a bigger number!
