If there is a secret in having folks believe in you it is to pretend you know more than you do or anyone else. That’s why news anchors don’t act silly on camera. Investment writers do the same thing only on paper. They pretend to know stuff other people don’t.
Financial writers, in most cases are simply writers reporting on money, often find themselves needing to fill space and put together some awful information and pass it on as gospel. One of them finally got to me.
This particular scribbler sets the stage in a recent article by writing that the last bull market had an extraordinary run beginning in 1982 but few people have the proof of having taken advantage of that bull. There are millions of baby boomers, he wrote in the WSJ, and only about one-third can retire and be comfortable, one-third have saved less than $50,000 and the other third cannot dig up enough change to buy the morning newspaper.
He goes on to explain that indeed you and I can do something about retirement and he proposes his ideas as fixing our future. But, after examining his ideas I think you’ll agree that our self-styled expert has been working a tad too close to the gluepot.
Delay your retirement and keep working. As if we haven’t heard this one. If you are self-employed working out of your basement, no problem. If you’re like most people that needs a steady paycheck, benefits and is over 50 the choice of whether to work or not is usually not up to the worker. As anyone knows how tough it is to get and keep a job.
Scale back your retirement costs. Smell the coffee, Bosco. Most retirees have a home, utilities, car, insurance, food and maybe a pet. Paring back expenses may only mean eating less, turning down the heat and increasing the insurance deductibles to an unhealthy level; or maybe dropping Rover off at a strange corner sans collar. Retirees, as workers, students and others, have already scaled back. A good many are at the bone already.
Say the hell with it and toss all your money into an immediate income annuity and spend everything you got. This is an idea best coming from the teeny-weenie-itsy-bitsy mind of Suzie Orman, but it wasn’t. Fixed annuity benefits, as anyone in the money management business knows, are based upon current interest rates and if someone is dumb enough to buy one now they are getting it at the worst possible time. The highest income annuities usually confiscate all your cash at death so nothing is left for your heirs or spouse. Yes, there are other annuity options but remember our ‘expert’ suggested wanting and getting the highest annuity income benefit.
Save, save and save some more. People are doing that. Unfortunately most people don’t know what to do with their money once they have it. Those boomers at the bottom third of the survey will never develop the discipline or stability to save consistently. Those with substantial assets will do just fine and the middle third will always need a helping hand and a guided plan on how to manage wealth. Saving alone doesn’t accomplish the goal.
Next week I’ll give my suggestions to create a better and less loathsome retirement plan.
If you have questions on anything contained in this blog write pstanley@westminsterfinancial.com or call Paul at 877 783 7080. Forward this blog to a friend or relative who you think may find it useful.
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