Retirement Planning is something most people can’t, won’t or don’t do. Or, if they do do- they do it once and then forget about it. Most of the time people just don’t know where to start. But the big thing is that things change from the time people start their plan to the time when the plan comes to fruition. In between then and now people get divorced, lose their jobs, earn less, make bad investment choices, give money to kids, support a sick parent, get sick themselves, injured or lose their home. Then there are the folks that plan and ignore guarantees and die too soon. Rarely does life work in a straight line where the rules are clear and if you do this then you get that. In other words ‘retirement planning just doesn’t work for most of us.’ But, I’m singing to the choir and you know all this. In last week’s Dow Jones’ MarketWatch there was a piece that reported the ten numbers that could change your life. It was about retirement planning. Here’s the numbers they say you should know:
- Calculate Inflation now
- Inflation later
- Needed income at retirement
- How much money you’ll need to get that income
- Taxes now and taxes tomorrow
- How much you have today, less the home you are living in
- How much you have to save to get from here to there
- How much you can afford to save (that wasn’t one of the numbers but it should have been)
- The annual return you need to get each year to get from here to there
All of those numbers are subject to change. That includes how much money you have now. Tomorrow you could have more…or less. That makes retirement planning impossible; but still there are seminars, software and financial professionals that swear they can guarantee a life of retirement freedom. Yes, you can take a snapshot on where you are, where you want to be and what it’ll cost you to get there. But to be even semi-accurate one would need to keep on snapping pictures from now till the day of retirement to keep up with stuff that happens to you. Even then things won’t be guaranteed.
When I started in the biz I was promised that if I kept my nose to the ‘grindstone’ and did all the right things I could retire on the princely sum of $10,000 a year. This was in the day when a postage stamp cost three cents and chicken sold in the supermarket for nine cent a pound. You can see how well that plan turned out.
The Conclusion is to know what the above numbers are, where they fit, how to calculate but don’t engrave them in stone or elevate those that are selling ‘the concept’ to some sort of financial gurus.
The Most Important activity in the planning process is to pay yourself first, manage your money prudently and earn more on your investments than the combination of annual inflation and your personal marginal tax bracket. Do that and you have a reasonable chance of financial security. Got questions, call or email me.
Over the Weekend A Growing Chorus That Washington Won’t Get It’s Act Together & The Nation Plunges Like Lemmings… and only then will some sort of a deal on taxes take place….you would think locking them into a room they’d come up with something by now, wouldn’t you? They just don’t want a deal! 
The Ben Bernanke Made It Clear…Bonds are safe 
from destruction until unemployment falls to 6 1/2% or inflation heats to 2 1/2%. The Fed Chief made the announcement that the Fed would not raise rates unless one of the above conditions occurred. This is meant to allow businesses and individuals to dig in, take advantage of low rates; and hopefully the politicians will do their part too. The Federal Reserve, never in its history, has ever given such an insight to its future plans on raising rates.
Monday Markets Edged Up a Tetch…across all indices. This included gold closing over $1704. McDonalds same stores in November up 2.5% when ‘experts’ cautioned for more losses. Big seller was their breakfast onion/sausage/cheese sandwich. 
China ramped up production of industrial materials dispelling worries over lingering economic malaise. This included copper and oil. Beijing’s introduction in September of a $160 billion infrastructure stimulus package provided the catalyst and encouraged mills to restock, said analysts in the WSJ.
Chuck Jaffe at MarketWatch with his sack of coal to hand out to fund companies included 
Vanguard on this year’s list. Within annuities the money market subaccount funds are utilized for conservative deposits. The Vanguard Variable annuity semi-annual report illustrated that their money market fund earned 0.07%. This did not include, The Jaffe wrote, expenses and fees. When factored in this safe haven that the fund company titled, ‘ helped investors preserve capital’ had a net return loss of 0.08%. and still no one gets fined, loses a job, goes to jail or is sued…
Watch For My Inflation Breakfast Meeting Coming 
Soon. Those that should attend are those that believe all the current and past government spending will create an inflationary economy where the cost of goods and services will rise and personal income lag. The Question and Answer will provide answers to what investors should do with their money and how to prepare.
From JP Morgan Asset Management This Recovery is the weakest since the Great Depression.
In 2013 you could do worse betting on home builders or those ancillary businesses that support home building. 
Eight years later but better than never…
Tuesday Markets soared…sputtered…but closed safely up on the possibility of some sort of a happy conclusion on taxes. Up across the board, and this wasn’t window dressing. It was sincere better buy bargains. Asia was also up on our domestic political hopes. The Federal Reserve absolutely positively discourages Big Banks from Getting Bigger. The Bigs have today almost 44% of all deposits from 37% in 2007. The Fed, according to the WSJ, has made it clear to The Bigs that they will discourage any attempt at new acquisitions. 
They’ll wait until the political climate changes…that’s the scary part.
Ten Stocks For 2013- …Barrons Picks:
- Apple
- Barnes & Noble
- BlackRock
- General Dynamics
- JP Morgan
- Marathon Petroleum
- Royal Dutch Shell
- Novaritus
- Western Digital
- Viacom
Are The Markets Rigged Against The Small Investor? 
Tadas Viskanta wrting for MarketWatch explains that the lost decade in equities has caused many people to turn their backs on investing. He also writes that many active managed funds have not been able to beat their indices; and if the pro’s can’t what chance the average Joe or Jane? Most investors cannot make money in the market for a few reasons: (1) Lack of time (2) Lack of knowledge (3) Lack of adequate money. And many funds are not in competition with the indices. Those that are able to beat an index have outstanding management and lots of luck. Consider that money is constantly coming in, most all funds hold some cash and the index doesn’t plus- fund allocations usually don’t match up to an index dead solid perfect. So the argument about active funds not matching up to an index are bogus and a smoke screen for Index Investors like Bogle to snark at. This argument is old and deserves a proper deep six.
Today’s Wealthy Will Get Hit With Obama Tax…and then you will…
It’s important to note that the Threshold amounts are not indexed for inflation. There’s going to be trouble down the road for millions of people as inflation heats up incomes. I only have to remind one and all about the alternative minimum tax! We went after the so-called rich with that one and the middle-class got bit…
Wednesday was an ugly day for the markets. There was a nice bounce in the morning and then it fell apart and the Dow and Naz closed negative. The S&P had a small partial teeny decimal placed gain…Dish Networks Green-Lighted to be able to use a slice of air- used specifically for satellite transmissions- for more cellphone use. The FCC okayed the deal on Wednesday and some analysts say the air could be worth an estimated $12 billion. No one knows and Dish isn’t talking exactly how they plan on using this extra air. DISH closed at $36.67. 
By the Time I write this Friday Morning Washington May Have Smelled The Roses and Compromised on Taxes. 
But I doubt it. Thursday Markets Fell. China was up huge! The Shanghai index up 4% on manufacturing news. Domestically gold fell below support. All indices down- S&P streak snapped. The President acts like he’s gotten a mandate rather than a second chance. Boehner suddenly develops a love affair with small business. Pelosi awakened from a deep snooze and said that a political deal had to be engineered; and the CEO of Honeywell is acting like a go-between in shuttle diplomacy between the White House and Congress, reminiscent of a scene from a John le Carre novel. In the meantime the public is demanding both sides to compromise. Stocks will continue to fall as long as this continues.
TCB – Elvis =Taking Care of Business. It was real simple for The King- Take Care of Business. Seems politicians (you can’t call them law makers) have forgotten why they’re there. Seems like everyone knows it except them.
Pssst…Contrarian with a love for Dividends? 
MarketWatch’s Matt Andrejczak suggested investors look at McDonalds, Intel and Microsoft. Two pay 3% dividend and the other a touch better than 4%. All are off their highs (Yes, as is Apple) with McDees slipping over 12%, Intel close to 30% and Microsoft is off 17% plus. Total debt for each is less than 60%. You can also put it on your shopping list, watch the chart and daily action. Need more info on how I watch a stock? Call or write me an E…
I was talking to a real smart guy yesterday and he 
suggested that people do two things in the next few years-(1) Buy Real Estate (2) Remortgage their existing real estate. Even if you have a 5% mortgage you’re paying too much. Call your mortgage company. And, according to another friend, Bill Minor, his monthly real estate newsletter sez home sales were up 2.1%, a 10.9% increase from last year. You can get his latest real estate market update newsletter by emailing him at Billminor@kwrealty.com
Once Upon a Time, last week, there was an IPO (initial public offering) called SolarCity that was too expensive and so the investment banks and issuing company reduced the share price ahead of the offering. Everyone thought that would be the kiss of death since the company was also in the solar panel business. It doesn’t make the panels, it installs them. But investors were infatuated with one of the big backers, a Mr. Elon Musk, who developed PayPal, sold it to EBay and a huge backer of Tesla Motors. 
Even though the business model and industry seemed iffy to investors they all thought the world of Elon Musk and so piled on and drove the stock price to where it would have been before the company and bank reduced it. And, we don’t know whether anyone except Elon, the bank and organizers, will live happily ever after but we’ll watch and report….shares closed down Friday to $11.72
Merry Christmas to All. Have A Safe and Wonderful Holiday. Today, more than ever, make sure a few of your giving dollars go to those local charities, churches that can brighten a bit those families in our neighborhoods not as fortunate.
Prediction Season…
Bank of America, Merrill Lynch peers deep into its crystal ball and sees…
- Global Equities top performing sector
- Dollar & Euro rally on global recovery
- High Yield & Emerging Market Bonds outperform in fixed
- Government Bonds should rise- but not much
- Gold hits $2000
All this is is an opinion….nothing more…
Finally- tune in next week for more predictions and what a moderate asset allocation portfolio should be.
Questions call Paul @ 586 783 7080 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about their money.
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