2012: The End is Near. Are You Prepared?

That's right folks. The end of the world. We are going to be done in by one of a number of scheduled calamities or some combination of them. Our prospects are not bright when you consider the fact that the Mayan Calendar comes to a sudden and abrupt end on 12-21-2012, when the earth finds itself aligned with the sun and a gaping hole in the center of our galaxy at the height of the solar maximum.

Not to mention that this time frame is cited in a number of apocalyptic texts, and there are asteroids we don't even know of hurtling towards us, and the geo-thermal cauldron is due for it's regular, every- sixty-five million-years-or-so explosion, probably under Yellow Stone national park, and the magnetic poles are due to shift.

Also, the History Channel has all but dedicated all of its programming to the subject, and of course there was the recent blockbuster movie delineating our various demise opportunities.

From so many angles, we are in for it.

What I do know is this: Catastrophe aside, the average lifespan for a US citizen is a healthy one that reaches into seven decades, somewhat longer than we would like to be working. And given the fragility of our financial markets and the frightening reliance of our blue chip stocks on credit, I am sometimes more scared of surviving the end. When it comes to our finances the end of life is not the true concern, it is the end of our savings. Every year it cost us more just to live the way we are accustomed to.

Armageddon or not, it is never too early or too late to take control of our monetary future and empower ourselves through financial awareness and education. The internet is endless and has allowed us to use the knowledge of others to transform the way we think and the way we make decisions. Take advantage of the resources available to you, especially when it comes to your retirement concerns.

Take some time to find ways to lock your retirement income tight and keep it growing guaranteed,View this chart to see what I mean.

About this Blog:

Understanding what is available to you is more important now then ever. Learn How to Retire is part of your educational journey and was developed to help you find the new Safe Money alternativesyou need to accomplish your retirement goals. In today’s economic environment one must realize that the only way to find success is through individual empowerment. Once you have taken the time to educate yourself you only then have the power to make the right decisions and put the trust factor on your shoulders. The more you know the more you will succeed.

www.LearnHowToRetire.com is “Individual Empowerment” Once you have taken the steps to understand then you are free to find the qualified and trusted advisor to help take your knowledge and formulate a plan.

www.safemoneyrep.com “Where People Find Trusted and Qualified Advice"

Real World Index Annuity Returns

The Wharton Financial Institutions Center from the prestigious Wharton School (of Business) at the University of Pennsylvania released a study yesterday entitled Real World Index Annuity Returns. This study provides the first empirical exploration of fixed indexed annuity returns based upon actual contracts that were sold and actual interest that was credited on those contracts. The study includes the following findings, none of which should be surprising:

• FIA returns have been competitive with alternative portfolios of stocks and bonds.
• FIA design has limited the downside returns associated with declining markets.
• FIAs have achieved respectable returns in more robust equity markets.
• Studies that have criticized FIAs are typically based on hypothesized crediting rate formulae, constant participation rates and caps, and unrealistic simulations of stock market and interest rate behavior. When actual policy data are used, the conclusions change.

The Wharton study concluded that from 1997 through 2007, for the contracts examined, five-year annualized returns for FIAs averaged 5.79%. These returns compare to 5.39% for taxable bond funds and 4.73% for traditional fixed annuities over the same period. The study also found that for the period from April 1996 through December 2008, a specific and typical FIA's returns bested the S&P 500 alone 66% of the time and a 50/50 mix of one-year Treasury Bills and the S&P 500 80% of the time.

Not surprisingly, the study finds that FIAs are particularly desirable for consumers who are especially concerned with avoiding losses because they are "designed in a way to avoid downside risk [and] they tend to produce preferred return patterns for such [risk-averse] consumers when compared to alternative investment strategies that expose consumers to significant levels of that risk."

The study's conclusion won't be a surprise to those familiar with FIAs:

How will index annuities perform in the future? We do not know but the concept has proven to work in the past and any articles should reflect this. FIAs were not designed to be direct competitors of index investing nor have FIAs been promoted to provide returns to compete with equity mutual funds or ETFs. The FIA is designed for safety of principal with returns linked to upside market performance.

We already knew that an FIA can be a good product for nearly any consumer and that FIAs are particularly advantageous for risk-averse consumers. The Wharton Financial Institutions Center has now provided a powerful tool -- from a respected an unbiased authority -- to support and substantiate what we already knew.

Real World Index Annuity Returns

About this Blog:

Understanding what is available to you is more important now then ever. Learn How to Retire is part of your educational journey and was developed to help you find the new Safe Money alternatives you need to accomplish your retirement goals. In today’s economic environment one must realize that the only way to find success is through individual empowerment. Once you have taken the time to educate yourself you only then have the power to make the right decisions and put the trust factor on your shoulders. The more you know the more you will succeed. www.LearnHowToRetire.com is “Individual Empowerment” Once you have taken the steps to understand then you are free to find the qualified and trusted advisor to help take your knowledge and formulate a plan. www.safemoneyrep.com “Where People Find Trusted and Qualified Advice”

Emotions and Retirement Income

Emotions drive almost all of our decisions in life. If I were in my late 50’s early 60’s and my broker did not have my investments diversified properly I may have lost 40% of my retirement money this year. I think I would be a little upset and want to do something about it. In such a devastating situation your accumulation timeline to accrue the money you need to live in retirement has now drastically changed; therefore requiring a new financial game plan, an undiversified gamble is no longer the recommended approach.

Knowing that interest rates are at an all time low and that I can only receive a 5 yr guaranteed bank CD at about 2% annually I would think a good portion of your retirement money would be better suited in a 5 yr annuity at 4-5% tax deferred. That would make a lot more sense; you should always at least try to keep up with inflation. There is also 1-3 yr Multi Year Guarantee Annuities available at 2-3.5% annually.

Gambling is not for everyone and especially for the ones that have already gambled and lost big. You don’t have to gamble with your retirement money anymore. There are alternatives available that will not only guarantee your principal but also give you indexed linked returns that can never go backwards. You will not get all of the index growth but you will also not get any of the index loss. For example: if the S & P 500 goes up 10% in a year you could get 8.5% for that year depending on the product you chose. If the S & P was to go down you would not lose a dime and receive 0% for that year. Every year your gains will lock in never to be lost. There are still other Safe Money Alternatives available for those who are considering retirement in the next 5-20yrs that will guarantee between a 5-8% return annually as long as you use these funds for a guaranteed lifetime income, any unspent cash values will go immediately to your beneficiaries at the time of death. These products also allow you to participate in index linked gains while accessing your lifetime retirement income.

As I said earlier diversification has always been the key to success and that is why these strategies are just for the Safe Money assets you have “The money you can not afford to lose” The older you get the higher percentage of your assets belong in the Safe Money category. To get a better understanding and more answers to some of your most immediate retirement concerns visit www.LearnHowToRetire.com

Annuity Alternatives

On the one hand you have what has been shown to work, meaning it supplies you with retirement income: The fixed-indexed annuity. On the other hand you have new products being engineered by brokerages because what they have always said would work, didn't... umm... well... work. Now I am more about the deeper historical data than I am the recent trends, but I have to point this out since I made mention of it in my last post: FIAs are growing in popularity because they make sense. They just do. There has been, to say the least, an explosive increase in consumer interest of fixed-indexed annuities.

Now I had planned on providing a boring old statistical comparison of CDs and FIAs over the last twenty years, but during the last week I noticed a lot more rhetorical traffic around "annuity alternatives." I think now is a good time to stop and put a few volleys back in the serving court where they belong. What I mean is this: don't listen to the crazy talk.

Yep there it is again. This time, it is coming from the engineers of doom themselves. The very ones who helped you lose your money are peddling "safer" products.

Where were these products last year, when the drunk-drivers owned the road? Why is their advice now worthwhile and worth another whirl? That was a rhetorical question. Not for nothing, the hangovers own the road today and they kept their licenses. Lesson: drive carefully.

Alright, I've gone overboard. For one thing, if there is a mutual fund company I would recommend, it goes by the name Vanguard. In my opinion, the class of the industry. I don't mean to bad-mouth this organization because their practices, to my knowledge, are certainly not representative of the bad behavior of the industry in the horribleness that ensued last year. That being said, I don't recommend mutual fund companies. I don't like the risk. I want a boat in retirement. It doesn't need to be ninety feet long anymore if ninety feet means it could easily be particle board in the surf, depending on the seas.

I have no trust in the market or those that play it. I want guarantees. I don't want alternatives to guarantees. I lost a lot of bank last year on the advice of securities experts. I'll take my pension, thank you. I created my own pension with a Safe Money representative. It'll be there when I get there (retirement). I will lose nothing, regardless of another tanking market. My money is safe. The alternative to safe money is called gambling.

Fixed Indexed Annuities are growing in popularity because they make Sense

I was listening to this guy today. A pretty sharp guy, more or less, is what I thought as I took in what he was saying, until he started with the crazy talk. I can spot crazy talk pretty quick these days, when it comes to money. Listening to crazy talk cost me a healthy chunk of my retirement savings recently, and you know the saying, "Fool me twice..."; I tend to be on guard and on the lookout for crazy talk. (FYI, at the time, it was the stock advice from all the expert advisors.) So when this otherwise reasonable fellow starts telling me that it is madness to purchase an annuity these days because interests rates are going to fly and the market is going to boom, my crazy talk antennae go straight up. You know how I spot crazy talk. Crazy talk predicts the future. Crazy talk speculates and tells me what I need to do with my retirement savings. I don't listen to crazy talk. Neither should you.

Stop the madness, the crazy talker says: It is unwise to lock in for 5 years because some very smart people think interest rates are going to rise. Unless you desperately need to earn an extra two percent, keep your money in a money market account. Current money market rates are at 1%.

What kind of advice is that?

I'll tell you what kind of advice that is. It is unsound advice. Keep on earning 1% and don't earn an extra 2 percent where you can? What is left out and is important is the gains you earn with your annuity are tax-deferred. What else is important is this advice ignores inflation. If the recommendation is to keep your money liquid, so you can move it into a risky fund at some unspecified point in the future, or when CD rates or money market rates suddenly pay exuberant returns, the recommendation will only cost you money. I am reminded of something I heard recently: "Brokers are only finding more creative ways to lose you money". This is one of the most creative yet.

If you keep your money liquid by not saving it or putting it into a low return money market account, you are actually losing money to inflation. I point you to our last post about the importance of making sure your investment returns out-pace inflation.

If you put funds into a fixed indexed annuity, you benefit from market index growth, your principle is protected from the losses that many us of suffered last year when the markets went over a cliff due to the sub-prime mess (one of my IRAs lost 40%, and as you know, I was not alone), your returns out-pace inflation and your gains are tax-deferred.

What else is important is if you extend your investment horizon, you earn more. We are talking about retirement savings here. We aren't talking about casino money. You should be looking to lock it up longer so there is more income in retirement.

To provide more insight into the soundness of the FIA strategy, and the unsoundness of brokers' recommendation to avoid them, we will be turning again and again to history (markets, interest rates, policy) in this blog, because it is true that those who do not learn from it are doomed to repeat it. Our business is your financial security. We want you to learn from history (which is why our domain name is learnhowtoretire.com and not learnhowtogambleyourretirementsavings.com or learnhowtoloseyourretirementsavingsbylisteningtoyourbroker.com). We provide the history, and connect you to local, independent representatives that will advise you on how keep your money safe and create your own personal pension.

Calculating how much you will need in retirement: Factoring Inflation

An old friend bought me a book about tackling the subject of how to approach the last third of your life – great book – chock full of humor and usable tactics to employ in the battle against age. I recommend everyone read it. Frequently. Because there is a lot of good advice in it and, if you are at all like me, some of it is bound to fall out of your head from time to time. The name of the book is “Younger Next Year*“*, by Chris Crowley and Henry S. Lodge, M.D.

There is some real-down-to-earth advice on just about every aspect of living the last half or last third of your life. Some of the most useful and sobering can be found in chapter thirteen: Chasing the Iron Bunny. In this section the authors declare matter-of-factly: “There’s one change that hits in retirement that you cannot duck and that you must prepare for as early as possible. There’s less dough“. The statement itself is not particularly insightful but awesomely important because the fact is so often and so easily overlooked by too many of us.

What is particularly impressive is the advice the authors provide on calculating how much you will need in retirement. Here is a brief breakdown:

1. “Make a realistic estimate of how much income per year you are going to have in retirement.”

2. “Unless your income is inflation-protected, adjust it downward by five percent.”

3. “Assume things will be worse and adjust downward another five percent.”

4. “Take a hard look at your prospective sources of income. Calculate coldly how reliable they are and make appropriate adjustments.”

The chapter goes on to help us approach and cope with living on a fraction of what we are currently accustomed to. I will be visiting the points above and use them to help us develop a financial strategy toward retirement and throw in some recent history to view different scenarios.

First things first, it is critical that your income source includes investments whose returns outpace the rate of inflation. The rate of interest earned on a five year CD currently does not provide the edge required. I suggest you extend the length of the accumulation phase, as the longer the accumulation phase, the higher the rate of interest gained.

Be conservative in your calculations. Assume a longer retirement horizon. People are living longer these days. If you follow the book’s instructions, you will be living a whole lot better longer.

If you purchase a 10 year CD instead of a five year CD you can gain up to a full percentage point in interest. If you purchase a fixed income annuity you can gain up to 5 percent more and can even decrease the length of the accumulation phase if you wish. Even in poor performing market periods, your FIA will protect your income against inflation. If the market performs well your FIA will outperform any CD.

If you follow the advice of the authors, the downward adjustments you need to make in compiling a realistic estimate of how much income per year you will need in retirement are drastic. But they need to be. Inflation alone eats away at retirement income value and recent history tells us just how precarious our nest egg is when tied to market performance.

Above all else, protect your principle.

In the coming articles we will discuss, among other things, a comparison of possible retirement income sources and an evaluation of the reliability of each. We will also discuss just how important it is to speak with a financial advisor.

To cite the authors of “Younger Next Year” once more: You do not want to be swimming away from the wreckage at seventy. You need to talk to someone and start planning as soon as possible. At the very least, start doing some research on your own. Visit the LHTR Planning section to begin.

Retirement Planning is a Civic Responsibilty

I received this headline in my email today from a Financial News Subscription service: "75% of Baby Boomers aren't prepared for retirement." I get this sense that many folks now approaching retirement age are looking over the meltdown of the prior months with a kind of glassy-eyed wonder and disbelief. I also get the feeling that many of this number are in fact part of the group that the news subscription service identifies as not being prepared for retirement.

It is this group that has me worried. A recent study of American workers by the Employee Benefit Research Institute finds that only 13% of retired persons think they will be able to live comfortably on their retirement savings. The reverberative effects of such numbers can be staggering. Consider this:By 2030, spending for Social Security, Medicare and Medicaid will amount to almost 60% of the federal budget . This coverage is a good thing. But there is a tremendous risk that it will put future generations into a national debt and tax situation that is back-breaking. Strong individual investment strategies need to be hammered out now to prevent an untenable financial situation a few decades from now.

It is incumbent on all of us to be our own advocates in the face of difficult economic circumstances. It is important that we be stewards of our own financial security so that we are not simply transferring financial burden onto our heirs. There are sound and safe strategies that can be implemented today, and should be, to maximize retirement savings without sacrificing spending flexibility.

A large part of this discussion is to help people understand, they can still live comfortably throughout their retirement even though they have lost significant amounts of money due to the economic decline. The opportunities available for those approaching retirement have changed drastically over the years. Post and Pre retirees can continue to accumulate wealth for their estate and for themselves without having to experience any significant decrease in their retirement spending; with the correct application of guaranteed income riders available today.

An income rider pays out, without annuitization. This allows for more flexibility and access to emergency funds.

When you annuitize a contract you set a defined amount of income for a chosen duration of time without the ability of change. At the end of the chosen time period your funds have been completely withdrawal at a minimal interest rate. There for the trade-off for receiving this income is the loss of emergency liquidity and control. For instance, the amount of time you draw these funds cannot be adjusted. The amount of payment cannot be modified once annuitized.

Income riders allow you to exert more control over your income stream. You still have enough control to take more then the allotted income if needed. If you were to elect income from most income riders, the majority of your principal would still have the ability to be linked to a guarantee rate, an index or another form of growth potential unlike annuitization.

This alterative allows you to guarantee an income you can not out live as well as give you the opportunity for addition index linked or guaranteed interest rate gains.

Safe Money Representatives and Safe Money Resource Launch "Learn How to Retire" Web Resource

Safe Money Representatives and Safe Money Resource Launch "Learn How to Retire" Web Resource

Burlington City, NJ., 20 April, 2009 - In response to the continuing turmoil in today's financial markets, and the growing sense of unease, Safe Money Representatives announces the launch of their new digital retirement information resource http://www.learnhowtoretire.com. 

"Losing money has become a collective concern among those approaching retirement age. It is important that everyone confronts this concern through education, understanding, communication and planning.” says Brent Meyer, SMR President. 

"All financial objectives need to be put back on the table and evaluated. Our feeling is that now is the perfect time to start planning for your future and making sure the money you need to live on will be there for your retirement. There are amazing new strategies for accumulating wealth while protecting it from losses. We want to make sure every person interested in learning about retirement planning has the resource to understand what is available to them and is aware of their options." 

"More than anything, we want to facilitate conversations between investors and advisors so that every person interested in learning has access to qualified information and qualified advice. This is how LearnHowToRetire.com  will help thousands of people to protect their wealth and plan for a comfortable retirement. We don't disguise who we are or where we come from, but make it clear that LearnHowToRetire.Com is designed to be a research center for individuals looking to be educated on retirement planning, and to be a toolbox for investors reevaluating their investment strategies that are now more interested in Safe Alternatives for their clients. Now is the time for everyone to learn all they can about retirement in terms of financial preparedness and we are excited to be able to contribute.”

“LearnHowToRetire.Com is continually updated with Safe retirement strategies and advice from all over the web, and from our network of certified and trusted experts. We want investors and financial professionals to see all sides of the retirement planning conversation. We will launch a blog shortly to get the conversation going and to keep it going. We will also launch a live chat system to provide real-time answers to investors’ questions. This site is offered as a free service to individuals to learn about retirement from a safe perspective so they can make educated choices that are right for them. We are most concerned for the folks out there who don't have a financial plan in place as they approach retirement, and who could very shortly find themselves faced with having to select from a small set of very bad choices. Simply put: It is never to early or to late to learn how to retire."

Safe Money Resource, located in Burlington City NJ, is the resource hub for a network of qualified financial representatives who meet the highest standards of ethical conduct and have proven records of integrity, knowledge and respect for helping people make the right decisions in planning for their retirement. Safe Money Rep is an online tool that allows individuals to find certified, local financial professionals who can help walk them through different safe income planning and retirement planning options.

For more information about LearnHowToRetire.com, Safe Money Representatives or Safe Money Resource call (800)790-7791 or leave message at: 1-800-787-2406

Contact:

Brent Meyer

Safe Money Resource

351 High Street

Suite #201

Burlington City, NJ 08016

Phone:(800)790-7791

Fax:(609)747-0277

http://www.LearnHowToRetire.com

http://www.SafeMoneyResource.com

http://www.SafeMoneyRep.com

Never More Important Than Now: Learn How To Retire

Yesterday marked the official release of LearnHowtoRetire.com and we don't think it happened a moment too soon.  Given the economic climate today, everyone, young and old, should be giving careful consideration to retirement planning.  See this article posted last week by the AP: http://www.google.com/hostednews/ap/article/ALeqM5hWfCM1tcJYNZv4Sq4t1uALg__bmgD97I1GS82 Economy dampens hope of a comfortable retirement, by David Pitt. Since this constitutes our first official bog entry, an evaluation of this article seems like a good place to start. The subject of the article is a recent study performed by the nonpartisan Employee Benefit Research Institute, which has provided some very sobering insights into the role many American workers are taking in their own retirement planning process.  Here are some of the key takeaways cited in the article:

• 13% of US workers say they will be able to live comfortably in retirement.
• 20% of retired people surveyed believe they will be financially secure, down 50% from 1 year ago.
• Less than half of the workers surveyed have tried to calculate how much retirement savings they will need.
  
• Only 7 percent say they have used an Internet calculator
• Less than one fifth say they have checked with an advisor
• 41% of workers that don't have defined benefit retirement plan at work believe they have one

These are only a few of the statistics provided by the study. I urge you to read the article to get the full import of it's contents.  To me it is very concerning all around, but specifically from these three angles:

1. While only 13% of workers polled believe they will be able to live comfortably in retirement, less than 20% of those polled have discussed the matter with an advisor.
2. Many people believe they have a defined benefit plan at work, when in fact they have a defined contribution plan, or worse, no plan at all.
3. Only 44 percent of workers say they have tried to calculate how much money they'll need to have saved for retirement. Another 44% is just guessing.
   

This underscores the fact that individual investors aren't taking the appropriate action to educate themselves on retirement planning or haven't contacted a financial advisor to begin the process of calculating how much they will need in retirement.

I wonder if data like this indirectly points to a kind of distrust individual investors have developed for financial counselors given the financial upheaval over the last year.

One thing is for sure: Individuals, most importantly those of retirement age or appraoching it, cannot simply keep their fingers crossed and hope for the best.