Fred Harteis Editors Note: I liked this article because it is very hard these days to save for the future especially retirement. This article will give some tips on making it last.
Anyone with an interest in retirement might find this article interesting.
Investors still dream of striking it rich in risky stocks, but in practice they're on the cusp of turning conservative. Financial reality is slowly sinking in. On July 1 the oldest baby boomers reach 59½—the age when you can easily tap a retirement account without paying a penalty. Those who retire early (or lose their jobs) will step up their regular withdrawals, and pay more attention to keeping their pot of money safe. Future income already looms as a concern, and with good reason. After adjusting for inflation, the average retirement plan is only 3 percent higher than it was back in 1993, according to a survey by John Hancock Financial Services. Younger investors have plenty of time to right themselves, but the boomers don't.
We're creeping toward a new understanding of what retirement accounts are actually for. In the 1990s, you focused on accumulation—how much money could you pile up. But the endgame is income. Your pile has to pay the bills for as long as you live, and you can't be sure how many years you're going to have. You've been thinking, "Go heavy on stocks, even at 65—I have 20 years for my investments to grow." But a new little voice is whispering, "Yeah, but what do I do for income at 65 if I'm retired with no pension and chose lousy stocks?" Here's where nervous boomers might look for security:
Better Mutual Funds
When investors choose their own mutual funds, it's often hit-or-miss. In a 401(k), you might put too much into company stock, or too much in a low-return fixed-income fund. The average saver doesn't know how to diversify, to limit risk. That's something employers worry about, says Avi Nachmany of Strategic Insight, a fund-industry consultant. They don't want to be blamed for losses if their workers retire poor.
Source: MSNBC.com
About Fred
Information: Fred Harteis leads i Team. With a background in construction and agri-business laid Fred’s business foundation.