Simple steps to a better retirement plan …

In a couple days, I’ll be heading down to Orlando to attend the 2012 World MoneyShow.

I always enjoy my time at this annual event because it gives me a chance to interact with other investors on a more personal level. I get to hear what they’re thinking about … to discuss the investments they’re using … and to talk more about the challenges and opportunities that they’re facing.

For the third year in a row, I’ll also be sharing some of my big-picture ideas, strategies, and investing ideas in a special workshop. And if you’re planning on coming to the show, I hope you’ll attend!

Of course, either way, I wanted to give you a sneak peek at what I’ll be discussing in Orlando because I think these ideas are absolutely crucial to your financial well being. So without additional fanfare, here they are …

First, You Have to Recognize Just How Shaky
The Old-Line Retirement Systems Are …

I have written a lot about Social Security, pensions, and other traditional retirement systems here before. But what blows my mind is that — despite a nearly-universal recognition of the problems — very little is being done to actually ADDRESS them.

Let’s just stick with Social Security for a moment.

We know that it is already taking in less money than it pays out. Even the program’s trustees — who have been miscalculating the shortfalls and timetables all along — now think this situation may be permanent without changes being undertaken.

And yet not only did lawmakers pass a package that equated to even LESS money flowing into the system for 2011 and the first two months of 2012 … but they are now working feverishly to extend this legislation through at least the rest of this year!

As I’ve said in the past, I’m as happy as anyone to keep more of my hard-earned money out of Uncle Sam’s hands. However, I’m continually appalled at just how far into the future our supposed leaders are willing to push major fiscal problems like the Social Security mess … and how they will even recklessly exacerbate the problems just to save face or build some short-term goodwill with the American public.

Meanwhile, we continue to see similar mismanagement across the individual states regarding their retirement promises. Massive shortfalls in these pension systems remain commonplace — the legacy of unrealistic promises made to win political favor and planning that was based on only the rosiest scenarios.

Now, am I predicting that retirees will be left out in the cold? That Social Security will implode or state pensions won’t deliver any income in retirement? No.

However, I wouldn’t make any of these systems the sole basis of your retirement plan.

In fact, at this point, I believe only corporate America has done anything to truly tackle this elephant in the room — by shoring up their pension plans, ratcheting back promises, and yes, in some cases reducing or cancelling former promises that were made to workers.

That’s why — no matter what you believe about the fairness of the situation — I continue to say …

It’s Imperative That You Continue
Building Your Own Personal Nest Egg

Look, I hope I’m wrong. I hope all of our systemic problems are magically fixed and everyone gets the money they always planned on.

But retirement planning is all about WORST-CASE scenarios. Hey, it’s a lot better to end up having too much money during your golden years than to come up short.

So the answer is to save aggressively, save often, and make that money work for you without taking massive risks.

I give this same suggestion to everyone I speak with — regardless of their age, income level, or investment background.

Of course the next immediate question is always about HOW to actually do this.

You probably already know my primary answers, but here they are in an easy step-by-step format:

First, you establish a budget that allows you to both enjoy the present while saving for the future. (And while people often tell me how impossible this is in their particular situation, I have rarely seen an instance where they were right.)

Second, your initial savings goes toward a liquid emergency fund.

Third, after that liquid emergency fund is established, you start using tax-advantage retirement accounts — 401(k)s, IRAs, etc. — to save even more money for farther down the line.

And once you get to the third step, you consider using an age-appropriate mix of cash, bond funds, and dividend stocks to build a solid investment portfolio. If you like gold and other alternative assets, you can add some of those, too.

This Is Precisely the Simple Plan That I
Recommend to My Own Family Members …

My 64-year-old father’s income portfolio is a great example. Over the last year and a half we have gradually shifted his money from a pay-nothing money market fund into a solid list of dividend-paying stocks as well as a select bond fund.

While we still have about 40% of his $100,000 in cash … he has earned a 9% overall return on his money so far … which is more than a hundred times the return he would have had otherwise!

As we put even more of his assets into higher-yielding investments, I expect the returns to only increase at a faster rate.

Plus, as I mentioned last week, I’m now preparing to use more advanced strategies like covered call writing to squeeze even better income out of the investments he already owns, too.

And I’m confident that these same approaches would work for you.

No, there aren’t any shortcuts to gaining financial security. It takes work, planning, and self reliance.

Moreover, today’s rock-bottom interest rates and choppy markets are only compounding the challenges we all face.

But with a little know-how and discipline you CAN get the comfortable retirement you deserve. You just have to roll up your sleeves and get started.

Best wishes,

Nilus

P.S. I’m also planning on getting into some of the specific investments that I’m currently recommending during my Orlando workshop. But if you can’t attend, you can always learn more about them by watching this online presentation right now.