The Dow continues to make new highs. The Federal Reserve is largely defanged. And central banks all over the world are pouring out money that seems to be driving up their markets virtually nonstop.
So it should come as no surprise that the dollar is falling.
Nor should it surprise you that investors today have become more complacent about risks than at almost any other time in history.
Worse, millions of Americans approaching retirement are virtually ignoring the steps they must take urgently to build their nest-eggs.
Sherri Daniels, president of our separate money management affiliate, is passionate about confronting this challenge head on, and she has some practical solutions I find refreshing.
For example, clients in their more conservative convertible bond program have enjoyed over 14% growth since inception.* And in their aggressive, but still disciplined, global program, their clients have made nearly 63%.**
So this morning, I have invited Sherri to give you her views on the retirement challenges you face, plus some possible solutions for you.
Your Retirement Challenges
And Your Possible Solutions
by Sherri Daniels, President,
Weiss Capital Management, Inc.
On each and every day of the year, almost 8,000 American baby-boomers celebrate their 60th birthday. That’s 330 new boomers per hour who are just a stone’s throw away from the traditional retirement age of 65.1
But sadly, many are ill-prepared to meet their retirement needs. Even if they are living a comfortable lifestyle in pre-retirement, they often lack ample savings to support themselves in anywhere near the same style during their later years.
The basic problem: Many people simply failed to plan for the rapidly changing landscape of retirement savings and investments that threaten to snare the unprepared. And nearly everyone ignored the fact that they’re likely to live a lot longer — typically into their late eighties or even nineties. That’s a good thing. But it also requires a far larger retirement nest-egg.
According to Benjamin Stein of the National Retirement Planning Coalition, “Tens of millions of Americans are seriously underprepared to meet their financial needs in retirement.†By some estimates, as many as 40 percent have saved almost nothing.2
The dire reality: Too many people are now destined to suffer a severe decline in their lifestyle … to get saddled with unpayable health care costs … and to outlive their nest-egg.
And that’s often true even if they start their retirement with a nest-egg that’s relatively substantial.
Seismic Shifts in Supposedly
“Rock Solid†Retirement Funds
In this age of shrinking nest-eggs and ballooning expenses, you’d think you could at least count on the private and government retirement funds that are supposed to give you some extra cushion.
And indeed, in the past, retirement was about getting a gold pocket-watch along with a guaranteed pension plan for life. Not anymore …
First, traditional, defined-benefit pension plans are going the way of the drive-in movie theater — quickly disappearing.
Second, among the few defined-benefit pension plans that remain, most are woefully underfunded.
According to government estimates, the level of underfunding in the private-pension system has skyrocketed 350% over the last five years, to a staggering $450 billion deficit today (see graph).3
Many will fail and need to be bailed out by the U.S. government.
Third, even the government’s fund — the Pension Benefit Guarantee Corporation — is deep in deficit.
Fourth, Social Security is in jeopardy. Social Security payments today account for about 40¢ on every retirement-income dollar for Americans age 65 and older. But the Social Security Trust Fund has an unfunded deficit totaling $4.6 trillion.1,4
So regardless of a tirade of promises from Washington, the plain, unvarnished truth is that the U.S. Social Security system is on a path toward going broke, without enough trust-fund dollars to cover the billions that baby boomers are counting on over the next several decades.
Fifth, Medicare is in worse shape than Social Security. Reason: Surging health care costs, the bulge of baby boomers needing health care, and the national epidemic of long-term, expensive-to-maintain diseases such as diabetes and Alzheimer’s.
In short, you cannot take your retirement cushions and safeguards for granted. Now, more than ever, it’s vital that you be proactive in planning for your retirement. And in my opinion, there’s no such thing as “too early to start.â€
Nor is it ever too late. Even if you’ve been slow to act, I feel now is the best time to take charge of your future.
Three Steps and
Three Solutions
If you’re not doing so already, here are some basic steps you can take immediately.
Step 1 is the most obvious: Save more!
How? One simple way is to match each dollar you spend on leisure activities … and then put that money away in a personal retirement account. That single step alone can build up a substantial nest-egg within a few short years.
Even if that means cutting down on having more fun today, it may mean you’ll be able to have more fun tomorrow.
Step 2: Make sure you keep a portion of your nest-egg in the most conservative investments you can find, such as a U.S. Treasury-only money market fund. The investments it uses are backed by the full faith and credit of the U.S. Government. Your income is not subject to state and local income taxes. And you can make withdrawals by immediate wire transfers or just by writing checks against your balances.
Step 3: Seriously consider investing globally, with bonds, stocks or some combination. It can help protect you from any decline in the dollar. And it can help you diversify across multiple regions of the world.
Plus, let me offer you three investment solutions …
Solution #1. Request our just-released free report, entitled Funding Your Retirement Lifestyle: How to Preserve and Grow Your Retirement Nest-Egg. In it, we give you the details on the retirement challenges I just touched upon. And we offer you very specific investment strategies for you to think about.
Solution #2. Consider our Weiss Total Return Convertibles program, using primarily convertible bonds. This program gives you what we feel is the best of both worlds — solid income from bonds plus the opportunity to participate in stock-market gains, while avoiding much of the declines.
Last year, our clients in this program enjoyed 8.82% growth, net of all fees and commissions. And from inception (March 31, 2005) through the end of last year, they’ve seen their money grow 14.4%. (That’s an annualized return of 7.97%.)
Solution #3. Our aggressive, but still disciplined, All-Star Growth Program, using what we feel are among the best professionally managed international and domestic mutual funds. The program helps diversify out of the U.S. dollar and gives you a stake in what we believe to be some of the most promising foreign markets. And we’re participating in a “no-transaction-fee†mutual-fund platform. So our clients can have access to these funds and to some of the most highly qualified portfolio managers, with no loads.
Last year’s results for our clients: Up 17.26%, net of all fees and commissions.
Results since inception (August 6, 2004) through year-end: 62.94%, again net of all fees and commissions. That’s an annualized return of 22.53%.
No one can predict the future. And my experience is that some of the strongest past performers can often turn out to be some of the worst future performers. But I feel our programs are on the right track, and we’re doing everything in our power to keep them there.
One final word: No matter which solution you choose, for your own sake — and for the benefit of anyone who depends on you — you should give yourself the opportunity that nearly everyone is neglecting: An enjoyable retirement.
Best wishes,
Sherri
Sherri Daniels, President
Weiss Capital Management, Inc.
www.WeissCapitalManagement.net
800-814-3045
P.S. Notes on my research sources are available by clicking here, as well as important disclaimers.
About MONEY AND MARKETS
MONEY AND MARKETS (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Sean Brodrick, Larry Edelson, Michael Larson, Nilus Mattive, and Tony Sagami. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM. Nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical inasmuch as we do not track the actual prices investors pay or receive. Regular contributors and staff include John Burke, Amber Dakar, Wendy Montes de Oca, Kristen Adams, Jennifer Moran, Red Morgan, and Julie Trudeau.
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