Where's Your Retirement Money Invested?
Are you complaining about the high price for gasoline and the obscene profits of oil companies? If so, you might want to check your pension plan (401k, 403b, TSP, etc.) to see if you own their stock! Why would stockholders complain about profits at "their companies"? Could it be they're not aware they own stocks? This disconnect is because many workers and retirees put their money in employer-sponsored pension plans without really paying attention to where it's invested. It's going mostly into mutual funds whose underlying assets are stocks and bonds of domestic and foreign companies. Since many are unaware of where their money is invested, are they similarly unaware of the risk they're taking? Unfortunately, many are and this risk could spell big trouble over the horizon in retirement.
For those up to about age 50, this lack of attention to risk is not a major shortcoming because they have time on their side: time for market downturns to correct; time to increase contributions; time for the magic of triple compounding tax-deferral; time to adjust their savings/spending. Unfortunately, there is also time to develop habits that freeze them into their investment pattern. As you near or enter retirement, "time" becomes the enemy because there is not enough time for markets to correct, salaries to rise, and investment growth to occur. Yet, far too many, out of habit, still hold their retirement money in the same risky places. You must make lifecycle adjustments in your investments to lower risks as you near and enter retirement because there is less time to overcome setbacks. This hard lesson was most recently taught during 2000-2002. The previous stock market high was six years ago, or 30% of your retirement years ago. How long until we reach the previous high? The risk: no one knows!
At the end of 2005, approximately 90% of pension fund moneys were invested in assets whose value was determined by the financial markets - stocks, bonds, mutual funds and the like. According to one study, 39% of the 60 to 65 year old participants in 401(k) plans left their money in the plan upon retirement. What does this tell us? Many in their 60's and beyond are investing like they were still working and could afford the risk they're taking. Their do-it-as-always habit has prevented them from making the needed lifecycle investment changes. This could lead to their greatest fear: outliving their money.
The $14.5 trillion in pension plans is being eyed by Wall Street. They would like for you to put and leave your money in the market. That's why you don't get good advice from firms and people who manage and account for your retirement money: if you move it, they lose business. Accordingly, their answers regarding moving your retirement money to a safer place is always going to be "don't". It is in their best interest for you to keep it where it is. They're not taking the market risks that could wreck your retirement plans.
As has been stressed repeatedly, retirement is not a time to make money by taking risks but a time to keep what you've got by not taking risks. If you're in or near retirement, reduce risks by moving to safer places because you don't have time to recover from bad markets. The investment habits of a lifetime have prompted many to leave money in their employers' plans when they retire. This decision could be lethal if you can't afford the risk. The need to change investments in response to aging was well thought-out by our lawmakers as they provided for transfer of pension money so that risk could change in response to your lifecycle. The process is called "rolling over", and you should ask your financial advisor for my free DVD "Rolling Over Retirement Money: Good or Bad" which discusses the pros and cons of this topic.
Summers Asset Management Group
Russell D. Summers, CAC
Certified Annuity Consultant
http://seniortaxsavings.retirerx.com/
727-678-2778
Russell Summers, CAC
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For those up to about age 50, this lack of attention to risk is not a major shortcoming because they have time on their side: time for market downturns to correct; time to increase contributions; time for the magic of triple compounding tax-deferral; time to adjust their savings/spending. Unfortunately, there is also time to develop habits that freeze them into their investment pattern. As you near or enter retirement, "time" becomes the enemy because there is not enough time for markets to correct, salaries to rise, and investment growth to occur. Yet, far too many, out of habit, still hold their retirement money in the same risky places. You must make lifecycle adjustments in your investments to lower risks as you near and enter retirement because there is less time to overcome setbacks. This hard lesson was most recently taught during 2000-2002. The previous stock market high was six years ago, or 30% of your retirement years ago. How long until we reach the previous high? The risk: no one knows!
At the end of 2005, approximately 90% of pension fund moneys were invested in assets whose value was determined by the financial markets - stocks, bonds, mutual funds and the like. According to one study, 39% of the 60 to 65 year old participants in 401(k) plans left their money in the plan upon retirement. What does this tell us? Many in their 60's and beyond are investing like they were still working and could afford the risk they're taking. Their do-it-as-always habit has prevented them from making the needed lifecycle investment changes. This could lead to their greatest fear: outliving their money.
The $14.5 trillion in pension plans is being eyed by Wall Street. They would like for you to put and leave your money in the market. That's why you don't get good advice from firms and people who manage and account for your retirement money: if you move it, they lose business. Accordingly, their answers regarding moving your retirement money to a safer place is always going to be "don't". It is in their best interest for you to keep it where it is. They're not taking the market risks that could wreck your retirement plans.
As has been stressed repeatedly, retirement is not a time to make money by taking risks but a time to keep what you've got by not taking risks. If you're in or near retirement, reduce risks by moving to safer places because you don't have time to recover from bad markets. The investment habits of a lifetime have prompted many to leave money in their employers' plans when they retire. This decision could be lethal if you can't afford the risk. The need to change investments in response to aging was well thought-out by our lawmakers as they provided for transfer of pension money so that risk could change in response to your lifecycle. The process is called "rolling over", and you should ask your financial advisor for my free DVD "Rolling Over Retirement Money: Good or Bad" which discusses the pros and cons of this topic.
Summers Asset Management Group
Russell D. Summers, CAC
Certified Annuity Consultant
http://seniortaxsavings.retirerx.com/
727-678-2778
Russell Summers, CAC
Reachat Credit
Demande De Rachat De Credit
Credit Consommation
Meilleur Taux Credit Travaux
Courtier Immobilier
Credit Rapide
Carte Credit Demande
Credit A Conso
Demande En Ligne Carte Credit
Rachat Credir
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