The recent debacles with the stock market and other securities have many wondering: is my money safe in an insurance policy. The answer: a definite “maybe.”

Insurance companies are required to hold sizable reserves. They are generally forbidden from making wild speculations with the money. Unfortunately, though, many of the mortgage-backed securities that have fallen to a fraction of their previous values were considered rock-solid before the “crash”—so solid, in fact, that they received highest safety rankings from the bond rating services.

How is your insurance company doing? You can find out, but it will take a little research. Check out the Web sites of the primary rating services: Standard & Poors, A. M. Best, Moody’s National Association of Insurance Commissioners (NAIC) is an organization representing the insurance departments of all 50 states.

You can also check out the site of the

Finally, the National Organization of Life and Health Insurance Guaranty Association (NOLHGA) can be a useful resource. This organization provides, among other things, information on state guaranty associations and insurance companies that have failed or are in danger of failing.

We wish there were an easy way to know if your money is safe with an insurer. The bottom line: if you want peace of mind, you’re going to have to do a little homework. The time and effort invested, however, will be well worth it.

Right now, the last thing most investors are worried about is inflation. The price of almost everything, from real estate to stocks to mutual funds, is going down. If you want to get more for your money, all you have to do is sit back and wait until even better bargains come along. In other words, we are experiencing deflation. There are, however, indications that this situation may be short-lived, and that inflation may soon once again rear its ugly head.

The recession that we’re currently experiencing has been more painful for more Americans than any other economic slowdown since the Great Depression. Not only have many lost their jobs—tens of millions have lost a big chunk of their retirement savings, and even their homes as well. And more people than ever before are struggling under enormous loads of debt. For them, even a minor economic setback can spell disaster.

President Obama was elected on campaign promises of “change” and “hope.” The expectations placed upon him are high. If he wants to have a chance at re-election, he has to deliver on his promises. So he’s making an earnest attempt. It’s called a “stimulus package.”

The “stimulus” essentially consists of a diverse bundle of government spending programs to the tune of at least a trillion dollars (that’s $1,000,000,000,000.00). Where will such an astronomical sum come from? According to official statements, the President intends to increase the deficit—in other words, the national debt. This means that the government will borrow the money it needs.

But from whom? Who is going to pony up a trillion bucks, and hand it over to Uncle Sam in exchange for an IOU (i.e., government bonds)? Foreign countries such as China, Japan, and Saudi Arabia are already big lenders to the U.S. government. And they’re experiencing recession, too. Their ability to lend is just about tapped out. Domestic lenders are also at the end of their ropes. Trillions of dollars have been wiped out in the stock market and real estate crashes. Is there anybody left?

Though official spokespeople don’t like to talk about it, there is one institution that is capable of putting up the money. It’s called the Federal Reserve. When the “Fed,” as it’s commonly known, wants to either (a) make credit more easily available or (b) stimulate the economy, it buys up debt instruments such as bonds using money that it essentially creates out of thin air. That money then goes into circulation. Some if it ends up in the “reserves” of commercial banks, who can then re-lend it, causing a “multiplier effect” resulting in the creation of even more new money.

Once the “stimulus package” is implemented, and the government begins its spending spree, the economy will indeed start to recover. More money in the hands of businesses and individuals will mean more consumption, more investment, more jobs, and more income. At least some of the pain of recession, maybe all of it, will be relieved.

But as all that newly minted money surges through the economy, and is multiplied through repeated lending and borrowing, prices will be driven up. The glut of dollars will drive the exchange rate down, making foreign goods more expensive. And unfortunately, most of what Americans consume are “foreign goods.” When was the last time you bought a shirt, a chair, or a toothbrush “made in USA”? You can’t even buy a U.S.-made TV or DVD player because none are manufactured here. As prices for foreign-made goods surge, Americans will have to send even more dollars overseas to get their goodies, which will make the dollar glut even worse. Not a pretty scenario.

As if this weren’t bad enough, inflation of this kind inevitably drives interest rates up. After all, if money is worth 10% less every year, lenders have to get at least 10% in interest just to break even. This will have two very unpleasant effects. First of all, even though the value of money will be going down, real estate prices will drop, since homes will become less affordable as mortgage rates surge (this happened during the great inflation of the late 1970s). Second, because bonds will be paying high interest rates, stocks will have a hard time competing. A dividend yield of 5%, which looks attractive right now, will appear paltry compared to 10% or 15% yields on bonds. This will cause stock prices to drop, further battering beleaguered 401(k) plans and other retirement investments.

So what’s a future retiree to do? This complex situation cannot be mastered through simple “buy and hold” strategies. Now, more than ever, it is essential to carefully monitor the economy. At present, while the outlook is (temporarily) deflationary, cash investments, such as short-term high-quality bonds, are an excellent investment. But stay away from long-term bonds: the last thing you want to do is “lock in” low interest rates. When the economy finally gets going again, corporate profits may rise, and with them, stock prices. But beware: inflation can easily crush stock prices, as described in the last paragraph. So our advice is: invest only very cautiously in stocks, and be ready to pull out of them if interest rates and inflation rise. In fact, it may be best to “get ahead of the curve” and invest in such inflation-busters as gold and inflation-protected bonds now, while they’re relatively cheap. The best time to invest in life insurance is when you’re young and healthy. The best time to invest in “inflation insurance” may well be at the time when people don’t feel they need it—in other words, right now.

As baby boomers prepare for retirement, many have a vague feeling that they’d do well to insure themselves against the potentially disastrous cost of long term care. But when they start delving into the details of long term care insurance—perhaps by conducting research on the Internet—they find the subject to be unpleasantly complex, confusing, and downright mysterious. But understanding and weighing your many options need not be a drawn-out and harrowing experience. Here are seven simple points to bear in mind that can serve as a compass as you navigate the various plans and policies currently available.

1. Be sure not to purchase more coverage than you need. Before purchasing insurance, get a feel for the costs you’ll need to cover. What can you pay out of your own pocket? What can’t you? Then, draw up a realistic “budget” of what you’ll need, and how much it will cost.

2. If you decide you need insurance, don’t put off purchasing it. Until the actual need for care arises, it’s tempting to fall into a “wait and see” attitude. This can be a big mistake. As you become older, the cost of insurance will rise. If your health deteriorates, you may be denied coverage altogether. The best time to purchase it is while you are younger. This will enable you to “lock in” a reasonable premium rate. Remember the old saying: “better safe than sorry.”

3. Don’t forget about the effects of inflation on health care costs. It’s no secret that inflation and health care costs are retirees’ two worst enemies. Inflation of health care costs can be especially devastating. You can protect yourself by including “Compound Inflation Protection” in your policy. Yes, it comes at a price. But the peace of mind of knowing that your benefits will keep up with rising costs is probably worth it.

4. Consider your family situation. What will the effect on your family be if you or your spouse require special care? Is anyone in your family willing and able to provide it? Or will you need to enter a nursing home? It’s unfair to your loved ones to ignore these issues while you’re still self-sufficient and healthy. The day may come when you are no longer in a position to take care of yourself, or even to make intelligent decisions. If you’ve made no preparations, you’re essentially foisting an onerous and burdensome situation onto your family—a situation that could have been avoided.

5. Understand what Medicare covers—and what it doesn’t. Many people sidestep the issue of long-term care by assuming that Medicare will cover the cost of any and all care they may need in their declining years. This is simply not true. When discussing your insurance needs with an agent, emphasize that it is important to fill in the “gaps” in Medicare’s coverage.

6. Don’t forget about geographic factors. Costs of long-term care can vary widely from region to region. If you need long-term care, where will you want to be? Near where you live right now? Close to a child or other relative? In a warmer climate? Once you’ve narrowed down your choices, contact some facilities in the appropriate areas and inquire into their rates. This will help you understand what the real costs will be.

7. Get the right coverage at the right price. A good way to do this is by comparing the prices and the coverage from several different insurance companies to see which ones offer the best rates with the most amount of coverage. A little bit of shopping around will both save you money, and give you a feel for what is reasonable, and what is not.

Yes, choosing the right long term care insurance can be a challenging task. But by tackling it while you’re still young and healthy, you can avoid creating an undue burden on your loved ones—and yourself—at a time when you’ll be much less able to bear it.

For many, the dream of retirement in a warm paradise in the sun seems far out of reach. But Costa Rica offers countless Americans, Europeans, and Canadians (among others) the chance to retire in a beautiful, tropical climate; and unlike many other overseas destinations, this small, stable Central American country is both affordable and relatively crime-free. Here are some of the reasons why many Americans have retired to Costa Rica, and why future retirees should at least consider it.

Low cost of living. Costa Rica is one of the most affordable places to live in all of Latin America. First of all, the Colon (the local currency) is trading at the very favorable rate of 558 to 1. This means that when you exchange your dollars you will have a lot more to spend on everything ranging from housing to everyday living. Health care in the country is inexpensive but good: many of the doctors were trained in the United States, Canada or Europe. There is even a great educational system for those retirees who have children whom they are responsible for—and a number of excellent colleges as well. Many retirees live very comfortably on $1,500.00 a month. Without the cost of living challenges that so many stateside retirees face, you’ll be free to relax and enjoy all the scenic beauty that this tropical oasis has to offer.

Highest standard of living in Central America. Since 1948 Costa Rica has no army. The money that would have normally been invested in military equipment has been put to use into education and health care. This has resulted in the highest literacy rate in all of Central America. The country has two outstanding English newspapers as well as cable or Direct TV with all of the U.S. channels. With a national park system that takes up a quarter of the land for the protection of wildlife, Costa Rica has been called the Switzerland of Central America.

Friendly taxation policy. If you are age 45 or older, you can apply for the easy to relocate retirement system though the Costa Rican government. This offers many benefits including tax exemptions. One the best is that you do not have to pay any income tax on your retirement income. Also, the country also offers substantial tax breaks to purchase real estate. If you do so, you’ll bring down your cost of housing and will have more money available to spend on other things.

Low crime rate. By taking an especially hard line on illegal drug trafficking, Costa Rica has achieved the lowest crime rate in all of Latin America. As in any other country, there is some petty theft, but violent crime is virtually unheard-of. Retirees in Costa Rica can walk freely about without constantly fearing that they might become the next victim of a crime.

Lots of activities. Costa Rica sits between the Caribbean Sea and the Pacific Ocean. Its many geographical features include volcanoes, mountains, beaches, and rain forests. Social activities such as sports, nightlife, and dining abound. The country has two major international airports and can easily be reached from any major U.S. airport by most airlines within a few hours.

For just $1,500.00 a month, you can enjoy a comfortable, worry free retirement in a stable, low crime and tax friendly country that many Americans, Europeans, and Canadians have already decided to call home. You’ll still have access to world-class health care; and if you suffer from homesickness, you can be back in the U.S. within a few hours. These are just some of the many reasons why an ever-increasing number of retirees are flocking to this beautiful tropical paradise.

There is, however, a type of policy that can. It’s called “universal life.” A universal life policy is structured in two parts: protection and investment. A portion of your premium payments goes into the protection component, which is basically the same as term insurance. The remainder goes into investments such as stocks, bonds, or money markets.

As the investments grow, they should eventually become substantial enough to fully fund the protection portion of the policy for the remainder of its term, which is often to age 100. So unlike term insurance, universal life does not simply expire worthless if you live beyond the end of the term.

You can purchase universal life by paying monthly premiums, which will gradually build up the investment component of the policy, or by making a single lump sum payment, which will fully fund it immediately.

The investment component can be used to complement your other retirement funds. When the value of the investments reaches, or even exceeds, the face value of the insurance policy, you’re not really “insured” any longer; rather, in the event of your demise, your beneficiary will simply be receiving what was already your money. So now, you have a choice. You can simply let the policy “ride,” and take comfort in the fact that the investments it contains will one day go to your beneficiary. But you also have the option of withdrawing some or all of the money while still living. So it’s a “win-win”: you know that if you die relatively young, your family will be protected; but if you live a long life, you’ll be able to tap into the value of the policy when, perhaps, other retirement investments are starting to dwindle.

It is important that you recognize that true universal life is a term policy with an investment component that builds value to the point that eventually the term premiums are paid by the value built. This is significant because some companies sell policies that are actually whole life—never becoming self-funding—and call them “universal life.”

When buying a universal life policy, it is therefore important that you get several quotes, read the fine print, and do your homework. By the way: by law, you have three days to make your final decision on any policy. Use them to read every word, and to make sure you’re getting the policy you really want and need.

Especially in these uncertain times, future retirees are seeking maximum safety for their retirement nest eggs. Bank certificates of deposit (CDs), government bonds, and top-quality corporate bonds are traditional safe investments. Assuming you want to invest in them, how can you maximize return on investment without incurring risk, or being forced to “bet” on whether interest rates are going to rise or fall?

An ideal way to accomplish this is by using an investment strategy known as laddering. Basically, laddering is the process of spreading out different time frames (maturities) and interest rates to ensure that your overall portfolio has the desired average maturity and interest rate.

In order to accomplish this, you place a portion of your total investment in short term maturities (one to two years), then some in medium term maturities (three to seven years), and the remainder in longer term maturities (ten years). When the short term investments mature, you place the proceeds into longer term maturities, essentially leapfrogging over the longest maturities you currently hold. Because you always hold the bonds or CDs to maturity, you don’t have to worry about them rising or falling in value in the interim. This shields you against potential losses if interest rates rise. If interest rates fall, you have locked in at least a portion of your investment at the higher rate for the longer term. It’s a “can’t lose” strategy for those who aim not to speculate on interest rate fluctuations, but rather to get maximum returns with minimum risk.

Once you’re retired, you can continue to employ the strategy, and you’ll have the same advantages as before. But then, an additional benefit will come into play: because a portion of your portfolio will be maturing every few years (or even every year if you structure your “ladder” accordingly), you’ll never have to wait for long periods of time, or cash out early, in order to have available funds. If you need some of the money, you can simply withdraw it without worrying about whether bond prices are high or low. If you don’t, you can keep the ladder going as before.

In short, the strategy of laddering belongs in every future retiree’s portfolio. If the fixed-income portion of your portfolio isn’t yet laddered, why not get started today? You have nothing to lose.

Yes, You Can Still Retire Comfortably:
The Baby-Boom Retirement Crisis and How To Beat It
by Ben Stein and Phil DeMuth
Copyright 2005
New Beginnings Press
ISBN 1-4019-0318-5
Available from any bookstore, Amazon, or the websites mentioned in this article.

Why Buy This Book

Most books written for a consumer audience about investing and saving for retirement read like manuals written by MBA candidates. They simply aren’t accessible for the average reader who doesn’t want a lot of esoteric financial info that shows how smart the author is. Too often, the content is boring so the book ends up on the bedside table each night because you fell asleep reading.

Readers interested in retirement, and that’s most card-carrying members of the Baby Boom Generation, just want to know one thing: how can I afford to retire?

This book shows you the way. Don’t think it’s out of date because it has a 2005 copyright. Stein and DeMuth, the authors, post free updates to the book’s data on the Internet.

We Boomed

We are the Baby Boomers. We reigned long and loud. We rocked from Elvis through the British invasion to the Eagles. We fought in Vietnam, watched a man walk on the moon, and lived to embrace the new Millennium. Unfortunately, one thing many boomers didn’t do was prepare for the biggest expense of their lives: retirement. When the first boomer applied for social security, that was a wake up call for many.

Is It Too Late

Sure, this is a book we all should have read about 30 years ago. However, according to the book, we haven’t yet missed the retirement boat. True, our country is facing an economic downtown, but that just means you need to make some smart decisions now, not later.

Value Offered

Stein and DeMuth’s book is worth the purchase price if only for their 21 Basic Rules of Retirement.

With 11 chapters divided into 3 parts plus an appendix you’ll learn what those basic rules are, how to plan decade by decade, how much you need to save, how much you should spend, how to create a couch potato investment portfolio, and what to do if, God forbid, you just end up without enough. The appendix gives: 25 Big Truths of Retirement Planning and Retirement Withdrawal Strategies–Other Voices.

User Friendly

Written in a friendly conversational style, the book is a resource of easy to understand facts and a treasure of down to earth advice. This isn’t your father’s investment book. Chances are your dad had a secure company pension when he needed it. This book is for us, the boomers who want second careers and new adventures. We still would rather burn out than fade away. That’s the spirit of our generation.

How do we make our future dreams come true? This book points you in the right direction. The rest is up to you.

The Authors

Ben Stein is known by many for the teacher he played in Ferris Bueller. In addition to being an actor, he’s a lawyer, a writer, and a respected economist whose father was a world-famous economist and government adviser. Most of all, he’s practical and possesses enormous common sense.

Phil DeMuth has a master’s in communications and a Ph. D in clinical psychology. He’s also a registered investment advisor, is well-published in all the nationally-known business periodicals, and owns Conservative Wealth Management in Los Angeles.

Click here to read more on amazon.com.

Guest blogger is novelist and freelance writer Joan Reeves

While specifics differ among companies, the most commonly offered retirement plan is the 401(k). In case you’re not aware of how it works, the 401(k) allows you to invest directly from your gross income without any tax deductions. Your money grows and compounds tax-deferred until you’re ready to retire. When you change jobs, it is important for you to understand your options.

Withdrawing the Money

Most departing employees need not even consider this option. If you make an early withdrawal, the amount you withdraw is subject to taxation as ordinary income and an additional penalty tax of 10% is levied. Unless you are in dire need, this is a very bad idea.

Rollover to an IRA

This will be the wisest course of action for most departing employees. The transfer of assets from a 401(k) to an IRA is called a “rollover,” and is the simplest of the options. An IRA is an Individual Retirement Account that continues to shelter your money from taxation. The rollover can be completed through direct transfer, or a trustee-to-trustee check. Consult your 401(k) plan administrator for details.

Leave the Money Where It Is

For employees who have yet to accumulate $5,000 in their 401(k)s, this is generally not even an option. If you have over $5,000 in your 401(k) account, your company will usually allow the money to remain in their plan. This means that at retirement, you can withdraw the money from the plan in the normal manner. If you are unsure of your next employer, or are receiving an excellent return on investment at your current company, this is the right choice. Otherwise, you will probably choose an IRA rollover.

When you leave an employer, the 401(k) plan administrator is required by law to give you detailed information regarding your 401(k) plan balance, and procedures for rollover and other options. Make sure you understand the ramifications for your 401(k) before you change jobs. If you are still unsure, consult an accountant or trusted financial advisor.

If you’re a Baby Boomer, born between 1946 and 1964, you may be starting to notice a few more creaks and groans in your joints when you get up from your recliner than you did a few years back. Since Baby Boomers are by far the largest segment of our population, at least you have the knowledge that you’re not alone in this. But is there something you can do to improve the quality of your life and increase your longevity while forestalling age-related illnesses? Yes, better Baby Boomer fitness is possible and exercise is the key.

Surveys show that most Boomers aren’t happy with their current level of fitness. Many have come to realize that it’s time to stop focusing so much on looks and begin a workout that focuses on health. Getting fit can help reduce the risk of heart disease, help with weight control as well as blood pressure and cholesterol control and reduce the risk of developing diabetes and osteoporosis. Exercise increases energy levels and helps manage stress. Whether you plan to retire and play with the grandkids, play golf or tennis, travel, or even continue working, getting in shape and having more energy will help you do all of these things more easily and better.

For Boomers beginning an exercise regimen, a plan that alternates three days a week of 30-minute cardiovascular workouts with three days a week of 30-minute resistance training can be a good place to begin your journey towards improving your personal Baby Boomer fitness. On your cardiovascular workout days, walk briskly, ride a bike or work out on elliptical machines if they’re available. Besides helping your heart, these weight-bearing exercises can help maintain or increase bone mass. To help keep yourself from getting bored, try changing your mode of exercise each day.

For your resistance training days, do weight lifting targeted toward a different body area each of the three days. For example, on the first day work the chest, back and biceps, on the next resistance training day, work the shoulders, triceps and abdominals, and on the third day, work on the quads, hamstrings and calves. This schedule will give each body area plenty of recovery time between sessions. Be sure to take your time and work up to higher weights as your muscles get stronger.

For complete Baby Boomer fitness, don’t forget to exercise your mind as well as your body by doing interactive computer games, puzzles and word games. Ride your exercise bike or walk the treadmill while watching Jeopardy or some other mentally challenging program and you’ll be multi-tasking your way to better overall health.

Since the mid-1990s, an ever increasing number of baby boomers have found themselves downsized, outsourced, or otherwise out of a job. The trend is expected to accelerate as the economy slips into recession.

Many of those affected are in middle management. They’re built their lives—from their kids’ educations to their mortgages to the cars they drive—around the comfortable salaries they’ve grown accustomed to. Now, they’re finding that the very kinds of jobs they know how to do are being eliminated. In other words, ever more elephants are looking for ever fewer watering holes.

Such individuals typically aren’t penniless when they first lose their jobs. They have at least some savings, and perhaps a substantial sum tucked away in a 401(k) plan. When they realize that their chances on the job market are slim, they consider going into business for themselves. They know that most business startups require some initial investment, and they’re willing to make it if they have a reasonable chance of success.

These are precisely the kind of people that franchise organizations target. This isn’t always a bad thing. At its best, franchising lets new entrepreneurs “piggyback” onto the experience of thousands. When you open a McDonalds (or a Subway, or a Jiffy Lube), the franchiser will teach you (and often, force you) to lay out your store, price your products, advertise, and otherwise operate your business in a very specific way: the way that has proven to work. But no formula is foolproof; and some are even intentionally misleading. At its worst, franchising can be a way to waste your life savings and perhaps even mire yourself with debt, leaving you only with shattered dreams.

Dave Taylor (an Internet guru whom I met and had breakfast with at Blog World Expo 2008) has posted a cautionary tale about a Subway owner who lost his store because he couldn’t afford a tax payment of less than $3,000. In other words, he ran out of cash, and that was the end of his business.

The moral of the story: if you’re thinking of investing in a franchise, do your homework, and be very, very sure (1) that the numbers make sense; (2) that the numbers you’ve been presented with are realistic; and (3) that you have enough cash to survive in the event of a miscalculation. Going into business for yourself can be very rewarding, but it also entails considerable risk—even if it involves a “tried and true” franchise opportunity.