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April 28, 2020

Simple Advice on Tapping Into Your Retirement Fund Early: Don’t

It’s no secret that the economy is currently in the midst of a slowdown. How serious is it? The old joke about the difference between a recession and a depression comes to mind: If your neighbor’s out of work, it’s a recession. If you’re out of work, it’s a depression.

Regardless of what you call the current economic situation, you may find yourself short of cash and looking around for a place where you can make up the shortfall. Then, a statement from your 401(k) or 403(b) plan arrives in the mail, and you think: hey, there’s tens (or hundreds) of thousands of dollars “just sitting there.” If I could just take a little out now…
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April 24, 2020

Gold as a Retirement Investment?

When people think of retirement investments, gold rarely crosses their minds. After all, gold doesn’t provide any income, and the whole purpose of saving for retirement is to replace the income shortfall when you’re not working any more.

To be sure, gold makes little sense for those who are already retired, and are seeking an investment that will generate income for day-to-day living. Future retirees, however, are less interested in current income than in growth and security of their retirement nest egg. For them, gold can be a part of a comprehensive retirement saving strategy.
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April 15, 2020

Future retirees beware: Wall Street is lobbying to get its hands on your pension money

The big Wall Street banking and investment firms—the same fine people who brought us the subprime credit meltdown and the mortgage crisis—are now lobbying lawmakers to allow them to buy up and manage your pension fund money.

According to a recent Business Week report, roughly $500 billion—that’s half a trillion dollars—is currently sitting in so-called “frozen” pension plans. These are corporate pension plans that are closed to new members. Because corporations are cutting pension plans, new pension funds become frozen every day, and the trend is expected to continue. Among well-known companies with frozen plans are Alcoa, HP, Verizon, and IBM.

Currently, many of these plans are underfunded due to many reasons, such as fluctuations in the stock market. When this happens, the corporations can be forced to make up the shortfall. Thus, it’s no surprise that many companies would love to get rid of the pension plans even though they’re full of valuable assets.

And it’s no surprise that big Wall Street firms would love to take them over. They could charge their typical fees of 1% to 2% annually to manage them. That equates to billions of dollars of your hard-earned cash that would be gobbled up.

But the danger isn’t limited to a few percent points per year. As Business Week further reports, if the moneymen get the way, some 44 million future retirees’ money could be put at risk
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April 7, 2020

Don’t delay starting a retirement savings program

The old saying “you snooze, you lose” is especially applicable to saving for retirement.

Einstein

No lesser a genius than Albert Einstein once declared “the power of compound interest” to be “the most powerful force in the universe.” That’s probably true; and the second most powerful force is arguably the power of regular saving. Together, they’re “thermonuclear” in power—but only if they have enough time to operate.

For example: based on reasonable historical assumptions, a 55-year-old will have to put away $610 per month in order to have $100,000 saved up by age 65. If he or she had started 10 years earlier, only $216 per month would need to be saved in order to achieve the same result. And if the savings program had begun at age 25, only $50 per month would suffice!


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