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Why Everyone Needs "Safe Money"
According to surveys done by AARP and other retirement organizations, pre-retirees and retirees (ages 55-70) had three major concerns: Outliving their money, losing money in the market and loss of buying power-in that order.
Not only are people healthier and living longer, they are planning to be more active in retirement than the generations before. The word
“retirement” is actually becoming obsolete. Although people will discontinue working 40-50 hours a week at their present career, most say they will do some kind of work in retirement; some because they will need the income and some because they want something to do. Many plan to travel, vonlunteer for worthy causes, pursue other interests, or cross off items on their “bucket list”. In any case the days of sitting on the porch when you retire are over for the majority of Americans.
We live in turbulent economic times. The period between 2000 and 2012 has been called the “Lost Decade”. The stock market has been so volatile that after the losses seen in the 2000-2003, the stock market didn't return to its former level until 2008 at which point we experienced another“crash” and it took the market until late 2012 to recover. In other words there was no “gain” in the market for 12 years. Even in the so called “Balanced Portfolio” there were tremendous losses that took years to make up.
Many people saw losses of 20-30% and 30-40% in 2001 and 2008 respectively. With IRAs, 401Ks and stock portfolios decimated, many people who were retiring or planning to retire, had to either drastically reduce their income or delay retirement. Neither option was optimal. To a certain degree, it’s a matter of luck. The sequence of losses and gains can be the difference between retiring with the lifestyle you desire, reducing your lifestyle or running out of money.
Only those people who had a good portion of their money in “Safe” places, using “Index” crediting, which had no losses when the market went down and that still earned a good rate of return when the market went up, were able to weather the storm and still sleep at night.
Not only are people healthier and living longer, they are planning to be more active in retirement than the generations before. The word
“retirement” is actually becoming obsolete. Although people will discontinue working 40-50 hours a week at their present career, most say they will do some kind of work in retirement; some because they will need the income and some because they want something to do. Many plan to travel, vonlunteer for worthy causes, pursue other interests, or cross off items on their “bucket list”. In any case the days of sitting on the porch when you retire are over for the majority of Americans.
We live in turbulent economic times. The period between 2000 and 2012 has been called the “Lost Decade”. The stock market has been so volatile that after the losses seen in the 2000-2003, the stock market didn't return to its former level until 2008 at which point we experienced another“crash” and it took the market until late 2012 to recover. In other words there was no “gain” in the market for 12 years. Even in the so called “Balanced Portfolio” there were tremendous losses that took years to make up.
Many people saw losses of 20-30% and 30-40% in 2001 and 2008 respectively. With IRAs, 401Ks and stock portfolios decimated, many people who were retiring or planning to retire, had to either drastically reduce their income or delay retirement. Neither option was optimal. To a certain degree, it’s a matter of luck. The sequence of losses and gains can be the difference between retiring with the lifestyle you desire, reducing your lifestyle or running out of money.
Only those people who had a good portion of their money in “Safe” places, using “Index” crediting, which had no losses when the market went down and that still earned a good rate of return when the market went up, were able to weather the storm and still sleep at night.
