6:10 am - Monday December 11, 2017

How the Recession Has Changed Retirement Planning

Expert Offers 3 Tips for Baby Boomers

The economy may be recovering, but some of the changes wrought by the
Great Recession may be long-lasting. Anyone planning for retirement,
no matter what their age, needs to take those changes into account,
says financial advisor Philip Rousseaux, a member of the esteemed
Million Dollar Round Table association’s exclusive Top of the Table
forum for the world’s most successful financial services
professionals.

“People in their 40s and younger have some time to retooltheir plan,
but Baby Boomers need to think with more urgency,” says Rousseaux,
founder and president of Everest Wealth Management, Inc.,
www.everestwm.com

“A lot of boomers had all of their retirement investments in the stock
market and, if they didn’t lose their principal, it will take some
time for them to recoup their gains. Others moved their money to
short-term savings, like CDs. But with interest rates so low, they’re
actually losing money when you factor in inflation.”

Those are the two most common mistakes people make in retirement
planning – having everything in either stocks or short-term savings is
a bad idea, he says.

“Space your investments so they’ll come due as they’re needed,”
Rousseaux says. “Plan some that can be available in the short term,
for emergencies, and others that will be available as you age.”

Only 14 percent of Americans are very confident they’ll have the money
to live comfortably in retirement, according to a 2012 survey by the
Employee Benefit Research Institute.

Here are Rousseaux’s suggestions for ensuring you’re part of that 14 percent.

• Don’t take risks you can’t afford. This is another common mistake.
“Don’t put the bulk of your assets into anything that makes your
principal vulnerable. Gambling that you’re going to win big on the
market, or any other investment, means you also risk losing big.” A
portion of your investment should have a guaranteed return.

• Seek any guidance from independent financial advisors. This has two
benefits: Advisors who aren’t marketing their own products have no
conflicts of interest. “You wouldn’t go to a commissioned salesman for
advice on buying a high-tech product. Instead, you’d probably turn to
a trusted friend or an independent expert source, like Consumer
Reports. Take the same care with something as important as your
retirement.” The second benefit is that independent advisors can
devise creative, innovative solutions to meet the needs of individual
clients. Those working for companies like MetLife are not free to
think outside the box. And that’s especially important In this new,
post-recession economy.

• Consider alternatives to the stock market. One of the effects of the
recession is that the public realizes Wall Street is not a safe
retirement plan. Even if it can get you there, it’s not necessarily
going to keep you there.“There are a number of great, safer
alternatives,” Rousseaux says. One of those is fixed, indexed
annuities. “You loan an insurance company money and it guarantees you
payments over a specified length of time. It’s a contract between you
and the company,” he explains. Fixed-rate indexed annuities have a
minimum and maximum interest payment that’s linked to a common index,
such as the Dow. When the Dow goes up or down, so does the interest
rate, but it never go below the guaranteed minimum or above the
guaranteed maximum. “Your principal is safe and you can ride an up
market without the risk,” he says.

With pension plans a luxury of the past and Social Security not a
guarantee for the future, Rousseaux says whatever your age, it’s
important to start planning now for retirement by creating your own
private pension.

“The good news is, our life expectancy grows every year,” he notes.
“It’s up to you to ensure that you have a great quality of life when
you decide you no longer want to work.”

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