TAKING RESPONSIBILITY FOR RETIREMENT:HOW TODAY’S SCARY HEADLINES CAN HELP YOUR RETIREMENT PLAN
First, it was the combined whammy of the tech wreck and the post-9/11 recession that battered our 401(k) accounts. Next was inflation in health care and education costs that further diverted indebted consumers from concentrating on retirement. Now come the headlines that any company facing tough times – or intense shareholder pressure – can pull the rug out from under its retirees hoping for the traditional three-legged stool of retirement – pension, Social Security and savings.
All three legs are in trouble – we aren’t saving enough, Social Security is under attack and traditional pensions are disappearing – fast.
For retirees facing a sudden loss of pensions and benefits, there are really very few options save going back to work or turning home equity into a personal bank. So the time to start taking on the lion’s share of your retirement responsibility is now, whether you’re five, 10, or 20 years away from hanging it up, if that’s your plan.
One general tip. If you’re not really certain where you stand, get some help. If you’ve never sat down with a financial adviser it may be time to get a second opinion on your retirement readiness. The meeting may yield some ugly news, but it’s better to know the options than cross your fingers. More...
Getting Started with ETFs
Conceived more than 80 years ago and now owned by 91 million individuals from 54 million households in the U.S., mutual funds owe their strong appeal to a combination of features: professional management, instant diversification for low minimum investments, prices based on net asset value (NAV) and marked to market daily, and easy reinvestment of dividends and capital gains.
Known legally as open-end investment companies, they issue new shares when investors want to buy them at NAV per share—plus sales charges unless they are no-load funds—but they must redeem shares at NAV (less sales charges unless they are no-load funds) when holders want to sell.
These characteristics have long distinguished mutual funds from a second type of investment company, closed-end funds, whose issued shares are fixed at creation. This means that bid-and-ask prices may be above or below NAVs.
The third type of investment company are Unit Investment Trusts, which are a fixed basket of stocks (not an evolving index) held for a pre-determined time.
If mutual funds have been found by some to be lacking a feature, it often has been the opportunity to buy or sell their shares at any time when markets are open at known prices—just like publicly traded stocks, bonds, and closed-end investment companies. More...
ABOUT THAT DREAM VACATION HOME…
With observance of Memorial Day behind us and vacation season at hand, it’s time in many American households for two perennial questions:
· “Where shall we go this year?”
· “Should we pay rent in a hotel or resort again, or does it make more sense to apply the money toward getting a place of our own, which we will then have whenever we want to go there in the future?”
Many households answered the second question with a “yes” last year, and others are expected to do so again this year.
Vacation homes—of which the U.S. Census Bureau identified 6.8 million at last count—accounted for 12.2 percent of all homes purchased in 2005, and, at a record 1.02 million, such purchases were up 16.9 percent from 872,000 in 2004, a recent survey by the National Association of Realtors reported.
Their median price—whether detached single-family homes, cabins or cottages, or multi-unit buildings—was $204,100, up 7.4 percent from 2004’s $190,000. Their median size: 1,480 square feet.
Vacation homes’ share of 2005 purchases lagged the 27.7 percent of homes which were bought for investment—whether to generate rental income, diversify assets, or both.
More...
THE PERPLEXING WORLD OF SOCIAL SECURITY AND EARNINGS IN RETIREMENT
Launched in 1935 during the Great Depression as a principal component of Franklin D. Roosevelt’s New Deal recovery program, the Social Security System has earned an unquestionable reputation for the reliability of its stream of monthly checks to retirees, the nation’s first comprehensive source of retirement income.
But did the laws that authorized the checks and ensured their reliability also:
- Permit the checks-based on your lifetime income -to be large enough to sustain seniors in comfortable retirement?
- Require Social Security checks to be taxed too much by the same Treasury Department which issued them?
- Reduce the checks too severely for those who needed money before becoming 65.
- Enable beneficiaries to get back all of the money they had paid into the system over the years?
