The Two Worst Retirement Savings Traps – and How to Avoid Them

From Peter Reagan at Birch Gold Group

Americans who are saving for their retirement have been having a rough time, mainly thanks to the economic turmoil that never seemed to end after the 2008 financial crisis.

But there could be a silver lining here…

There are two things that you can start to manage today, which could help to improve the stability in your retirement portfolio. Those two things are: Risk and expectations.

Kiplinger’s published a column that succinctly addressed what realistic expectations might look like (although the specific percentages could vary). Here’s a paraphrase:

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3 Tips for Planning Your Retirement Like a Billionaire

From Peter Reagan at Birch Gold Group

While the odds of your retirement wealth growing over one billion dollars is likely to be slim (but not impossible), you can plan your retirement like a billionaire would.

It’s fairly simple, but not easy to do.

We can start with some initial thoughts that were provided in a U.S. News article outlining the billionaire retirement strategy:

It’s fun to dream about having complete financial freedom in your golden years, but if you want to retire like a billionaire, you must stick to a well-planned investment strategy, and perhaps reconsider your lifestyle choices and mindset.

Patience is vital; building substantial wealth takes time. Don’t underestimate how much retirement will cost – or how long you might live.

It’s also important to establish goals for this next stage of life and determine what legacy you want to leave behind.

Now that you have this groundwork to start from, let’s start with the first place you can start planning your retirement like a billionaire…

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Doug Casey on Governments Targeting Retirement Funds… and What You Can Do About It

Via International Man

Retirement Funds

International Man: Most Western governments, especially the US, have debt loads and spending commitments that guarantee they will eventually—likely someday soon—try to grab as much wealth as possible.

Retirement savings are a juicy target. But, unfortunately, they’re among the lowest-hanging fruit for any desperate government.

What’s your take on the situation?

Doug Casey: Let me remind you of something that I’ve said a number of times in the past. But it bears repeating because it’s so critical but overlooked, even while it’s so obvious.

And that is that the prime directive of any living entity—an amoeba, an individual, a corporation, a government, anything—is to survive. The government is an entity as distinct as General Motors or Apple Corporation, with its own peculiar interests. It isn’t “We the People”; that’s just a promotional catchphrase—propaganda. Its prime directive is to survive. And it will attempt to do so at any cost.

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The 3 Phases of Retirement Saving (Plus, How to Avoid the #1 Mistake)

Via Birch Gold Group

The 3 Phases of Retirement Saving (Plus, How to Avoid the #1 Mistake)

From Peter Reagan

Saving or planning to save for retirement in 2022 is getting more challenging as each day passes.

Inflation is still accelerating and stealing your purchasing power at an annual rate of 9.1%. The Dow Jones, S&P 500, and NASDAQ are all violently uncertain. The housing market is falling apart at the same time.

On top of all that, even notorious optimist Federal Reserve Chairman Jerome Powell confessed the strong possibility of a deep recession starting this year.

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How to Successfully Retire in the Upcoming Lost Decade

Birch Gold Group

How to Successfully Retire in the Upcoming Lost Decade

With the challenges that retirement savers already face like pandemics, planning, and an uncertain stock market, the rising price at the pump is one they could do without.

According to AAA, the average gas price nationwide is currently $4.24. You can see how gas prices are faring on a state-by-state basis in the graphic below:

AAA national gas prices as of 3-30-2022

As of 3/30/2022. Graphic by AAA

The graphic above reveals that the Western third of the U.S. is getting rather expensive to drive, especially for those on a fixed income. Just for context: “A month ago, the national average was $3.54 per gallon. A year ago, Americans were paying an average of $2.88 a gallon.” Continue reading “How to Successfully Retire in the Upcoming Lost Decade”

Why Retiring In 2022 Could Be the Worst Decision of Your Life

Via Birch Gold

Why Retiring In 2022 Could Be The Worst Decision Of Your Life

If you were planning on retiring in 2022 or soon after that, thanks to several recent economic developments, now might be the worst time to do that.

Ron Surz is an industry veteran with a niche focus on baby boomers (Americans born 1946-1964). Surz has managed target date funds for 401(k) plans since 2008. He recently issued a warning to prospective retirees:

This is a perilous time. There has never been a worse time to retire. We’d be really lucky if the baby boomers made it through the decade without suffering a big market loss.

According to one report from the Insured Retirement Institute that focused entirely on the baby boomer generation, Surz might be right:

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Is $1 Million Enough For Retirement In America?

Via ZeroHedge

The average American needs their retirement savings to last them 14 to 17 years. With this in mind, Visual Capitalist’s Carmen Ang asks (and answers below), is $1 million in savings enough for the average retiree?

Ultimately, it depends on where you live, since the average cost of living varies across the country. This graphic, using data compiled by GOBankingRates.com shows how many years $1 million in retirement savings lasts in the top 50 most populated U.S. cities.

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Retirement Security Month Missing Its Most Important Ingredient

Via Birch Gold

The Year Ahead: U.S. Faces Uncertain Economic Future

When you think about the idea of a secure retirement, one key ingredient would be security. If that’s missing, all you’re left with is a retirement full of anxiety.

And it doesn’t matter which politicians take office, both sides of the aisle often meddle with Social Security and other retirement safety nets, but neither seem to produce tangible results that actually make retirement more secure. (At least, not very often).

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Every Good Retirement Plan Should Have These 5 Steps

Via Birch Gold

Every Good Retirement Plan Should Have These 5 Steps

With inflation on the rise, manic market behaviors, and market volatility that doesn’t seem to be ending soon, retirement savers already have enough to think about.

But even if things were more normal, your retirement game plan should still be built on a solid foundation. Without that foundation, the above-mentioned uncertainties can more easily wreak havoc on your golden years.

So we’re going to take a closer look at five ideas you can consider adding to your retirement game plan. (Of course, if you don’t have a plan yet, there is no better time than the present to make one.)

Let’s get started…

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Taking the Training Wheels Off Your Retirement Plan

From Birch Gold Group

Taking the Training Wheels Off Your Retirement Plan

When my grandfather completed his 30-year stint at the Flexsteel factory, he retired with a pension. That and his Social Security benefits gave him a comfortable retirement.

The days of pensions, however, are pretty much over. Nearly every corporation rebelled against the uncertain, long-term costs associated with securing their former employees’ retirements. Instead, they argued for (and got) a different kind of employee retirement benefit: the retirement account, specifically the 401(k). Workers could contribute pre-tax payroll dollars, and the employer would pay administrative costs and even sometimes kick in a little extra.

This had the side effect of putting every American worker directly in charge of his or her long-term retirement plan. Whether or not they were ready for it.

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5 Retirement Saving Mistakes That Could Derail Your Plans

Via Birch Gold

5 Retirement Saving Mistakes That Could Derail Your Plans

The younger generation of retirement savers is raising concerns about their prospects for a comfortable retirement according to a recent Forbes article, and rightfully so.

After all: Social Security is behind the 8-ball, the pandemic’s economic ripple effects are affecting savers, and lawmakers can’t seem to stop meddling with saver’s futures.

Who wouldn’t be concerned?

Forbes highlighted the results of a poll with 3,000 respondents:

The average American began to stress about their retirement at 25. This varies by state, with South Carolinians and South Dakotans starting by 19 and Arkansans staying calm until their early 40s.

The pandemic also played a role in the stress: “One in three polled have had to push back their retirement timeline since the start of the pandemic, and more than half expect a need to work part-time in retirement to get by.”

Education, preparing an emergency fund, and understanding how a retirement fund works were among the advice given to help alleviate the worry.

Pandemics definitely fall into the category of black-swan disasters you can prepare for decades before retirement. Still, they certainly cause anxiety when they happen.

Black swans aside, financial advisors tell us there are a handful of big (and avoidable) mistakes that impact retirement savers of any age.

Let’s bring the focus to factors we can control, and examine the list.

The five mistakes that can throw any retirement off-track

Recently, Business Insider shared a list of major savings mistakes, created in collaboration with a number of financial advisors and other professionals. We think their advice is worth sharing here.

“Get rich quick” infomercial thinking

You’ve probably come across one of those late-night infomercials that promised you would make tons of money fast. The real world of retirement saving, according to Jonathan Gassman (CFP), is different for people who think they can “get rich quick”:

This all could have been avoided by understanding there are no get rich quick deals (without major risk), having an attorney or financial advisor review the deal, and sticking to a plan.

Of course, Gassman is a voice of experience. Experienced savers are also flexible with their retirement plans based on their situation.

The major take-away here? There are no get-rich-quick deals without major risk.

Skating where the puck was

Tania Brown is a CFP, who related a story to Business Insider about adjusting a Brooklyn native’s retirement plan to fit new circumstances:

When she mentioned she would love to take lots of cruises and was open to relocating, I suggested exploring a relocation to Florida, especially since she worked remotely.

Why would anyone want to stay in Brooklyn who didn’t have to?

We’re joking, but that move resulted in substantial tax and expense savings. Asking the client questions about her situation brought up a new circumstance (remote work) and helped Brown zero in on what her wanted from retirement.

That’s a great story, isn’t it? Getting a huge step closer to your golden-years vision while saving on taxes and cost-of-living at the same time?

The next big mistake is also about mixed up priorities…

Nobody’s going to do it for you

Remember the story of the grasshopper and the ants? It’s just as relevant as the first time your grandmother told it to you.

In other words, “For those who underfund their retirement because it’s not an urgent priority at the time, they are creating a potential future financial crisis” said Kelly Crane, CFP.

This seems like a simple bit of advice to follow, but according to one Northwestern Mutual study, 15% of Americans have nothing saved at all when they retire. According to another study, a staggering 33% were less than three paychecks from disaster.

Saving for your future, even when it’s hard, is crucial. No one else is going to do it for you.

Experts advise that following through with the intention to save is easier with a plan…

Saving by the seat of your pants

Saving for retirement is a long-term venture. Too many daily demands and distractions can easily your attempts to secure your future.

That’s why CFP and author Patricia Stallworth recommends developing a long-term plan instead of “saving by the seat of your pants.” She says:

Retirement is complicated and it’s difficult, if not impossible, to reverse bad decisions. Not having a plan can lead to a host of errors, from not saving enough to maintain your lifestyle, to underfunding health care, to forgetting the impact of debt in retirement.

As Stallworth points out, there is a lot to keep track of when saving for retirement. Having a plan, especially an automated plan, gives you the opportunity to decide once. And stick with it. Rather than rethinking your plan monthly, or even weekly.

That’s especially important when markets get volatile (like they are now). Which leads us to the final mistake that can crack your nest egg…

Succumbing to panic

Market volatility is normal, according to Fidelity. All too often, volatility leads to panic.

For example, the Dow dropped 700 points on Monday, then bounced back the next day. That kind of whipsawing can drive savers to make bad decisions.

Trying to time the market often leads to disaster, according to CFP Phil Lubinski:

Even if they manage to get out at the right time, rarely have I seen anyone who knew when to get back in. In order for this to work, both sides of that strategy have to be timed perfectly.

Lubinski recommends creating an plan and sticking to it, instead of panicking. That can be tough, especially if your risk profile is out of whack.

Having a solid game plan you’re willing to follow, while avoiding unnecessary risks seems to be the best advice of all.

How physical gold and silver can be part of the solution

No matter how old you are, or what stage of saving you’re in, operating without a game plan can put you on the fast track to losing everything.

When it comes to your retirement, “slow and steady” gives you a better chance at avoiding panicky mistakes, and ultimately enjoying a comfortable retirement. That’s why planning, diversifying, and maintaining control of your savings can help keep you on the right track.

Physical precious metals like can be a part of the solution. Their proven track record fits well with a “slow and steady” approach. So, when you’re creating your plan, consider whether adding both gold and silver are a good choice for you.

You’ll stand a good chance of looking back on these decisions and thinking, Glad I took matters into my own hands.

With global tensions spiking, thousands of Americans are moving their IRA or 401(k) into an IRA backed by physical gold. Now, thanks to a little-known IRS Tax Law, you can too. Learn how with a free info kit on gold from Birch Gold Group. It reveals how physical precious metals can protect your savings, and how to open a Gold IRA. Click here to get your free Info Kit on Gold.

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The Pandemic Cost Retirement Savers a Lot, but Taught This Valuable Lesson

Via Birch Gold

The Pandemic Cost Retirement Savers a Lot, but Taught This Valuable Lesson

The economic shock of the COVID-19 pandemic has forced many retirement savers to reevaluate their plans.

That isn’t surprising, because the global economy tanked in late February, and that’s bound to have financial consequences.

But those consequences have proven even more severe than we feared.

Continue reading “The Pandemic Cost Retirement Savers a Lot, but Taught This Valuable Lesson”

Why Saving $1 Million for Retirement Is Meaningless

Via Birch Gold

Why Saving $1 Million for Retirement Is Meaningless

As inflation continues to rise, saving for retirement is going to get more challenging, especially in the United States.

It becomes even more challenging if savers think that having $1 million saved for retirement is some magic number retirees hit to qualify for the secure retirement club. In fact, we’re going to explore why that kind of saving goal may only provide an illusion of security.

Let’s start by examining how inflation moves the goal posts…

This is not your father’s IRA balance

When Dad saved for his retirement, every dollar he socked away went much further than it does today. Let’s say he was born in 1941.

We’re going to make a couple of assumptions here:

  1. Retirees spend about half the national average wage every year (Social Security and other benefit programs will cover the rest of their expenses)
  2. Retirees need an additional 15% above that number for unexpected expenses
  3. Retirees will enjoy their retirements for about 20 years

When he retired at age 65 his “magic number” for retirement was:

2006
National Average Wage: $38,651.41
Cost to Retire: $444,491

Uncle Dale (Dad’s little brother), born 13 years later in 1954, he reached retirement age just a couple years ago. He saved about as much for retirement as Dad. However, those 13 years made a big difference

2019
National Average Wage: $54,099.99
Cost to Retire: $622,148.85

That boils down to a 40% increase in the cost to retire… in just 13 years.

What’s going on? Why does Uncle Dale need so much more than Dad in order to retire?

It’s mostly because of inflation. (While there are some other complicating factors, too, like near-zero yield on “safe” assets like government bonds, CDs and savings accounts, really, it’s mostly inflation.)

That’s the past, though, right? What happens when we look ahead?

$3 million is the new $1 million

If you’re currently in your 30s the picture appears to get much more dire. It looks like you’ll need $2 million (and that’s assuming inflation stays around 3%, which isn’t likely):

Using an average inflation rate of 3%, the calculation shows you’ll need $2.1 million in savings to equal the purchasing power of $750,000 today.

Personal finance blogger Financial Samurai thinks that, even if you did manage to scrape together $1 million for retirement today, it won’t go as far as you think. You might eke out a meager income throughout retirement (if nothing goes sideways):

If you retired today at 65 with $1 million, you may be able to spend $40,000 a year (4% withdrawal rate) for 25 years. But you might also run out of money before you die as well.

That lifestyle doesn’t make $1 million seem like much. That’s because the buying power you have today won’t be the same 10, 20, or even 30 years from now. So instead of “how many dollars” someone might be saving for retirement…

And that’s what led Financial Samurai to say, “$3 million is the new $1 million.”

But you know what? The numbers don’t even really matter.

Foxtrot - Jason is a millionaire

We have to change the way we think about saving for retirement

Inflation makes the “magic number” of dollars we might think we need for the retirement we want completely irrelevant. Or at least obsolete.

Instead, we can think in terms of purchasing power.

Today’s number of dollars doesn’t matter. All that matters is their future purchasing power.

That’s what makes the Foxtrot cartoon funny. Jason Fox is thrilled to be a millionaire (in Turkish lira) without realizing that his purchasing power hasn’t changed. A million lira buys the same stuff as $13.06…

So don’t spend too much time obsessing over a magic number. Think instead about your purchasing power.

Fortunately, there are some types of assets that lock in purchasing power. Inflation-resistant assets like treasury inflation protected securities (TIPS) and Series I Savings Bonds (I-bonds) grow at the rate of inflation.

TIPS are defined by the U.S. Treasury as an asset that “increases with inflation and decreases with deflation, as measured by the Consumer Price Index [CPI]. When a TIPS matures, you are paid the adjusted principal or original principal, whichever is greater.” Basically, there’s a nominal yield plus an inflation adjustment you receive when the bond matures. TIPS include a downside guarantee, too, because you always get at least your initial investment back.

You can see current TIPS rates here.

I-bonds are defined as “a low-risk savings product. During their lifetime they earn interest and are protected from inflation” based on the change in CPI. I-bonds are a personal-finance version of TIPS (although individual investors can buy both). In fact, I-bonds were so popular for a time that the Treasury now limits purchases ($10,000 per year in electronic bonds + another $5,000 per year in the form of federal income tax refunds). You can learn more about I-bonds here.

Right now, the yield on I-bonds is 3.54% which looks fantastic compared to CDs or savings accounts… A lot less fantastic when you realize this isn’t actually profit. It’s just a return of the purchasing power devoured by inflation.

Now, both sound like good ideas when taken at face value, because they are protected from inflation. The problem is, both rely on a couple of assumptions:

  1. The reported CPI is accurate. (Looking at “real” inflation, we know the Fed likes to play games with inflation numbers.)
  2. The solvency of the U.S. government. Maybe that sounds silly to you. Students of history might remember the S. debt defaults of 1790, 1861, 1933, 1979, and of course the 2013 near-miss.

The good news is, there are alternatives that don’t rely on solvency or inflation reporting…

Examine retirement assets that preserve buying power

Know why central banks worldwide hold gold? Precious metals have had inherent value for thousands of years because they are tangible and finite resources. Precious metals aren’t controlled by any central bank or any government. Gold cannot simply be “printed” like dollars or euros. Furthermore, gold is an internationally-recognized store of value.

“Store of value” is exactly what we’re looking for. Gold isn’t tied to a magic number that can be doubled or tripled by inflation. This gives physical gold and silver a unique advantage of being a hedge (the word bankers use to describe protection) against inflation. That gives savers a better chance of avoiding the dilemma of planning for tomorrow’s retirement and thinking in today’s dollars. Inflation-resistant assets can help you see beyond the numbers and focus on maintaining your buying power well into the future.

With global tensions spiking, thousands of Americans are moving their IRA or 401(k) into an IRA backed by physical gold. Now, thanks to a little-known IRS Tax Law, you can too. Learn how with a free info kit on gold from Birch Gold Group. It reveals how physical precious metals can protect your savings, and how to open a Gold IRA. Click here to get your free Info Kit on Gold.

2021’s “Tragic Trifecta ” Will Make Retirement Saving Tougher

From Birch Gold Group

The dollar is still weakening, inflation keeps rising, and now the trade deficit is surging to record levels (again).

Perhaps market fundamentals are beginning to overtake media hype. If that’s what is happening, this “trifecta” of economic signals could make saving for retirement even more of a challenge in 2021.

Coming in third place: record-shattering trade deficit

To examine why this “trifecta” could do that, let’s start with the record trade deficit.

The balance of trade measures the dollars America sends overseas to pay for foreign goods and services, compared to the dollars flowing into America in exchange for U.S. goods and services.

Continue reading “2021’s “Tragic Trifecta ” Will Make Retirement Saving Tougher”

Politicians Invent New Retirement “Solutions” That Don’t Make Any Sense

Via Birch Gold

Politicians Invent New Retirement Solutions That Don’t Make Any Sense

There is no doubt that if the Social Security Trust’s shortfalls aren’t addressed, then it will be in big trouble just over a decade from now.

But the problem is, instead of coming up with real solutions, politicians have been playing the typical partisan games that end up meddling with your retirement and kicking the can further down the road.

That pattern appears to be continuing at both the federal and state level. Starting at the federal level, a recent bill called the “TRUST Act” was reintroduced in an attempt to “shore up Social Security and Medicaid,” according to ThinkAdvisor. While the bill addresses more than just the Social Security trust fund, the necessity for some type of solution to shore up the intended funds is obvious.

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The Difficult Retirement Road Ahead Requires Long-Term Planning

Via Birch Gold

The Difficult Retirement Road Ahead Requires Long-Term Planning

The U.S. economy isn’t a light switch that can be flipped on and off at will. Yet that didn’t stop the majority of state governors from turning off their economies in 2020 — causing financial misery for tens of millions of people.

The COVID-19 emergency finally appears to be coming to a close, although that process could still take months. Even so, retirement savers still have an extremely challenging road ahead thanks in part to economic ripple effects that will affect the U.S. for years to come.

Kiplinger urged savers to concentrate on planning as one way to mitigate the financial uncertainty. The same article offered some other retirement ideas to consider while making that plan.

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