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Missed Fortune – Don’t Let Your Retirement Funds Run Dry

Posted on | February 27, 2011

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Not Enough in Qualified Plans

A recent Wall Street Journal article, “Retiring Boomers Find 401(k) Plans Fall Short,” noted that the 401(k) generation is beginning to retire, and the result isn’t a pretty sight.

It said that the median household headed by a person age 60 to 62 with a 401(k) has less than one-quarter of what’s needed in that account to maintain his standard of living in retirement.

That’s according to data compiled by the Federal Reserve and analyzed by the Center for Retirement Research at Boston College.

Even counting Social Security, pensions and other savings, most 401(k) participants appear to have far too little savings for the long haul.

People are expecting to work longer and they feel like they’ve lost their future. In 2008, the average American had lost as much as 31 percent in the value of their IRAs and 401(k)s.

By the end of the year, many had lost as much as 50 percent and still haven’t earned it back yet.

In 30 years, 401(k)s have gone from a small program to a multi-trillion dollar industry. But they’re not what we thought they were.

Recently, Vanguard has started suggesting that workers contribute 12 to 15 percent —including employer contribution—into their 401(k)s because of the stock market’s weak returns and uncertainty about Medicare and Social Security.

The answer isn’t socking away two, three or even six times more money.

I can prove it to you.

Make Your Money Work For You

You shouldn’t leave your money in tax-deferred plans, only to watch it erode due to taxes and inflation down the road.

Most people don’t understand that even a $1 million nest egg won’t get you very far 30 years from now.

You have to break free of the blunders that are holding you back. These are blunders like thinking that IRAs and 401(k)s are the best ways to save for retirement, or thinking you’re going to be in a lower tax bracket when you retire.

Taxes will go up and inflation is just around the corner.

The U.S. Congressional Budget Office predicts that by mid-century, most middle-income Americans will be paying 50 to 60 percent of their earnings in taxes. That’s because of our tremendous debt and Social Security.

The folks who follow the Missed Fortune strategies didn’t lose a dime in their retirement accounts in 2008. In fact, they doubled their money in the last 10 years.

Using conservative strategies, such as indexing, I’ve averaged about 8.2 percent. When inflation happens, I tie my funds to the things that are inflating.

Isn’t it time you converted your IRAs and 401(k)s to better strategies? Isn’t it time you secured a brighter and more prosperous tomorrow?

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*Life insurance policies are not investments and, accordingly, should not be purchased as an investment

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