Guarantee Your Retirement

Follow These 5 Simple Steps

You will recall we last spoke of the sorry financial condition of our beloved Social Security System; a system that was signed into law by Franklin Roosevelt in 1935 to help elderly Americans. In those days the average life expectancy for American males at birth was 57. Social Security did not start paying benefits until 65. It is much easier to pay retirement benefits when half of the workforce dies before reaching retirement age. Another important fact…in 1940 there were 159 workers contributing to social security for every beneficiary. By 2003, there were only 3.3 workers contributing for every beneficiary. It is estimated that by 2018, that number will fall to only 2 workers for every beneficiary. Sobering isn't it. In a recent article in the Denver Post, writer John Farrell suggests that Americans need to have more sex because we are not producing enough babies.

So, what should you do to guarantee financial comfort in your golden years? We certainly cannot count on the government taking care of us. Here we go, hang on.

1. You have to take charge of your finances. As I stated in an earlier post, no one cares about your money more than you do. Now I realize that this might not be your idea of fun, but look at the alternative. At the very least, you need to have a self directed IRA so that you can control where your funds are invested.

2,3,4. Diversify, diversify, diversify. Yes, it's that important. And I just don't mean some combination of stocks and bonds either. Most financial advisors will tell you that long term you need to keep your money in the stock market. They will also quote you some research done by Ibbotson about how stocks have returned 10% per year since creation. That study is terribly misleading and a fine example of how you can use statistics to prove anything you want. This means you need to diversify into several different asset classes. Precious metals, stocks, bonds, foreign stocks and bonds, natural resources, inverse funds, and CDs.

5. Set aside time at least annually, to review your portfolio and rebalance. Rebalancing assures you that you will not become overly invested in one particular asset class.

That's it in a nutshell. Now I realize that I've covered these points rather quickly, so what I am going to do is go into each point in some detail in upcoming posts so come on back now, ya hear?