How to Protect Your Retirement Income

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Published October 26, 2012

How can I take charge of my retirement plan?  The government’s Social Security system just isn’t going to be enough for any of us to live on in the future. The American public has been committing financial suicide for the last 12 years by being a passive investor, letting financial advisors, brokers, and banks control their money, ruining their wealth and 401k plans. Their advisors have been gambling with their money and losing it.

What’s a good return today? The economy is a joke and the market is in shambles. Wall Street is a corrupt casino and banks pay nothing – 1%, 2% or 3%. All the while inflation and taxes are running rampant. It’s clearly the time for each of us to take charge of retirement.

Just what are my options? Where do I start? Read the “Protect Your Retirement” section on Fox Business; look into obtaining monthly retirement income from an insurance company; read books like The Retirement Miracle by Patrick Kelly to understand fixed index products; find out the three major ways to invest and receive tax-free income; consider absentee ownership of a franchise; find a job; learn about investments that can’t decrease in value when the market goes down; research the types of investments that keep pace with inflation.

Where can I get upside gains with no downside risk? The number one rule: Never Lose Money. You could convert a bucket of money into a monthly income stream. You could save taxes, look at line 20 on your income tax return and see how much of your Social Security checks are being taxed. For many of us there is a way to reduce or eliminate those taxes. Let’s get the best rate of return we can get on our money. But never break the rule: Don’t Lose Money. The most important advice I can give you is, it’s not what you earn, it’s what you keep that counts. Safe money becomes very important when many Americans are looking at 25 to 30 years of retirement.

Consider the following scenario with these assumptions:
• A person born in 1947 retires at age 66 with monthly Social Security income of $1,600.
• Social Security will increase an average of 1.5% due to cost of living. However, the real inflation rate may be closer to 3.1%.
• The person’s current tax bracket is 18%.
• 50% of the person’s investment is in a 401k and 50% is in a non-qualified investment.
• Investments have a 5.5% rate of return.
• In 2013, the monthly expenses are $5,000.
• In 2014, $5,155 per month is needed to cover the same expenses with 3.1% inflation
• In 2015, $5,314 per month is needed.
• Cutting back on any spending during retirement and running out of money is not desired.

Based on these assumptions, how much money do you need from investments to retire?  $1,200,000 in investments is needed now to retire.  The money would be gone in about 2045 or after 32 years of retirement.

What if the rate of return was 4.5% (instead of 5.5%) on a $1 million nest egg? All the money would be gone in 2035.

Invest like a champ. Live like a champ.

“Protect your Retirement”

You can read more from Dennis Holmstrom at http://www.sjobergholmstrom.com

URL

http://www.foxbusiness.com/personal-finance/2012/10/26/how-to-protect-your-retirement-income/