In prior blog posts, we discussed the importance of preparing for retirement. After all, it’s a critical component of a secure post-retirement lifestyle. Having an effective, personalized retirement plan will help bring lasting peace of mind.
Unfortunately, surveys continue to show Americans have strong anxiety about their retirement. A recent PricewaterhouseCoopers survey report offers insights into current levels of retirement confidence. In the 2015 Employee Financial Wellness Survey, retirement confidence was stronger than last year’s survey. 57% said they weren’t confident they’d be able to retire when they wanted to – down from 60% in 2014 and 65% in 2013.
In previous blog posts, we’ve discussed topics such as the growing appeal of fixed index annuities. Changes in the American retirement landscape, such as the shrinking availability of defined-benefit pensions, is prompting many workers and retirees to investigate alternative retirement income vehicles. As a result, total fixed index annuity sales in 2014 shot up 104.3% from total sales figures in 2004, according to Beacon Research ($47 billion in 2014 versus $23 billion in 2004).
But what, then, about CDs? How do fixed index annuities stack up against them? To get a comparative overview of both financial solutions, let’s cover some history as well as key differences.
In previous blog posts, we’ve discussed financial products offered by insurance carriers, such as annuities. But what if an insurance company fails? What then happens to your money in the annuity or financial solution issued by that insurance carrier?
In the context of “Safe Money” – or money you can’t afford to lose – it’s worthwhile to discuss bank failures as well as insurance company failures. After all, bank options and annuities are two ways of preserving your wealth from the effects of market downturns. They’re means of keeping your hard-earned money safe.
In previous posts, we’ve discussed Americans’ concerns about retirement security. Such fears may be tied to general fears, such as running out of money in retirement. But what about Americans’ aspirations for a dream retirement?
Of course retirement interests will vary from person to person. But some nationwide surveys give insights into what seniors desire on the whole. In a recent AARP survey, many people report wanting more than just full-time relaxation or leisure.
In a prior article, we discussed the recent stock market downturn. Since then, the stock market has recovered much of what it lost. But the effects still linger from the massive sell-offs, which started in mid-August and persisted through until month-end. Given the extent of their impact, it certainly begs the question of whether stocks are still currently overvalued – and what effects this might have in the future.
The Current Stock Markets Situation
The flurry of global stock sell-offs stemmed from concerns about the Chinese economy and when the Fed might raise interest rates. A strong drop in Chinese manufacturing and the surprising devaluation of the Chinese yuan were primary strong contributors to these global investor fears.
Just last week, global financial markets were stirring. But this past Monday, August 24, 2015, it reversed. Minutes after Monday’s opening bell, the Dow Jones Industrial Average had a record 1,089-point decline. At closing, it had plummeted 588 points.
Likewise, the S&P 500 index formally entered correction territory. At closing, it had recorded a loss of 77.68 points, or a 3.94% decline. Both closings were the biggest reversal seen since October 2008.
Retirement security is a driving concern for many Americans. It’s no secret as to why. Inadequate retirement savings, growing income expectations of Social Security, longer life expectancies, and record amounts of people retiring are all influential factors.
At the center of it, many individuals are worried about if they will outlive their retirement funds. It’s a growing concern given changing trends. According to U.S. federal government data, the average life expectancy is 78.8 years. Thanks to innovations in healthcare and technology, the human lifespan is longer than it’s ever been in history.
With opportunities for greater life longevity, how should people plan for the future? Read on to learn about some strategies you can adopt, whether you’re planning ahead or you’re currently in retirement.
In a previous blog post, we discussed how a stock market correction could affect retirement money. Of course market downturns aren’t the only factor which can drain retirement funds. Events such as emergency medical situations or unexpected personal crises may also lead to financial duress.
Being prepared is a key fundamental for retirement security. But many people aren’t taking those steps. According to various survey data, by 2030 almost 20 percent of Americans will be over 62 years old – currently the average age at which people retire. Data from the U.S. Census Bureau’s Supplemental Poverty Measure shows around 15% of Americans over 65 years old live below the poverty threshold. Moreover, almost 50% live “near poverty.” Or in other words, they have incomes which are less than twice the poverty threshold.
What’s the Future Look Like?
In past blog posts, among other things we’ve discussed the importance of portfolio diversification. Having too much of your money allocated in volatile markets – such as the stock market – can leave it vulnerable to market downturns. It could lead to sizable retirement losses – an outcome which often takes years from which to recover.
In late April to early May, the S&P 500 index was hovering at 2% below its record high. Given this trend, many industry analysts were calling for the possibility of a market correction of 10%. Marc Faber, editor of The Gloom, Doom, and Boom Report, had a less favorable forecast.
“For the last two years, I've been thinking that U.S. stocks are due for a correction. But I always say a bubble is a bubble, and if there's no correction, the market will go up, and one day it will go down, big time,” Faber opined on April 30, 2015 on “Trading Nation” on CNBC. “The market is in a position where it's not just going to be a 10 percent correction. Maybe it first goes up a bit further, but when it comes, it will be 30 percent or 40 percent [at] minimum!”
Why So Bearish?
There are many factors which can influence one’s retirement: healthcare costs, unexpected emergencies, periods of financial duress, or other situations. These variables can have a tremendous impact on a person’s future. It’s important to plan for any such occurrences ahead of time. In a previous blog post, we discussed tips on planning for retirement security.
There’s one factor which can greatly influence a long-term retirement strategy: having an “early” bear market. Or in other words, it’s when a major market correction – or a market downturn – leads to retirement account losses.
How can an Early Market Downturn Affect Retirement?