Our philosophy at Statewide Retirement Planning Co. is to work with our clients through education and information. We feel strongly that this approach will enable our clients to make better and more informed decisions. With this in mind, we have decided to send out a regular newsletter filled with information regarding all aspects of retirement and the retirement planning process. We hope that you enjoy reading these newsletters and are able to use the information to make your retirement years more secure and enjoyable than it otherwise might be.
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Bipolar Economy Requires a Game Plan
Dr. Shelby Smith

If you’re going to keep retirement money in the current bipolar stock market a game plan is necessary. The price swings fueled by constant rumbling across the financial landscape about geopolitical developments, rumors, institutional agendas, insider trading, manipulations and misleading information stacks the deck against those outside the heart beat of Wall Street. To have a chance at success you must have an entry point, exit plan and the discipline to resist changing either on a whim. Most people do not have this. If not what you believed to be a good bet could turn into a retirement-wrecking decision unless luck is on your side.

Today’s market thrives on the huge money of institutional investors (e.g. 401(k), Wall Street insiders and market makers that are driven more by emotion and hunches than the technical information followed by the outside players. If you’re in the market because you need the thrill and excitement of dangerous activity, you might be better off sky diving: if something goes wrong at least you won’t have to deal with the consequences.

So why do so many retirees and those in retirement’s red zone (within 10 years of retirement) keep their money in risky places? Even if professionally managed it is generally infested with fees and over a period of years most money managers under-perform the index averages. The same ones who tell you to “hang in there because the market will come back” are the ones who didn’t warn you the market would crash. Contrary to what you read and hear from Wall Street and other financial pundits, when it comes to predicting the future direction of markets remember that no one knows because there are simply too many imponderables. An uncertain future spells risk and there are no exceptions; thus, proceed only if you can shoulder the risk of loss without suffering a retirement breakdown if not all goes according to expectations.

What about buying and holding, i.e., investing for the long-term? What Really can be expected over the long term? Does anyone really know? Are we now experiencing a new permanent financial shift? What should our expectations be?

Wall Street tells us that you’ll earn 8% to 10% “long term” but study after study has documented that small investors average far less because they are emotional in their decision making.  The fact is that in the past couple of decades the market has not averaged the highly touted 8% to 10%. Is this a new trend or a temporary departure from what can be expected long-term? Again, no one knows if the next market wave is a permanent sea shift or the normal ebb and flow of the financial tides. If you think a permanent shift is impossible review the following:

long-term trend of Japan’s Nikkei 225 stock index that is currently about one-fourth of where it was in 1990 (38,916 on 12/29/1989 versus 8,725 on 7/13/2012).
followed NASDAQ is currently at 2,908 (7/13/2012 close) versus 5,048 in early 2000
the DJIA is still well below the last peak of 2007.

So as a retirement-minded saver what should you do?

• First, don’t bet the farm on the market. If the market has appeal to you, then limit your exposure to what you feel can be lost without destroying the retirement that you’ve planned.

• Second, lock up an income you cannot outlive and if you have any money left you can then speculate in the market. Chances are you already have part of your guaranteed lifetime income as Social Security or, if you are lucky enough, an employer/government pension. You can round out what’s needed by putting some of your retirement money in a fixed annuity offered by an insurance company (make sure you understand what you’re buying and that it meets your needs).

• Third and most importantly, create a plan for the financial aspects of your retirement because without a road map there is no telling where you may wind up. If you do not have the discipline to develop a plan to follow or the expertise to make needed changes along the way, by all means find and work with a Retirement Planning advisor specialist that can help you select from among the numerous options those that meet your needs. Generally speaking, you can receive competent assistance from a Retirement Planning Advisor Specialist for free.

Your retirement journey could be as long as one-third of your life, as much as 30+ years, and it will be the largest purchase you’ll ever make; therefore, you must take it seriously because your lifestyle, and that of your loved ones, depend on the decisions you make about your money. For more information, review this short video.

Call us now at (954) 781-2220 or fill out this short survey to find out more about how you might receive guaranteed* income for life and protect your principal at the same time!

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