In his recent State of the Union Address, President Obama unveiled something new: a retirement savings account to "help" Americans build a nest egg, coining it the "MyRA."
Something immediately felt wrong about the proposal... but I couldn't put my finger on it.
So I researched the new MyRA and found details to help you understand just how it works.
But I also saw some potential dangers there that you need to prepare for now...
I recently received a call from "Russ," a client of mine. He was wondering why the investments he holds at my money management firm have gone up so much more than the money he's entrusted to a major fund broker.
I'd be wondering, too.
That's because, in a year filled with hundreds of 52-week highs and a broad market that climbed roughly 25%, they've managed to "grow" Russ' money all of... 2%?
It didn't take long to find out why.
It's estimated that by 2020, nearly $3.85 trillion will be invested in the same "one-click" mutual fund industry's bestsellers that Russ did: "Target Retirement Funds."
I'm so glad he called.
These "funds of funds" are dangerous. They're far too simplistic, automatically adjusting your investments based largely on one factor: your age. And that just doesn't work anymore.
In fact, these "solutions" are more dangerous than they've ever been...
As Baby Boomers start retiring in droves, they face the Great Retirement Investing Crisis: they have nowhere near the amount of funds it takes to retire comfortably. And most haven't even thought how much money it will take to finance a comfortable retirement, let alone achieve financial independence.
They must look beyond wealth preservation, toward wealth generation for retirement. Boomers must learn to make money instead of just looking for so-called income plays.
Income investors beware: As we enter a new rising rate environment, it's actually more risky to aggressively chase yields than to aggressively chase growth.
Sometimes the best defense is going on offense and right now is one of those times...
The Retirement DerailersSM survey found that a staggering 90% of American investors (aged 50 to 70, and with $100,000 or more in investment assets) have been blitzed by at least one "derailer" - an unexpected event that has put a hefty dent in their retirement savings goals.
If you have a 401(k) chances are you're getting ripped off and you don't even know it.
With all of the associated 401(k) fees, the truth is you could be losing as much as 33% of your retirement nest egg to the financial advisors who run your plan.
Typically, these fees are completely buried in your 401(k) statement-- and even if you do manage to find out how much they are, the fees won't seem like much at first glance.
But overtime, the fees can literally cost you a small fortune.
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Baby boom retirements are destined to be thoroughly miserable, mostly thanks to Federal Reserve Chairman Ben Bernanke. Those with funded pension plans will find their plans in bankruptcy, while those without pensions - the IRA and 401(k) majority - will simply find the bankruptcy transferred to their own finances.
To find out why this is happening and what can done about it, read on...
There is something outrageous contained just 18 short pages into President Obama's budget that has the power to affect every American's future in a very direct way -- your retirement.
A move is underway that could turn all your hard-earned IRA and retirement cash into a slush fund for the Federal government...and there's nothing you can do about it unless you act now.
Retirement savings aren't delivering enough for us to live on after we stop working. It's not just that we aren't doing the right calculations; it's also that we aren't always using the right tools. 401(k)s and pension plans aren't cutting it anymore.
Americans' dreams of the "golden years" have increasingly become tarnished by harsh financial realities.
Indeed, a new survey of U.S. employees and retirees presents a disturbing portrait of the retirement crisis - among both current workers and retirees.
Longer life expectancies, stagnant wages and the uncertainty surrounding Social Security benefits have made it harder than ever to save enough to live comfortably in retirement.
The 23rd annual Retirement Confidence Survey by the non-profit, non-partisan Employee Benefit Research Institute - which polls both workers and retirees -found only 13% of American workers and 18% of retirees are "very confident" they have or will have enough money to retire comfortably. And 49% of workers said they are either "not at all" or "not too" confident they will have enough money to enjoy retirement.
"Not only do workers lack confidence about their ability to secure a financially secure retirement overall, but more and more, they lack confidence in their ability to pay for medical expenses and even basic expenses such as food, clothing and shelter," Jack VanDerhi, research director at EBRI, said in a statement.
These statistics show just how difficult it has become for Americans to save enough for retirement.
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It has been called the "royal road to riches."
Starting with just $10,000 and a small monthly contribution, any investor can use this method to create their own golden parachute - a million-dollar retirement portfolio.
All you need is time.
