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Retirees are trading their golden years for the golden arches

Lately, it seems like every time I take my 10-year-old to McDonalds, I give my order to someone who probably hangs out with my grandparents. In fact, I guess most of them ARE grandparents. I started to think maybe they knew something I didn’t know about the best place to work (a free uniform, discounts on quarter-pounders, an extra order of McNuggets), but then I realized these retirees weren’t working because they wanted to. but because they HAD to. After all, if you could choose between traveling, golfing and enjoying your golden years or standing behind the cash register in the golden arches… well, the choice would already be made.

Unfortunately, retirees are returning to the workforce, as a result of seeing their savings lose 25-50% of their value in recent years. All of them were convinced by the financial gurus that the best way to retire was to spend 30 years contributing to a plan that would be heavily taxed and prone to losing money for 80% of the participants. They listened to Ramsey and Orman’s lies about unrealistic returns and bought into the hype that “there’s no other way!” when it comes to preparing for the day you (hopefully) stop working (for good) and start living your dreams. The result, millions upon thousands of baby boomers desperately trying to find a way to get back on their feet, and even more retirees returning to work, finding that the competition is so tough that the only place they can easily find employment is somewhere that asks.” would you like fries with that?”

For retirees, it’s too late. The damage is already done and they will recover for the rest of their lives. For baby boomers, now is the time to take big steps to secure their future. Continuing with the status quo will get you to the same place as today’s retirements. Waiting for the market to recover is NOT a plan, it’s crazy (crazy: doing the same thing and expecting different results). Do the math; if your account lost 50% in last year’s liquidation (ie your balance dropped from $100,000 to $50,000), the market has to go up 100% just for you to WRONG. The average time it takes for the market to go up 100% is 7 to 10 years!! The average recovery time (a flat market) after a recession is 16 years! Do you start to see the problem?

Fact: The average mutual fund investor has actually lost one percent per year, adjusted for inflation.

Fact: 80% of all investment advisers and mutual funds perform WORSE than the general market each year.

I’m a consultant, so the truth hurts… but that doesn’t make it any less true. I’m sure you’re thinking you’ll be one of the 20% whose tally continues to rise, outperform the market, and build a fortune for your later years. That’s what today’s retirees also thought, convinced of this lie every time they turned on CNBC or talk radio. If they’ve convinced you, too, keep doing what you’ve always done: the world will always need someone to make another batch of fries for lunch.

Thirty-somethings and forty-somethings need to start planning for their retirement in different ways. need to change some of your retirement savings in accounts that don’t fluctuate with the market. Another lie in the media is that the stock market averages 10-12% per year… NO WAY! The inflation-adjusted long-term real average is 6%, and it comes with all the stress of the constant roller coaster ride and the knowledge that the year you decide to retire could be another year where the market crashes and you lose your hopes. half of your money

The other problem facing retirees is ever-increasing taxes. Convinced that their 401(K) was the best place for their retirement savings, they accumulated as much pre-tax savings as possible. They were told (as you are today) that it’s better to postpone taxes until retirement because you’ll earn less and be in a lower tax bracket. There are TWO problems with this line of thinking:

1. No one is in a lower tax bracket now than 20 or 30 years ago because taxes have RISEN and continue to rise. More tax increases await us in the coming years, a necessity to pay for increased public spending and bailouts. Seniors who were in a 15% net tax bracket 20 years ago no longer have the tax breaks they had when they were younger (kids at home, mortgage interest, etc.) and currently pay 25-30% of taxes.

2. Who wants to PLAN to be in a lower tax bracket when they retire? Think about it, that means you plan to have less money than you do now. Do you feel like you have too much right now? If not, why would you want to PLAN on having less in the future?

There’s never been a better time to sit down with an advisor who focuses on tax- and risk-free planning and assesses the path you’re headed down to determine where you’ll be when it’s finally time to retire. A Chinese proverb says: “No matter how far down the road you discover you are going in the wrong direction… TURN AROUND! Continuing will only take you further from your desired destination.”

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