Monday, March 01, 2010

Retirement Calculations and Realistic Planning

I promised you that I would add more to yesterdays post on the unreliability of traditional pension plans and what to do about it.

I have been gathering information for quite a while and am struggling to condense it all in a nice package. What I'm about to tell you is my condensed opinion. You can take each point and pursue them at your leisure if you want.

  • You need much more money than your financial advisers have been telling you because they have been ignoring the reality of the effect of withdrawals and overestimating future performance. I hope you watched the video I posted on my Learn to Trade With Confidence web page. It was quite the eye opener eh?
  • Safe Company Pension Plans are not safe. We now see that the funding that was required for these plans was reduced, and that many companies started using their own stock as security. If the company goes belly up, so too does your pension!
  • Government Pensions are considered as safe, but they are feeling an unbelievable actuarial load. So we can see future restrictions coming. Already there is talk of a two tier retirement plan in the civil services. Older plans will be phased out.
  • The general public is not being told about the pension plan crisis because the financial industry needs them to keep pumping in the money. Meanwhile lobbyists are hard at work to get legislation past to allow companies and plans to renege on sacrosanct retirement policies.
This is not fear mongering. You only have to read or listen to the financial trade publications for a few weeks to get a clear picture of what is going on. And the reason is not hard to understand either. A very powerful baby boomer generation is heading for retirement and want to enjoy the lifestyle they have been fantasizing about for decades!

Retirement plans and pensions have been built on the 19th century notion of people dying after a couple years of retirement. Can you imagine the hit that a healthy 60 year old will make? It is not unusual to expect a good 30 years of cheques. And to be fair to the actuaries, they have been screaming as loud as your average actuary can scream about the plundering of pension funds that is about to happen.

Companies, government and the financial industry involved in selling mutual funds and administering pension funds have been allowed to ignore the depletion of retirement saving because of a bull market that lifted every sector of investing. Defenders of the mutual funds and pension plans say that the increased spending of retirees will bring on another golden age. And they also point to emerging markets as a new source of wealth.

What all these financial experts ( lobbyists) ignore is the dismal performance of the fund managers. Just think about this. We have just finished one of the greatest bull runs in history and have had the baby boomer generation working at their peak performance levels.


We are heading into a time when I believe the market will be flat and choppy. The charts will be going up and down like a bad trip at sea. You can make money in this kind of market but it takes skill and attention. Something that most financial advisers and mutual fund managers are incapable of doing.

Did you know that a mutual fund manager is NOT ALLOWED to trade a successful trade that falls out of their particular fund's rules. Who is that protecting? Actually most of my tips come from frustrated fund managers.

This leaves you, the private investor as the only one who can save your future. Oh yes, I firmly believe that the government will help us keep body and soul together. But do you just want to have enough money to buy a sack of potatoes and sit watching TV in a 450 sq ft room? ( Yup, that's what the gov't can guarantee you.)

What about that great emerging market that is ready to bring us wealth? I've got news for you. They are the best business people on earth. It is like a trout jumping int a shark tank thinking that there is a great meal there. Just guess who is for dinner?

Think I fear mongering? I'm not. I like the Chinese and the Indians. So does legendary trader Jim Rogers. He has actually moved his family to Asia! People point to Buffet and his investment in America, but Mr Buffet is at a very different stage in his life. He want to give back and still make a reasonable profit. Jim Rogers has the kind of investing mindset that the up coming retiree needs. Now to be clear, I don't like him as a person, but I respect him as a truth teller.


We take Debbie Reynold's advice.

Debbie Reynolds had it all. Fame Fortune etc etc.
The fame continues, but the fortune went down the drain.
I heard her interviewed once and she was asked what advice she would give to upcoming actresses. Her answer?

We have been lead to believe that the financial investment world is just too complicated for the average person. It is even intimidating to get a trading account with a broker. All the questions are set up to make us just give up and go to our friendly mutual fund salesman. ( By the way, it isn't that the broker doesn't want you. It is because the lobbyists have created all these hoops to " protect us against ourselves".)

You can learn to trade in a way that is safe and successful. Actually, it is the same method that many private equity investors use. These are people who have big money names as clients. Clients who demand results!

I have tried different strategies and like the one I mention in

The main reason is that it shines in a flat choppy market, and is safe in a trending one.

And yes, to use another older example. I'm like Victor Kiam. I loved it so much I bought the company.

To put it bluntly. The financial industry sees you as cannon fodder. The next few decades are going to be one big Ponzie scheme with you as the target. Take control of your life and gain the trading skills needed to bring you income now and throughout your future.

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