According to the man called the Oracle of Omaha, Warren Buffett, the definition of risk is, "Risk comes from not knowing what you're doing."
It is clear that increasing numbers of investors don't have a clue as to what they are doing. 37 percent of middle class Americans said last year that they will continue to work until they are too sick or die, according to a recently released study by Wells Fargo.
Since 1991, the number of investors expecting to retire at 66 or older has more than tripled (source: EBRI 2012 RCS Fact Sheet No. 2). Thanks to the same source we find that 50 percent of Americans retire earlier than they planned for reasons beyond their control. While people now believe they must work forever, the real story is unexpected life events leave many investors unable to work as others fall victim to forced retirement. Meantime, 59 percent, up from 52 percent last year, of middle income workers report that paying monthly bills is the primary issue. 42 percent declare to save to make work optional and keep bills paid is impossible. This leaves 48 percent that don't have the confidence to be able to save for retirement.
To be sure the new normal over the past three years has made saving for the future more challenging. There is no magic bullet, however, and it does make sense to start right where you are. Just as Buffett's quote on risk is a favorite of mine, so is an American Proverb, "Great success is always preceded by great preparation." Wells Fargo found that 52 percent of the middle class say they have confidence that they
will save enough for retirement. Only 29 percent, however, report they have a written plan. Let me suggest to you that you take as much time each year planning for your financial success as you do planning your next vacation. It's a good habit to keep.
Proof in the Planning
Those who have a written plan report they are 70 percent confident about being able to retire, according to Wells Fargo. Only 44 percent of those who don't have a plan feel confident. A whopping 91 percent of those who have a plan say they have the willpower to save regularly as compared to 75 percent for those who have no plan. For those in the 40-59 age group with a written plan say they have about $63,000 in retirement fund as compared to those without a plan say they have only $20,000.
Rather than throw up your hands in defeat, take the time to determine for yourself, what does it take to make work optional? Get help to make sure you are looking at all of the details so that you don't miss anything. Many times investors are shocked to see how much they need to save to make work optional in the future. Sometimes investors are pleasantly surprised to find by rearranging priorities and assets, being able to retire is within reach. One thing is for sure; you won't hit a target you cannot see.
Certain statements contained within are forward-looking statements including, but not limited to, statements that are predictions of or indicate future events, trends, plans or objectives. Undue reliance should not be placed on such statements because, by their nature, they are subject to known and unknown risks and uncertainties.
This information contained in this newsletter is general in nature and should not be construed as comprehensive financial, tax, or legal advice and the opinions expressed are not endorsed by NPC. As with any financial or legal matter, consult your qualified securities, tax, or legal representative before taking action.
While there are over 3,000 local financial advisers with many different opinions, it’s possible that not all firms in the Conejo Valley pay for independent research. This independent research is one of the features that helps investors see the larger picture and make appropriate, if not more informed decisions. The independent research has been used with investors in the workshops the firm conducts since1999 when John Grace became Master Certified and a Charter Member with the H S Dent Advisor’s Network.
“Master Certified” references those who pay a fee to learn about various economic trends and have demonstrated by passing tests the ability to effectively answer.
Investments are inherently risky and will fluctuate with changes in market conditions. Consideration should be given to the possible loss of a part or all of principal invested.