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About 10 years ago, I remember a book came out by Harry Dent titled the Roaring 2000's. In it he predicted this new century was poised for tremendous growth, and he made some very bold market predictions like the Dow at 40,000. I believe he has since changed his tune a bit perhaps based on what has actually occurred in this first decade of the twenty first century.
A lot of negative things have happened this past decade with two major bear markets taking place. Stocks on the New York Stock Exchange have lost an average of 0.5% annually since the beginning of 2000. Compare that to an average 17.6% annual gain stocks achieved in the 1990's.
Where does that leave us today? How should you as a Baby Boomer invest in such uncertain times? Well if you study other assets during this same period you will see that not all of them fared the same as stocks. Bonds yielded between 5.6% to 8% depending upon the sector you were in. Gold outperformed everything else - up 15% annually this decade after losing 3% annually in the 1990's.
I believe everything is cyclical in nature and these trends will most likely continue. Some years stocks will do well while other years bonds may outperform. As someone nearing retirement, you have to be able to build a portfolio that will withstand the downs of the market. The best way to do this is to build a very well diversified portfolio that includes both stocks and bonds. Adding additional assets such as gold and other commodities to the portfolio makes a lot of sense as well. Look for traditional companies that continue to pay a healthy dividend to add to the mix. Lastly, pay attention to asset valuations and adjust your portfolio accordingly.
Make sure you have a strategy in place so when you do retire, your future retirement years will be insulated from the wild swings in the market. Let's hope 2010-2019 becomes the Roaring 2000's again!
Happy Holidays,
Carleton
Wednesday, December 23, 2009
Thursday, November 19, 2009
Long Term Care for the Baby Boomer
As we all know, health care has been in the news lately these days. Harry Reid has put together a 10 year plan in the Senate that would cost $848 billion dollars and would cover an additional 31 million Americans who do not currently have health insurance. Will it get the 60 votes to move forward? Who knows!
What I do know is Baby Boomers need to start planning ahead to ensure they get great health care coverage regardless of what happens in our government. The best way to plan for this is through long term care insurance (LTC). Before rushing into getting a LTC policy, decide for yourself if this is something you will need. Can you self insure? Do you have a family history of long life? How do you want to spend the latter part of your life? Do you have family that can take care of you? Will they really want to take care of you?
All of these questions are ones you need to ask yourself and your family. One thing we know for sure is health care costs are going to continue to go up. Are you prepared to handle this? Some interesting stats that you should think about:
* Over 60% of adults ages 50-64 who are working have been diagnosed with at least one chronic health condition - i.e. - arthritis, cancer, diabetes, heart disease, high cholesterol, or high blood pressure (Commonwealth Fund Report or CFR).
* About 6% of insured older adults in working families (1.8 million people) are underinsured (CFR).
* Nearly 23% said there was a time they went without needed medical care because of cost (CFR).
* 75% of older working adults with individual insurance coverage spent 5% or more of their annual income on premiums and out of pocket medical expenses (CFR).
These statistics are pointed out not to scare you but to get you to think about the role health care will play later on in your life. Although LTC insurance can initially appear to be an expensive option, it might be the difference between providing you with a more comfortable retirement or not!
Carleton
What I do know is Baby Boomers need to start planning ahead to ensure they get great health care coverage regardless of what happens in our government. The best way to plan for this is through long term care insurance (LTC). Before rushing into getting a LTC policy, decide for yourself if this is something you will need. Can you self insure? Do you have a family history of long life? How do you want to spend the latter part of your life? Do you have family that can take care of you? Will they really want to take care of you?
All of these questions are ones you need to ask yourself and your family. One thing we know for sure is health care costs are going to continue to go up. Are you prepared to handle this? Some interesting stats that you should think about:
* Over 60% of adults ages 50-64 who are working have been diagnosed with at least one chronic health condition - i.e. - arthritis, cancer, diabetes, heart disease, high cholesterol, or high blood pressure (Commonwealth Fund Report or CFR).
* About 6% of insured older adults in working families (1.8 million people) are underinsured (CFR).
* Nearly 23% said there was a time they went without needed medical care because of cost (CFR).
* 75% of older working adults with individual insurance coverage spent 5% or more of their annual income on premiums and out of pocket medical expenses (CFR).
These statistics are pointed out not to scare you but to get you to think about the role health care will play later on in your life. Although LTC insurance can initially appear to be an expensive option, it might be the difference between providing you with a more comfortable retirement or not!
Carleton
Friday, October 16, 2009
A Lurking Estate Trap?
I have always preached about the value of keeping your estate current. An article in today's WSJ titled "Is There a Trap Lurking in the Language of Your Will?" just reinforces this.
Apparently many people have language spelled out in their wills that they created a number of years ago which directs the "full amount" of the estate tax exemption (currently $3.5 million today) to go into a bypass or credit shelter trust when the first spouse dies.
May of these wills were created or updated back in 2002 when the exemption was at $1 million. As the exemption has increased, the entitlement left over for the surviving spouse has drastically decreased for those families whose net worth is around $4 million.
By not updating their wills, this generic language that states the "full amount" has left many surviving spouses with little to nothing left over for them. The article goes on to state that the problem is usually far worse for blended families. Children from a different spouse typically don't get along with the surviving spouse. This can lead to some real animosity.
The moral of the story - keep your wills updated and make changes as necessary!
Apparently many people have language spelled out in their wills that they created a number of years ago which directs the "full amount" of the estate tax exemption (currently $3.5 million today) to go into a bypass or credit shelter trust when the first spouse dies.
May of these wills were created or updated back in 2002 when the exemption was at $1 million. As the exemption has increased, the entitlement left over for the surviving spouse has drastically decreased for those families whose net worth is around $4 million.
By not updating their wills, this generic language that states the "full amount" has left many surviving spouses with little to nothing left over for them. The article goes on to state that the problem is usually far worse for blended families. Children from a different spouse typically don't get along with the surviving spouse. This can lead to some real animosity.
The moral of the story - keep your wills updated and make changes as necessary!
Thursday, September 3, 2009
Letting Go of the Need to Win
There was an article in Tuesday's WSJ titled When Winning isn't Everything that I thought was interesting even for us non-Baby Boomers.
The author mentions that his generation's competitive drive to achieve can actually be a dangerous thing! The context is in the world of physical fitness but I can't help but extrapolate this to other areas of our lives.
Many of the recent scandals from Bernie Madoff to Stanford to the Roger Clemens steroid story all seem to stem from that desire of wanting more or offering performance that seems too good to be true!
The ethics of this country seem to have gone out the window in favor of continuing to get or achieve more. I hope the younger generations such as mine can take heart as we lead this country into the future. There's a hefty price to pay for winning at all costs - whether it be financial pain or physical pain!
Thoughts?
The author mentions that his generation's competitive drive to achieve can actually be a dangerous thing! The context is in the world of physical fitness but I can't help but extrapolate this to other areas of our lives.
Many of the recent scandals from Bernie Madoff to Stanford to the Roger Clemens steroid story all seem to stem from that desire of wanting more or offering performance that seems too good to be true!
The ethics of this country seem to have gone out the window in favor of continuing to get or achieve more. I hope the younger generations such as mine can take heart as we lead this country into the future. There's a hefty price to pay for winning at all costs - whether it be financial pain or physical pain!
Thoughts?
Friday, June 12, 2009
Roth IRAs
Roth IRAs are becoming a hot topic these days especially as we get closer and closer to next year. Right now in order to qualify to contribute to a Roth IRA, your modified adjusted gross income (MAGI) must be below $105,000 if your are single and below $166,000 if you are married filing jointly. There are phaseouts above those numbers of $105,000-$120,000 for singles and $166,000-$176,000 for married couples.
What about converting a regular IRA to a Roth? In order to convert a traditional IRA over to a Roth IRA, your MAGI must be less than $100,000 in the year of the conversion and you are not married filing separately.
When TIPRA (Tax Increase Prevention and Reconcilitation Act) was passed in 2005, it set for the income limits to convert a traditional IRA over to a Roth IRA to expire in 2010. This is a huge planning opportunity for those of you who have never been able to qualify for a Roth IRA but have built up a substantial amount of savings in an IRA.
Starting next year, you can convert your IRA over to a Roth IRA. You will have to pay taxes on the amount being converted based on your ordinary income tax rate. However the government is allowing you to pay these conversion taxes spread out over the next two years.
As a Baby Boomer, there are a number of advantages Roth IRAs will give you in retirement:
- Tax free growth for the rest of your life
- No RMD (required minimum distribution) like a regular IRA at age 70 1/2
- Shelter from expected tax increases over the next several years
Take a serious look at converting your IRA over to a Roth IRA next year in 2010. It may be the only chance you get!
Best of luck!
Carleton
McHenry Capital, LLC
McHenry Capital, LLC helps Baby Boomers on the verge of retirement overcome all their fears, worries, and anxieties they have and associate with retirement. We help our clients get crystal clear about envisioning the kind of retirement they want, and we create a real strategy to help them accomplish this. We work with our clients in what we believe is the fairest manner possible - a Fee-Only, Fiduciary, Product Neutral approach to ensure their best interests always come first. For more information, please contact us at 888-968-9815 or visit us on the web at www.mchenrycapital.com
What about converting a regular IRA to a Roth? In order to convert a traditional IRA over to a Roth IRA, your MAGI must be less than $100,000 in the year of the conversion and you are not married filing separately.
When TIPRA (Tax Increase Prevention and Reconcilitation Act) was passed in 2005, it set for the income limits to convert a traditional IRA over to a Roth IRA to expire in 2010. This is a huge planning opportunity for those of you who have never been able to qualify for a Roth IRA but have built up a substantial amount of savings in an IRA.
Starting next year, you can convert your IRA over to a Roth IRA. You will have to pay taxes on the amount being converted based on your ordinary income tax rate. However the government is allowing you to pay these conversion taxes spread out over the next two years.
As a Baby Boomer, there are a number of advantages Roth IRAs will give you in retirement:
- Tax free growth for the rest of your life
- No RMD (required minimum distribution) like a regular IRA at age 70 1/2
- Shelter from expected tax increases over the next several years
Take a serious look at converting your IRA over to a Roth IRA next year in 2010. It may be the only chance you get!
Best of luck!
Carleton
McHenry Capital, LLC
McHenry Capital, LLC helps Baby Boomers on the verge of retirement overcome all their fears, worries, and anxieties they have and associate with retirement. We help our clients get crystal clear about envisioning the kind of retirement they want, and we create a real strategy to help them accomplish this. We work with our clients in what we believe is the fairest manner possible - a Fee-Only, Fiduciary, Product Neutral approach to ensure their best interests always come first. For more information, please contact us at 888-968-9815 or visit us on the web at www.mchenrycapital.com
Monday, April 20, 2009
Welcome to the Retirement Blog!
Welcome to the Retirement Blog!
From time to time I will be commenting on various issues, topics, and articles as they relate to the world of retirement. My hope is to use this new medium to provide my opinion on all the information and misinformation that you may come across in main stream publications that may affect your thinking on retirement. There is a lot of information out there these days talking about various strategies, products, etc. to help you navigate your retirement. I will be commenting and giving you my general ideas in these areas. Please do not constitute this as specific advice for your situation. You must consult with your own financial, tax, estate, and insurance professionals as it relates to your unique situation. I will NOT ever be promoting investment performance on here, and always keep in mind that past performance on any investment is NOT indicative of future performance.
I look forward to this being an interactive forum so please provide your comments/feedback as you feel when they are warranted.
Best of luck to you in achieving your ideal retirement!
Carleton
McHenry Capital, LLC
McHenry Capital, LLC helps Baby Boomers on the verge of retirement overcome all their fears, worries, and anxieties they have and associate with retirement. We help our clients get crystal clear about envisioning the kind of retirement they want, and we create a real strategy to help them accomplish this. We work with our clients in what we believe is the fairest manner possible - a Fee-Only, Fiduciary, Product Neutral approach to ensure their best interests always come first. For more information, please contact us at 888-968-9815 or visit us on the web at www.mchenrycapital.com
From time to time I will be commenting on various issues, topics, and articles as they relate to the world of retirement. My hope is to use this new medium to provide my opinion on all the information and misinformation that you may come across in main stream publications that may affect your thinking on retirement. There is a lot of information out there these days talking about various strategies, products, etc. to help you navigate your retirement. I will be commenting and giving you my general ideas in these areas. Please do not constitute this as specific advice for your situation. You must consult with your own financial, tax, estate, and insurance professionals as it relates to your unique situation. I will NOT ever be promoting investment performance on here, and always keep in mind that past performance on any investment is NOT indicative of future performance.
I look forward to this being an interactive forum so please provide your comments/feedback as you feel when they are warranted.
Best of luck to you in achieving your ideal retirement!
Carleton
McHenry Capital, LLC
McHenry Capital, LLC helps Baby Boomers on the verge of retirement overcome all their fears, worries, and anxieties they have and associate with retirement. We help our clients get crystal clear about envisioning the kind of retirement they want, and we create a real strategy to help them accomplish this. We work with our clients in what we believe is the fairest manner possible - a Fee-Only, Fiduciary, Product Neutral approach to ensure their best interests always come first. For more information, please contact us at 888-968-9815 or visit us on the web at www.mchenrycapital.com
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