Up and Coming Weekly is a weekly publication in Fayetteville, NC and Fort Bragg, NC area offering local news, views, arts, entertainment and community event and business information.
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16 UCW AUGUST 19-25, 2015 WWW.UPANDCOMINGWEEKLY.COM 2015 Best of Fayetteville Special Edition • Coming Sept. 16, 2015 Advertise & promote your business all year long effectively and affordably! UP & COMING WEEKLY'S Advertise, market and promote your business in the most popular, most read edition of the year! RESERVE YOUR SPACE TODAY! For more information, rates and deadlines call (910) 484-6200 UP & COM I NG W EEKLY 'S Statistic – 76 percent of people have not looked at the amount of money they have on hand for retirement. 76 percent of people have no idea how much money they have for their own retirement! This is shocking. Not knowing is not a solution. Burying one's head in the sand will not solve this dilemma. A big part of the problem around this topic is how the financial industry has taught people to prepare for retirement. They have taught Americans to accumulate a pile of resources in a variety of places, most of which have loss of principal, risk, taxes, fees, volatility and so forth as their attri- butes. Can we blame them? No. Financial institutions have rules about money they want investors to follow. The rules go like this: 1. They want us to give them money 2. On an ongoing basis 3. Let them hold onto it for as long as possible 4. Give back as little as possible They do this through a variety of tactics, not the least of which is fear. So we as consumers hear these rules and unwittingly participate in them. The only problem is it isn't about you, it's about them. Who wouldn't want to have consumers follow these rules? Give someone your money, do it often, don't ask for its use and when available use as little as possible. What a WIN for them! Back to the accumulation story: So let's say you man- age to set aside $1,000,000 for your own retirement. You are very happy about this. You have worked and saved and worked and saved for 40 or more years to arrive at this point and you're elated with your accomplishment — as you should be. You sit down at the kitchen table at or around age 65 and begin to discuss with your spouse your strategy for enjoying retirement. You have read numerous publications that talk about safe withdrawal rates in retirement and as you continue to educate your- self you begin to realize the picture isn't as rosy as you had once thought. The so-called experts are extoling the idea that if you withdraw as much as 5 percent of your nest egg in retirement there is a 50 percent chance you will run out of money during retirement. The only solution to running out of money is to withdraw less. A 4 percent withdrawal rate comes with an 18 percent chance of running out of money. A 3 percent withdrawal rate comes with a smaller chance of running out of money. The most recent agreed upon withdrawal rate I have come across that virtually assures you will not run out of money in retirement is 2.52 percent (according to the Journal of Financial Planning, July 2011, authors Manoj Athavale, Ph.D. and Joseph M. Goebel, Ph.) So do the math, 2.52 percent of $1,000,000 is what? That's right, $25,200 per year in retirement. Wow. That's below the poverty line! So now think back to the rules of finan- cial institutions and let's see if they are in play. We have given them our money throughout our working years, we have done so on an ongoing basis, we have not asked for the use of that money for years and years (all the while borrowing for our own needs, by the way, from the bank no less), and are now asking for it in retirement only to be told not to take more than 2.5-3 percent of the pile. Voila', it has worked perfectly. But for whom? You, or them? You decide! Who Is Your Money Working for in Retirement? by ALAN PORTER Will your retirement savings and investments be enough to provide everything you need? ALAN PORTER, Strategic Wealth Strategies, Contributing Writer. COMMENTS? Editor@ upandcomingweekly.com. http://www.iflretirement. com/Alan-Porter or call 910.484.6200.