Advisors: A Conversation to Have with your Clients

There was another great article in Financial Advisor magazine this month which highlights the sort of fears and concerns that plague many generations of today’s investors, specifically those nearing retirement who are trying to better preserve capital. It’s no longer just about the magic number one needs to retire comfortably or which financial product you can buy to protect your future income against long life spans. Today’s concerns are often about the potential of current events to cause another market retreat along the lines of the tech bubble or housing crash, the sort of thing which can further jeopardize a comfortable retirement. The article suggests that some of the top concerns that clients/investors have at the moment include: 1) the debt issue and whether that may ultimately cause the US to lose its status as the world’s reserve currency; 2) the likelihood that we’ll experience severe inflation in the coming years which could dramatically impact purchasing power; 3) what are the potential ramifications of Obama’s large and complex health care plan? So let’s briefly touch on each of those and then see if we can back those concerns into some sort of investment opportunity.

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Saving for Retirement: The Numbers

There was an article in Financial Advisor magazine this month which talked about how much money people ought to save if they wish to retire comfortably. I’ve found people enjoy these simplified, rule-of- thumb type systems as they allow people to break down complex, hard-to-reach goals into smaller, more manageable pieces. The article suggests that saving 8x your final salary should, along with social security, prevent a situation in which one outlives their assets. Obviously this isn’t an exact science as the retirement picture looks a little different for everybody, but based on standard spending ratios (typically 85% of pre-retirement income will be needed) these numbers should work. The ways in which one may reach such a large lump sum goal will vary but below are the suggested guidelines for doing so.*

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