You Are Your Retirement

Monday, 18 Mar 2013 07:40 AM

By Sean Hyman

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Before the 1970s to 1980s, much of middle-class America received pensions after working for a corporation until retirement.

This was where the corporation saved up and invested for the employee, so it didn’t require much discipline on the worker’s part to have a way to retire off of more than Social Security checks. They could simply focus on their job, ignore the financial markets and simply retire, get their gold watch and pension check at retirement.

However, since these days, the 401(k) came about. It can actually be a better way to invest for people because it gives the person more control over their retirement dollars. It can also give them more choices of investment vehicles in which to invest.

Editor's Note: Obama ‘Blunder’ Spawns Massive Profit Opportunity

But it can have an Achilles heel to it too. It does require some discipline upon the worker’s part. First, they have to set up a 401(k). You may laugh, but many people who have access to a 401(k) program through their employer do not take advantage of it.

Then they have to have the discipline to set a contribution percentage that they won’t tinker with. Additionally, they have to decide what it’s invested in. And that’s a challenge for the average worker that doesn’t keep their eyes peeled to the markets.

With pensions, workers didn’t worry about the gyrations of the stock market. That was the pension fund manager’s worry. However, in their 401(k)s, workers can “see” the gyrations in their retirement account. This can be a disadvantage because people get emotional when they see their balances temporarily decreasing in value and so they “cash out” and lock-in losses or lower gains than if they’d simply left it alone and not watched it all the time.

So the worker has to have access to a 401(k). They have to take advantage of it and be disciplined enough to set a percentage of money to come out of their checks and not to lessen that amount. Then they have to know what to invest it in and they have to keep their eyes off of it and let time take its course.

These are a lot of hurdles for the average employee to get over. Do you think many of these people end up jumping over these hurdles well? Of course not.

They’ll typically either invest too conservatively in the early years, or get scared and go to cash in stock market declines, then put the money back in only after stocks have risen a lot once again. In essence, they’re becoming their own mutual fund manager without the stomach or experience to do so.

Another reason we know that they don’t fare that well doing things themselves is because of a poll from Harris Interactive back in early 2011.

The survey showed that 54 percent of the respondents had less than $25,000 in savings or investments, while 71 percent had less than $100,000 in savings or investments and a staggering 83 percent had less than $250,000 in these liquid assets.

Most of America has not done a good job at preparing for their own retirements. So since “you are your retirement,” you’ve got to be diligent in having a decisive game plan where you invest money regularly for your future retirement.

Now, if you wish you had that pension fund manager managing your funds, today you can have something similar.

Editor's Note: Obama ‘Blunder’ Spawns Massive Profit Opportunity

You can follow the investments I recommend in the Ultimate Wealth Report at www.ultimatewealthreport.com for your IRAs and any self-directed 401(k)s. Look over the recommendations and why they are being recommended. Then see which ones make the most sense to you and invest accordingly.

This saves you time and lets you tap into the research time that I did in searching for the next stock gems. It’s similar to having a pension fund manager for your retirement accounts (and for your taxable brokerage accounts, for that matter.)

About the Author: Sean Hyman
Sean Hyman is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of Ultimate Wealth Report. Discover more by Clicking Here Now.

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