Source: www.paycheckforlife.org

We came across a recent study done by the prestigious Ernst & Young, LLC covered by Americans for Secure Retirement. (For a more in-depth look at the study, visit the website by clicking on the chart above.) The study found that almost three quarters of middle-income Michigan households seven years from retirement (near-retirees) can expect to outlive their financial assets if they attempt to maintain their pre-retirement standard of living. Obviously this does not uniformly apply to everyone as it is a sample of the population, but it is trying to show a current trend.

Another finding pointed out that near-retirees in Michigan would have to reduce their standard of living on average by 35% to reduce the likelihood of outliving their financial assets (failure rate) to only five percent. Although it is common belief that retired people have lower costs than their working counterparts, we have found from our clients that the idea more than likely isn’t the case and clients need to maintain their pre-retirement standard of living. Yes, retirees may have their home paid off, cars paid for and college bills out of the picture, but retirees also have more free time and are able to go out and do things like golfing or traveling more often then they did in the past. Then, as they age, they find they might have higher medical bills. So, what can you do to help cut expenses in retirement with the things you have control over? Here’s a great US News article that provides 21 different ideas to help you chop your spending: http://bit.ly/coypIj

We aren’t posting this to scare you with statistics. Although the outlook and findings may appear bleak, they also seem to point to the extremely important idea that pre-retirees and retirees should work with a qualified professional to create a financial plan as well as continue to revisit and update that plan on a regular basis. And even though making a plan is a great step – the hardest part is actually sticking to the plan. Having a qualified professional that knows you well and can hold you accountable is a great way to make sure you stay on track to help avoid outliving your assets, not to mention, maintain your peace of mind.

If you don’t currently have a plan or don’t work with a professional that acts as a coach to help you stick to your plan, give us a call! We’d be happy to see if we can be a future resource for you.

• By accepting some risk one may be lead to a greater reward/return.
• Many equities can potentially achieve greater returns than fixed income investments (and they may prove less vulnerable to inflation as well).
• In volatile times like these, having investments that pay dividends or interest (what we refer to as cash flow) is especially important.

Finding the right investment mix for your situation is one of our specialties. Whether you are planning for an upcoming retirement or are already retired and would like to review your current investment mix and receive a second opinion, please feel free to give us a call.

Read Matt Krantz’s (a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies) article here: http://usat.ly/HPB2uY

For more information visit: www.socialsecurityjackson.com

Charlie Rose interviews Erskine Bowles & Alan Simpson

Editor’s Note: This post was written by David Richmond, President of Richmond Brothers.

Since the debt and deficit will be hot topics this political season and it is hard to tell where the truth is when listening to media or the candidates, I wanted to share a study done by the Debt Commission. This was the bi-partisan commission lead by retired Senator Alan Simpson (he is worth the price of admission on his own) and Erskine B. Bowles, former President of University of North Carolina and the White House chief of staff under Clinton, the last time we had budget surpluses. I saw them interviewed on Charlie Rose’s program on March 29th. It was fabulous. They were speaking plain English and laid out the facts; the study (The National Commission on Fiscal Responsibility and Reform) is 67 pages but it is written for the average American as much as finances can be and it is relatively easy to read. I thought you ought to have the facts so that when people line up against this type of thing you know what they found first to make judgments. 

They basically say we have a real problem and it is going to be painful to fix, period! Democrats are going to have to give on entitlements and Republicans are going to have to give on taxes. They lower taxes in this proposal but they broaden the base and lower the taxes getting rid of loop holes, deductions, and back door spending. The first 10-15 pages they lay out the basic premise. It is worth looking at.