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Alan Klayman Founder of MyIncomeStrategy.com® Oct 10, 2008: McCain: Suspend mandatory retirement-fund sales. The Republican nominee for president said Friday that many seniors who have reached the age of 70 1/2 are required to start taking disbursements from their 401(k) and IRA retirement accounts under U.S. tax code. He's asking Congress to waive that requirement. "To spare investors from being forced to sell their stocks at just the time when the market is hurting the most, those rules should be suspended," ... OBAMA AGREES THIS IS WHAT THIS WEB SITE HAS BEEN SAYING FOR THE LAST YEAR. STOP SELLING FROM GROWTH ACCOUNTS. That is what every other calculator does. They are called "probability", "MONTE CARLO", "Linear", but they all do the same thing. Sell your assets in bad markets. DON'T DO IT!!!!!! Sept. 15, 2008 For the 3,000th time in this blog I will repeat what I have been saying for some time. The similarities between the assumptions of predicting the future used in mortgage bonds calculations and the way almost everyone is calculating your retirement income projections is scary. You need to work with real numbers, understand when you are using assumptions and when you need to revisit any and all calculations. You need to know when you are being sold something vs. when you are being sold something that is actually going to help you. Bear Stearns, Lehman Brothers, Merrill Lynch. Can you see that there are assumptions being made that you need to recognize, understand, and be able to distinguish what applies for your money. You need a level of transparency that you have not been afforded before. You need to get away from the 'black box' methods of calculations, and into reality. People keep asking "Isn't it enough that the price of filling up your tank is high, but food also?" There is a connection to the price of gasoline and the price you are paying in the food store. I know that many people are trying to stretch their dollar farther and farther, especially those on a fixed income. Now I'm not going to go into a political discussion about profits and prices or different party philosophies, but here is a primer of what is driving these prices today. As we all know very well, the price of oil is flirting with it's ll time highs and so is the price of gasoline. As an alternative to oil, Ethanol is being used in 10% or more of the gasoline we use whenever we fill up at the gas station. As an alternative to gasoline some vehicles are running on 85% Ethanol (E-85). If you can't tell, many cars MPG (miles per gallon) do worse on Ethanol blends than pure gasoline, which is causing some of us to fill up more than we used to. The Ethanol being used as a substitute for petroleum (to reduce our dependence on oil) is being derived from corn. The more corn that is used to create Ethanol, the less for corn that can be use for food. Not only less food for people, but also less corn available for feed for livestock. This reduction in the amount of corn used for food, with a steady demand for corn has caused the price of corn to go up. It has also increased the price for food based on livestock (meat, dairy) to go up, since it costs more money to feed this livestock. To try to meet the demand for corn there are farmers who are substituting the land they used to plant other food products like wheat, and soy, and are planting corn. This is causing a shortage in wheat, soy, and these other products that were planted where corn is now being planted and this too is creating an increase in the price for these wheat, soy, and other food products. In addition, energy speculators and hedge funds, are betting on the price of corn and other food items to increase by buying futures contracts on these commodities and are further pushing up the price of these basic staples. This becomes a 'bubble' where the prices are being pushed up artificially and do not reflect the actual cost/value of these staples. The end result of these contributing factors is a less availability of certain foods at certain times, (less supply with the same demand = prices go up) and an increase in the price of food at the market. So to sum up, the increase in the price of gasoline is causing us to try to find other ways to use energy which in turn is causing the price of food to go up. Is this permanent? It may or may not be. If there is a 'bubble' it will burst at some point for the speculators. There are technologies developed and being developed to derive Ethanol from other products like garbage, waste, and other non-food items. As we move to more energy efficient cars and car manufacturers offer more fuel efficient cars this will decrease the dollars it costs to fill up ( or charge ) your car. Wind, coal, and other technologies will help provide longer term relief from oil based energy solutions. But if the prices are here to stay, then you need to budget for these prices in your income planning. If your are not yet retired use these inflated prices as a base. If they go down at some point then you accounted for them, if they don't go down then they are in your budget. If you are already retired then you need to account for these prices in your budget TODAY, and check your income plan to make sure you can cover you needs not only now, but in the future. Here is a link to a free strategy selector tool you can use: http://www.myincomestrategy.com/strategy.cfm Be diligent in your planning, and make sure you are being as energy efficient as you can. Better for the money to stay in your pocket for your needs.rn JHere is a question we have been getting a lot of lately. I have an extra $XX thousand I don't need for the next 10-20 years, where is a good place to put it? The answer lies in your feeling of the ability of the US economy and the companies that comprise the stock market. If you think that the US is a place for opportunity and that things will get better over time than equities must be in the mix. If not, look at fixed investments along with investments of companies/countries where you think money will pour into and will strengthen along with government stability that will not pose liquidity restrictions on your investment. 4 reasons you should never retire After years in the workforce, why would you ‘retire’ all of your wisdom? Maybe you stop working at your current job, but here are 4 reasons you should never completely and fully ‘retire’. 1.You know too much There is no question that after spending this many years in the workforce, some people need a break. But being a smart person you realize that you know too much to let your knowledge go to waste. Instead of thinking about retiring, think about transitioning into a new role. This new role is one where you impart your knowledge and wisdom onto others. Do you think that someone else working for 1, 2, 5, 10 years in a role similar to yours has your knowledge? 2. You have too much experience This may sound a lot like #1, that you know too much, but experience goes hand in hand with knowledge. An MBA from an Ivy League school is just someone who is a few years out of college, and then went to school to learn from people just like you. They are smart enough to know that they don’t know it all, and they need people just like you to help them succeed and progress. You have so many years of experience, years of trial and error, making mistakes, learning from them, and applying this experience to real life situations. Do you think someone with 1, 2, 5, 10 years experience has lived through and seen the good times and the bad, the ups and the downs, the way to make it through different economic cycles as you have? 3.Your health will rejoice I’m not a doctor, nor do I play one on TV. But I have my share of experience. My non-scientific experience from sitting and speaking, and working with tens of thousands of people has shown me that the people that keep on keeping on, are the ones that appear (at least to me), to be the healthiest. There is something to be said about what came out of ‘the old country’. How many older folks have you known, one’s that lived into their 90’s that still worked, or volunteered their time? Let’s not forget what we learned from our parents and grandparents about work ethic. But let’s also apply today’s knowledge about the importance of time off, of proper medical care, and keeping our bodies in shape. ‘Holistic’, ‘Organic’, ‘Farmers market’, all of these sound a lot like how our parents and grandparents lived. Apply ‘old’ principles, along with the new, keep active, and your health will rejoice. 4.Up to now you were apprentices. That’s right. Anyone who worked for someone else, you were their apprentice. Now it is time to take that knowledge and experience and make it your own. Whether you start a new business, or you share your knowledge teaching, or doing volunteer work, you can make a bigger impact then anyone half your age. If you had your own business, and you sold it, then it is time to start anew, or share what you know and what you learned with others. If you are keeping a business in the family, stay involved. Just because your kids, or any younger generation, is running the show that doesn’t mean they have #1 & #2, the knowledge and experience you have. I am not telling you to never hand over the reigns. I am saying that you need to keep in touch and understand the pulse of the business. One experience that stands out to me is a company I visited in Pittsburgh, PA a few years ago. The founder of the company at the time was 88 years old, came to work almost every day for a few hours, and was still called on to meet with community leaders, was there for advice when needed and was still a vibrant part of the business. So here are 4 reasons for you to keep contributing. I don’t know whose idea it was to take people at the most productive time of their lives when they built up so much knowledge and have them stop doing what is best for themselves, their colleagues, their family and their community. But I think that it is better for you and for everyone around you to enjoy these years and make them as fulfilling as you want them to be. Recent article: Balancing rising expenses against a fixed income. Property investments in retirement are fine; just watch the costs: Click to read Recent articles including quotes in Senior Market Advisor: Click to read A question came up about short term bond funds and retirement income recently. Short term bond funds should NOT be used as the spend down portion of a 7 or 14 year spend down/grow back income strategy since they are FUNDS and they can lose money. They are an investment option in a well managed diversified GROWTH portfolio. 14 Secrets to Retire picked up by WUSA channel 9 News in Washington DC Click to read On Yahoo! and CreditCards.com On AOL.com and SmartMoney.com: 14 Secrets to Retire (maybe even retire rich):I've worked with thousands of people over the years and here are some of the secrets I've picked up from some of the wealthiest clients. I've also included best practices I've learned with them. Independently each secret may seem modest, but together they are substantial. Some of these you may already know, all of them are timeless. No matter, do what's best for YOU. That is the basis for the MyIncomeStrategy program. 1. Spend less then you earn. If you spend more than you are making, you will never be able to save, will not have enough for a comfortable retirement, or have true financial freedom. 2. Do what you love to do. It is easier to make money if you are enjoying yourself and your work is aligned with your belief system. No one is any good at doing something they hate. 3. Make sure you are saving money. Put money away into your savings and investments first, and then start paying your bills. If you say you don't have any money to save, it means that your expenses are too high. You need to set this priority in order to be able to retire rich, let alone retire at all. 4. Don't follow the crowd. Too many people do things backwards. They buy when they should sell, they listen to someone who knows nothing but promises an inside tip. They start a plan and never follow through. Everyone's situation and attitude towards savings/investing is different. You need to make decisions based on what is best for you, not your friends. 5. Don't try to predict the future ? or let others predict it for you. Too many of today's retirement calculators and planning tools try a level of complexity that predicts your future. Stay away from the crystal ball. Be practical. Use technology as a tool. Set up a plan and stick with it, start by: a) Setting your savings Goal b) Calculating the amount to save each year c) Working to meet or exceed your savings goal Want to calculate how much to put away to be able to retire rich? That is live the lifestyle you wish, your principle available for your use and pass money to your heirs or to charity: The following can be done using http://www.MyIncomeStrategy.com or with the help of a financial professional. - Determine how much you want to retire on. - Calculate your goal amount and work to meet or exceed it. - Calculate how much is needed in the future. - Use a savings calculator: See how much you can need to save to make your goal. See if this is realistic. If not on your salary then you need to either: - earn more - trim your spending - change your expectations rn6. Rebalance your portfolio. You must rebalance your portfolio at least once a year. By doing so you will automatically sell your winners and buy into your losers. Which sounds bad, but is actually good. Why? Because you will be buying when the price is down and selling when the price is high ? exactly a formula to success. 7. Don't carry credit card debt ? Credit card debt will bury you. The interest alone can be greater than what you purchased if you are only making minimum monthly payments. Using credit cards offers you protection and reward perks are nice, but if you use these cards you must pay them off when the bill comes. 8. Be Predictable (a) Keep your expenses as predictable as possible. If your expenses are variable it becomes harder to keep a lid on these, and harder to save money. The best way to do this is to establish a budget and revisit at least twice a year. (b) Keep your income predictable, even if it is not. Plan on an income that exceeds your budget if you are on a variable income (commissions or bonus income for example). Assume an income less than what you are accustomed too. This way if you earn more, you have more. (c) Maintain a 2-year cash cushion ? just in case of an emergency, investment opportunities, or any unexpected expense. 9. Work with investments you are comfortable with and understand. If you are not comfortable with something, make sure you understand it. If you understand it, and are still not comfortable then don't do it. But, don't dismiss investments you haven't taken the time to understand. 10. Reinvest your dividends. Whether you are in a company sponsored 401k, have savings and investments, or an IRA, make sure you are reinvesting your dividends. Reinvestment buys more shares, immediately gives you the benefits of dollar cost averaging, and has accounted for a good portion of the growth of the market indices over time. Check with your tax advisor about dividends and their special tax consequences outside of retirement plans. 11. Uncouple your income from the stock market. You must keep your income predictable when you are retired. If your income is tied to the stock market going up and down, you are "reverse dollar cost averaging". You are invested in vehicles that go up and down with the market; like mutual funds or stocks. When the market goes down, and you have to sell off investments to meet your income. Pick strategies where you are NOT reverse dollar cost averaging when the market goes down. You have other assets that produce income for you and you have time to wait out the market cycles to recover any losses. 12. Your best interest may not be in the best interest of the person selling you something. Make sure your interests always come first. Sometimes information others provide to you is in their interest, not yours. You need to see who is providing this information and why. Is it really to help you, or them? People who sell only one type of investment, might only know more than one type of Income Strategy. Which leads to #13. 13. No single investment solutions. There is no 1 investment that can 'do it all'. You need a well-structured approach to your investments. You need to follow the principles and gudelines of asset allocation, and you need to stick with it. 14. Strategy first then investments. When you are retired, you MUST have your income strategy picked out prior to your investments. When you plan your vacation, you need to know your destination, and have a way to get there ? including a map. The same is true when you are retired. Having a plan or Income Strategy is important. Having the RIGHT PLAN or RIGHT INCOME STRATEGY is very important. It is important that you pick the Income Strategy that provides you with the income you want, along with comfort, peace of mind, and the flexibility to adapt to changes in your life, and in your investments. For help picking an income strategy you can use this easy tool I developed for free. Go to: http://www.MyIncomeStrategy.com/strategy.cfm Who is taking responsibility for the increase in prices and the corresponding increase in profits? There is no question that increases in prices to offset other costs are necessary in business and will help keep a company humming, and keep jobs from being lost. But unprecedented increases in prices along with record profits are unwarranted and hurt the consumers that can least afford to be hurt. Retirees and others living on income generated from savings take heed. Volatile markets will eat away your principle if you don't move to an income strategy that is uncoupled from the markets. Another group hurt by these price increases are those on a fixed income. Some may think to include themselves if they are salaried and their costs have gone up 20% but their income only went up 2.5%. We need more responsible people making decisions. From Yahoo! and Creditcards.com. Read about how an income strategy, like a 7 year spend down and grow back strategy, compares to an investment strategy. This article uses an anchor strategy as the investment strategy example. The article discusses how these strategies work and what the differences are between an income and an investment strategy. Rethinking borrowing in retirement featured on YAHOO.com and in Creditcards.com How to retire debt when you retire is featured in this article on Creditcards.com. Read here about Investment choices after retirement funds are maxed out, specifically about paying down a mortgage vs. investing monies in the market on creditcards.com and in YAHOO.com DVMOURTIME has picked up the top 10 mistakes people make picking an income strategy. Judith West interview is available here too. Retired and afraid of running out of money. Thinking about retiring and wondering how much you need? Listen to Alan Klayman explain how to plan for both with My Income Strategy on Getting Your Money's Worth with Judith West. To follow up from yesterday. Ethanol is being used in 10% or more whenever we fill up at the gas station. This ethanol is being derived from corn. The more corn used to create ethanol, the less for food for people, and the less corn available for feed for livestock. This causes the price of food and livestock based products to go up. In addition, there are farmers who are trying to meet this demand and have substituted planting corn instead of where wheat, soy, and other products would have been grown. This is causing a shortage in wheat, soy, and these other products and this too is creating an increase in the price for these products. In addition, energy speculators are buying futures contracts on these commodities and are further pushing up the price of these basic staples. The end result is a shortage of certain foods and an increase in the price of food at the market. We had a great time at the dvmourtime.com party for WUSA TV 9 in Washington DC. The Capitol Grill hosted a great event, as did J.C. Hayward and the rest of the WUSA channel 9 news team. One thought on everyone's mind was the economy and how to work out / disconnect the price of oil from the soaring price of food. A lot of people are looking for energy alternatives to Ethanol based from corn, and of course alternatives to petroleum. It seems that the energy speculators are creating another bubble waiting to burst. But the consensus is that this bubble hurts too many people that can not afford food prices in the poorest parts of this country and the rest of the world. From the 8 ways to squeeze your budget featured this week in CreditCards.com If you are removing assets from your 403(b) (a hospital retirement plan), make sure you are not using a method that fluctuates with the market. It's better to have an income strategy (a plan on how turn your savings and investments into spendable cash) that can guarantee income instead of being dependent on a fluctuating unpredictable market to meet your fixed monthly expenses. This can cause you to take out more when your investments go down and leave less for the future. To learn how receive guaranteed income for at least a portion of time during your retirement get STEP-BY-STEP instructions at http://www.MyIncomeStrategy.com/inside.cfm Start with the Strategy Selector Click for Step-by-Step Instructions. Start with the Strategy Selector To read the article in CreditCards.com: Featured in Jolie Magazine. See Alan's article here. Check out the new issue of Jolie Magazine here: New article on retiring debt and working toward a retirement income goal prior to retirement at age 62. Ready, Set, Cut Rates... If you have an adjustable rate mortgage, seriously think about moving to a fixed rate. Rates may linger low for some time, but then again they may move up quicker than you think. Don't be caught in the trap many found themselves in taking teaser rates for their ARM's and then not being able to adjust their income along with the increase in the adjustable rate. Don't be fooled. Look at what you can afford, leave some breathing room, and go with a fixed. If you can buy something (anything) at a lower price than it usually sells for then don't you want to consider it? Well that's where we are with fixed rate mortgages. Doesn't matter what age you are 18 or 88. I want to thank those that attended the seminar tonight. We had a great group of highly motivated and intelligent investors that care about their financial future. It was a good event. For those that wanted to attend but could not make it, e-mail mis.seminars@gmail.com and we'll send you a free gift. A question of hospitality came up recently , and the answer is in the town of Nilbog. Catch Judith West on "Getting Your Money's Worth". Alan Klayman talks about getting your money to last for the rest of your life. Watch a primer on how a spend-down & grow-back strategy differs from a market withdrawal strategy. Don't get caught with a fluctuating portfolio in this economy. Anecdotal evidence... but: My Realtor Friends with many years in the business are getting very busy. Have we hit equilibrium in the housing market? Every State/County/Area is different, but I know people working in middle class, affluent, and super-wealthy areas all with the same experience. This is in the Northeast, so it may be confined to here, but there is a time when the right mix of inventory, interest rates, and pricing spurs demand. We may be at that point.? MyIncomeStrategy.com® is on the CW 11 WPIX News in New York City. MyIncomeStrategy.com is on WUSA CBS 9 in the Nations Capital. 13 lucky quick tips for inflation fighting and recession-proofing your Portfolio, Income and Retirement. 1. Keep expenses lower than income. 2. Budget billing from your utility. Keeping your expenses level helps you to: 3. Fix income and expenses on annual or monthly basis. If you budget for how much you spend each month then you won’t have to dip into savings or investments for extra cash. If you dip into investments for extra cash and the market is down, you end up selling at a lower price and need to sell more shares of investments to get the same amount of money out. This can lead to a depletion of your accounts (not good). 4. Retirees: Pick your Income Strategy so that you don’t have to sell on dips in the market (see #3). Try a spend-down and grow-back strategy instead. www.MyIncomeStrategy.com/inside.cfm has some listed. 5. Savers: Pay yourself first. Putting money into savings is always a good idea. Cash for emergencies and: 6. Contribute to an IRA or another type of retirement plan (401k, 403(b)). You will save money for yourself, you save on taxes now, and your money grows tax deferred. Tax-deferral is very powerful. Your money grows and compounds on taxes you never paid, but saved. Like a mortgage, but you grow the interest instead of the bank. 7. Look into technology solutions for services like faxing. This will save you on a phone line. www.efax.com is an example. 8. Look at virtual voice mail and automated attendants. This can be cheaper than your phone company’s service, it’s portable, and you can check your messages online. www.gotvmail.com is an example. 9. Pay bills online – save on stamps. Many banks do this for free and Internet services like www.mycheckfree.com does this with no cost to you. 10. Some Gas saving ideas – Group your shopping trips. If you are going to an area where they have a store you regularly shop in, then shop. Fewer trips = less gas wasted = more money in your pocket. Keep you tires properly inflated for better gas mileage. 11. Review with your cable provider for promotions, and when they end. Surprise, your bill is $50 higher because a promotion you signed up for a year ago ended. Make sure you know when these end, and if you want to continue them, great. If not, then don’t get charged for a service you don’t want. 12. Constantly review your telephone and cell phone bills to make sure you are using the right service plan. Are you signed up for 800 minutes and using 1000? Better take the higher plan. Are you signed up for 1000 and only using 200? A lower plan will save you money. 13. Unit price at the store. Usually buying more is better, but not always. Check the price per hundred and compare. The lower the price per unit the better for you.rn A discussion on finding the right income strategy and managing debt in retirement right here... Note: I use the most inefficient method of taking income 'Market Withdrawal", using the assumption that if it works for the least efficient strategy, everything else will be easier. Watch MyIncomeStrategy.com® - On the news! Are you retired, in between jobs, supplementing your income? Today I was a guest with Dave Lucas on Newschannel 8 in Arlington, Virginia and we discussed 3 main points:1. Most retirement calculators and programs are using the same type of assumptions that Mortgage Bond Pricing has been using. And we know where that has got us thus far. The assumptions of trying to predict the future and modeling future behavior and market movements does not work. You need to take a pragmatic approach, and work on what makes sense for your situation. Take out the guesswork. 2. Don't try to solve short term income problems with long term solutions. Most retirement calculators and programs are doing this, and it is wrong. This hurts your portfolio. You need to do what works best for you and your family. 3. Using this website without the aid of the video or the instruction manual is not it's intended use. You need the instruction manual to help guide you so you can get on track and/or stay on track. for the DVD or Manuscript that gives you Step-by-Step Instructions. Or have us do it all for you. Quoted on Fed action providing liquidity to the market by Markets Media Online Great program today on WBNW Boston 1120 am - The Daily Bear with Lou Michaels. Check in next Wednesday at 11:30 for more. We'll talk about what assets to use to generate income, taxable vs. tax-deferred. Where to use them, when, and why. NEW WEBSITE FEATURES INCLUDE: VIEW the HOW-TO Video intros for free by clicking on any 'Play Video' bar Calculators are all 'FREE'. Just register your e-mail address for 'FREE' access. Here Help us make this site better for you and send us feedback. Have a Financial question you want answered? then click here. And we'll e-mail a response back asap. A big thanks to Bill Wills and the team on Cleveland's WTAM 1100 AM The Wills & Snyder Show Don't forget to budget your $$$ in Cleveland and pay yourself first.Retirees and those looking to retire, move to a strategy that works without having to deal with the market going up and down. Take a look at the spend down and grow back strategies I really can't say enough about the professionalism and quality of organization at Fox 5 in DC. They are a great team and really great to work with. I'd like to thank the entire news team at Fox 5 in DC www.MYFOXDC.com What a great interview experience. Steph - don't forget to get the bagels in Fairlawn. Katy - Your first on the list for the new book. Thanks again for everything. Listen for Alan Klayman every Wednesdays at 11:30am on 1120AM WBNW on the Daily Bear radio program with Lou Michaels. Streaming Live on the web WBNW On the newswire: HBTILY Credit, Liquidity, and Retirement: The Fed came to the rescue this past weekend in the latest stage of the credit crisis, keeping the financial markets liquid with the facilitation of JP Morgan's purchase of Bear Stearns. What does this mean to your retirement income and retirement portfolio? First - If you have an income strategy tied to the markets, fix it now. Many people can use a strategy not tied to fluctuations without having to radically change their investment portfolios. Second - Whether you are retired or pre-retired, don't panic. In many cases some of the best buying opportunities and growth potentials, come from turbulent markets. Volatility is a friend to long term growth and an enemy to short term income. Act accordingly. In the newspaper - Tim Grant for the Pittsburgh Post-Gazette.com The trouble with Monte Carlo retirement income probability calculators starts with their imperfect attempts in trying to predict the future. A confidence level is only as good as the paths they predicted. I think we learned from the mortgage bond crisis that computer programmers can not predict what will happen 5 years from now, let alone 35 years from now. Under no circumstance should we think that these 'quants' can take into account or are aware of every economic, social, and political variable that can and will affect the future behavior and path of the markets, and in turn your retirement. There are better solutions. Check out articles on www.Ideamarketers.com MyIncomeStrategy.com® helps you in both a strong and a weak economy build a retirement income program that suits your needs. It will help you find the Income strategy with the lowest rate of return needed so you don't run out of money, along with the most flexible income options. Don't be fooled by companies and individuals trying to sell you something. Do what is best for you and your family! We might not be heading for stagflation. There are too many businesses that have been hurt and will continue to be hurt by the rising costs of food and energy. Some will layoff, and some will shutter facilities. But many are already taking another tactic. They are lowering prices to bring in consumers. This will surely hurt economic growth, but it will help curb runaway inflation (ex-food and energy). Growth could rebound after this period of business and price contraction subsides. In many of the income strategies in MyIncomeStrategy.com® there is a call for a fixed rate. Right now Municipal Bonds have a tax-equivalent yield that can bring success to many investors shut out of low fixed rates. This gap in the markets between government bonds and municipal bonds may not last. Time to pick your income strategy and take advantage of a historical price anomaly. Looking at the recent comments of Fed chief Mr. Bernanke comparing this years economic downturn vs. 2001, it is more than apparent that my call for you to disconnect your income strategy from your investments is long overdue. Get your copy of the book or DVD NOW. In the news: ...What’s more, investment banks that have managed the muni bond markets, are, moreover, refusing to let investors withdraw their funds. "Banks are not providing the liquidity and price stability necessary for securities to have successful auctions,” says Alan Klayman, CEO of MyIncomeStrategy.com, a financial planning firm. Since corporate demand for ARS issues has evaporated, banks, at first, took on the inventory. But as the credit crunch continued – fostered by the sub-prime loan mess – Wall Street changed its mind. "The capital commitment required to do this grew at the same time the banks faced challenges from other parts of the credit market,” says Peter Cohan, a professor of management at Babson College. This is akin to what would have happened in the old days – before computer trading – if all the specialists on the New York Stock Exchange had stopped providing liquidity to that market, says Klayman. Thus far this month, hundreds of municipal bond auctions have failed. This has raised speculation of bid rigging in some parts of the financial news media, and at the Securities and Exchange Commission as well... There is no question that if we are not in a recession by the economic numbers, consumers are behaving as if we are. Here are 6 steps to recession proof your retirement income: 1 - Pick a retirement income strategy that is not tied to market fluctuations 2 - Put strategies ahead of investments 3 - Align your investments to your income strategy 4 - Budget your annual income to a level monthly number, especially if you are on commissions or get paid bonuses 5 - Estimate expenses on a level basis (like your income), and match them up 6 - Stay ahead of inflation by avoiding low to no rate of return accounts, you can have safety and an inflation beating return Who is this program for? If you are retired, about to retire, or know someone that is then the MyIncomeStrategy program is for you. Use this Program to find out what you need to do in this unstable economy, stock market, and real estate market TODAY to shield & protect yourself, your family and your assets RIGHT NOW. MyIncomeStrategy is designed to help you make smart decisions with your money TODAY. This program is for people who want to make their money last for the REST OF THEIR LIVES. To order call 1-877-647-1266 Don’t regret this moment and look back one day and say I wish I would have done that. On the newswire: IMPORTANT! Starting today you will need a username and password to use the calculators. Just go to the upper right hand corner and create an account. Then you will be ready to go. Existing users, just log in first then go to the home page or calculators, or members area. THANKS! In our video, on our homepage, and posted for the past year, we have warned people to be careful, and it bares repeating once again. There are some, that have only their interest in mind, and are looking to sell you something. Sometimes it is a cookie cutter approach to investing, sometimes it is an investment product they manufacture, but in any case, this is the bottom line; Don't be fooled by these people claiming to try to help you so you don't run out of money. You must learn what is best for your situation, you must know that there is more than one way to set up a Retirement Income Plan and an Income Strategy. Using an Investment Strategy to derive your income can spell Disaster! There is a very important difference between an Income Strategy and an Investment Strategy. The math is not the same. You must do what is best for you! Do what is in your best interest. That is the guiding principle behind the MyIncomeStrategy program. Do what is in YOUR best interest. Not in the best interest of someone trying to sell you something that works better for them then it does for you. Markets are closed for Presidents day. I was asked recently about what to do with your 401k in this market. The answer is simple. You should stay the course you set out on, assuming it is a reasonable one. You should be well diversified and asset allocated, with your goals, time horizon, and risk tolerance all factored in. If you are a long term investor saving for retirement, then dips in the market work in your favor. No need to make radical adjustments. Just make sure you rebalance, in times of excessive market volitillity, do it quarterly instead of annually and take advantage of market fluctuations. I am asked frequently; When is the best time to pick your Retirement Income Strategy? Pick your Retirement Income Strategy 7 years ahead of Retirement. The correct Retirement Income Strategy is the Strategy that offers the lowest rate of return needed in order to make it work, coupled with the greatest investment choice and flexibility. Then, minimize the effect of market conditions. For example, if you want a Strategy that results in 85% Fixed , and you are 85% Stock, and retiring this week, that’s hard. Better: 7 years ahead identify your Strategy and have time to start unwinding your positions in reasonable intervals. It's never too late. If you’re within 7 years or already retired, review your Income Strategy and make adjustments appropriately. Alan Klayman was asked his opinion on International Mutual Funds and what to be looking for: Mutual funds that are International are preferable to Global. Global implies US investments. For International, use a diversified mix of countries and quality, that means developed and emerging markets debt, along with credit qualities above and below investment grade. Also use a US fund that specializes in countries that do business overseas, like an export fund. This gives you foreign exchange coverage without having to specifically hedge any currency. What you end up with is US companies doing business in Mexico, China, Europe, Japan, Asia, Africa, India etc. along with Mexican, Chinese, European, Asian, African, Japanese, and Indian companies that do business in the US and with each other. Alan Klayman was asked to contribute to a Corporate meeting regarding how much to put away in a retirement plan, here is a summary of his thoughts: Personal finance expert Alan Klayman suggests putting as much as you can into your retirement plan. „Put everything you can into these plans, whether an IRA, 401(k), 403(b) or other tax-advantaged retirement vehicle. Here are some of the benefits: You get a tax deduction today, which means an instant rate of return at your effective tax rate. So taxed at rate of 20% for example, you actually get a 20% return just for investing in your future. Your money grows tax-advantaged. Whether you use a Traditional IRA or a Roth IRA, your money is growing and you are not paying taxes. So every dollar earned you get your effective rate REINVESTED and it compounds instead of paying that money to Uncle Sam. If you are in a retirement plan with a match (like a 401k) then every "matched" dollar equals 100% return, before you invest. Many of these plans are automatic and are not high maintanace on your part. Just make sure you rebalance your portfolio and review your investment strategy at least once a year. Who is the ideal candidate? Anyone with earned income.“ ~Alan Klayman, founder of MyIncomeStrategy.com Alan was asked by a Prominent Newspaper about his thoughts regarding Warren Buffett's recent offer to prop up Municipal Bond Insurers, Here is his answer: "I believe that Mr. Buffett sees an opportunity to do a few things. Or if he doesn't see it this way, I do. First, these are good assets. They can fit into his insurance portfolio and are backed by the taxing power of the municipality. Since he is looking to cover these assets and not the more risky CDO's, I do not believe it will alleviate the entire credit crunch, but I do believe that in the long run it will benefit taxpayers. Shoring up a AAA rating does the following - keeps interest payments of a municipality down which keeps property taxes and local earned income taxes down which gives relief to both working families (savers) and retirees (income investors). Is this a good time to buy these assets, if the yields are high and the prices are low? You bet it is." ~Alan Klayman, CEO & Founder of the MyIncomeStrategy program On the newswire I want to thank Lou Michaels of "The Daily Bear" radio show and the folks at WBNW 1120 in Boston for having me on their show today. You can here Lou live streaming at MoneyMattersradio.net and on 1390am Cape Cod. Lou is a great host, and I look forward to being on the show again. Get ready for what might be a bumpy ride. 2 new stocks have been swapped in the Dow Jones Industrial Average. Chevron and Bank of America are in. The energy sector has enjoyed a run up over the past 8-10 years, many say at the expense of the economy &/or other business. How much longer can this last? Bank of America is in the Financial sector which certainly is in a time of volatility. Many in the investing community watch the S&P 500 for direction of the stock market, but the press and some others tend to follow the Dow. It's movement is seen as a representation of the entire market. With that said, prepare for what might be some more volatility in the movement of the Dow, as these two companies may see their sectors move greater than they have in the past. What does this mean to growth investors, volatility can be your friend when you dollar cost average, and implement an asset allocation strategy where you rebalance. For INCOME investors, volatility is a bullet into your income portfolio if you use a market withdrawal strategy, for example if you have all of your money in a money management portfolio, or mutual funds. Best to get the book or video for the MyIncomeStrategy program. Go to the Multimedia center or Members area and learn what works best for you, so you don't run out of money! Looking to know HOW to do it, not TOLD what to do? That is what many retirees and people about to retire are looking for. They want to know what are my choices, and how do I go about planning my income in retirement? They aren't looking to be sold something, like a cookie cutter money management program. They want true unbiased information, so they can do what is best for them. Does the market have you down? Well if you haven't rebalanced your portfolio in over 3 months, now is a good time to pick things back up. When you rebalance your portfolio you put your current investment portfolio back in line with your targeted asset allocation. With recent market volatility you may have the opportunity to buy back into a sector of the market at a discount, with gains made from others. For example, if you have mid cap growth funds and international bond funds then one has done better than the other over the last year, and you will be selling high & buying low. A good idea. This works well and should be done at least annually for growth investors, and on the growth portion of an income investors spend-down/grow-back income strategy. The trick is not to try to guess what to buy or sell, just rebalance. Looking to help keep new drivers safe? Then visit Student at the wheel for Student at the wheel TM which is STUDENTatthewheel at In the news: PERSONAL FINANCE: STRATEGIZING FOR DESIRED RETIREMENT INCOME. ALAN KLAYMAN, personal finance expert and founder of MYINCOMESTRATEGY.COM, can discuss municipal downgrades, future taxes and today's retirement strategies: "If municipal bond insurers are downgraded, municipalities will be faced with future coupon rates based on reduced credit and higher state/local taxes to cover these expenses, stemming from today's mispricing of debt instruments via incorrectly modeling predicting the future. Translate this to retirement income. Companies and individuals rely on retirement income models that predict the future behavior of retirement income based on past experience probability models. This spells disaster when they are wrong. A prudent approach is strategizing what you *need* to do in order to receive the income you want in retirement. Map out a strategy -- don't leave your future to chance." In the news: Floriday Today! Everyone hopes Fed Action will benefit economy by Wayne T. Price ...Alan Klayman, founder of MyIncomeStrategy.com, a Holicong, Pa.-based financial adviser, said, with the Fed's actions, homeowners with an adjustable-rate mortgage shouldn't waste any time switching to a fixed-rate mortgage. "It's a great opportunity," Klayman said, "especially in Florida, where you guys have just got hammered with the real estate problems." Klayman said, while rates could go lower, if people lock in at fixed rates, "they will be well ahead of the game when interest rates head back up in the future." He also said, if a proposed federal economic-stimulus package now results in income-tax-rebate checks being sent to households, they should be used to reduce debt. "If you don't have any high-interest debt, then add the rebate to your savings and continue to build your nest egg," Klayman said. Recession & Retirement Income - Recently we were asked about what happens if we go into a full fledged recession? How do we manage our retirement finances, and are we in a recession? News out of McDonalds that sales were flat (not down) but flat in the USA indicates that higher earning individuals are cutting their spending and lower earners are cutting to even stopping their spending. Again indications only. We do face a bigger problem in the future IF we do hit full fledged recession and the bond insurers FGIC/AMBAC/MBIA are downgraded. If this were to occur then every Municipal bond backed by insurance is by definition downgraded. Not a big deal right now, actually it can be seen by some investors as a 'buy'. But going forward as municipalities issue debt, they will be faced with having to pay higher coupon rates based on their own credit (or the reduced rating of the insurers) which in turn equals higher yields / higher interest payments / and an increase in local and state taxes (property / income / sales / tolls / etc.) to cover this increased expense. New Jersey has already started a toll road increase from now through 2022. If we do hit full fledged recession and a breakdown in the municipal bond insurers then we would be looking at a future of tax increases and a degradation in the standard of living in this country that can be traced back to today and the mispricing of debt instruments (incorrectly predicting the future / taking into account different market scenarios). If we are in a 'mild recession', and the bond insurers emerge relatively unscathed, then we should have learned a number of lessons. Which leads us to Retirement Income Strategies. Too many companies and individuals rely on pricing models that try to predict the future behaviour of their assets based on probablility models. In many cases these can be correct, but they spell disaster if they are wrong. A more prudent approach would be to use a strategy on the inside pages of http://www.myincomestrategy.com/inside.cfm that tell you what you NEED to do in order to receive the income you want in retirement. Not every instance will work, nor can you guarantee that you will have the standard of living that you want (you might not have enough assets, or the risk might be too high in the rate of return needed), but you will know what you need to do. And it is more important to set up a gameplan and map out a strategy, than leave your future to chance. Pay down any high interest debt with the recently announced "Rebate Checks". If you don't have any high interest debt, then add the rebate to your savings and continue to build your nest egg Be careful what you see/hear/believe. An 'expert' recently appeared in the media and said (and I paraphrase): "You should be moving into the market especially since retirees can expect 30+ years in retirement. Keep about 1 years worth of money in cash for immediate expenses." Here is what is wrong with the statement, and why you need to understand your own situation, not take what you see/read/hear at face value: 1) This assumes everyone is 'just' retiring (30+ years statement), what if your 85? 2) Assumes a Market Withdrawal Strategy (all of your money invested, 1 year in cash, need to sell every year to go to cash) - problems with this are: - Market withdrawal can not support a greater than 4% withdraw rate (income divided by assets (income/assets)) due to market volatility. What if your withdraw rate (income/assets) > 4% what do you do? - Market withdrawal is not your only option - Market withdrawal is not for everyone. You may not want to be fully invested, or can have a bond/cd portfolio that kicks off enough income that nullifies this statement. - Many Market Withdrawal guru's use models that try to predict the future. We know where that can get you 'see the mortgage mess (specifically pricing of CDO's)' - Probability calculators will try to tell you when you will run out of money. Wouldn't you rather know what you needed to do, and not leave it up to chance to hopefully get there? Use your knowledge and the knowledge of a skilled financial professional to chart a course. 3) Keeping 1 year in cash is in a way a modified spend down/grow back strategy, but 1 year is not long enough. - Since the premise is that the market has done well in the past, so the statement implies an expectation it will do well in the future (next 30+ years): - Using that assumption if you look at any historical chart you will see that your chance of making money vs. losing money in the market in 1 year is about +55%/-45% (best 1 year / worst 1 year) since 1925. - If you go out 7-10 years the best vs. worst years ever look something like (+15%/-3%), with a 20 year mark never showing a loss in the S&P 500. Doesn't it make sense to play these odds and go with numbers where your return (albeit in the past - but that's the statement assumption) is high and your chance of loss is low? - From these stats alone you should have more in fixed drawing income than 1 year. With a record setting cut in the Fed Funds Rate, seriously consider refinancing Adjustable Rate Mortgages. Sure rates could go lower, but if you can lock in a fixed rate at or below historical averages, then you will be well ahead of the game when interest rates head back up in the future. This is a perfect way to make your expenses more predictable, and help you match your income and expenses for 2008 and beyond. rn |
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