Story by Numbers: Lessons to be gained from the latest unemployment poll

Posted on April 8, 2013 by barb1311

By all accounts, the fact that unemployment numbers are at their lowest in four years should be cause for celebration—with an unemployment at 7.6%, we’re led to infer that means there are more people with jobs, an implication built into the words and numbers. But the numbers aren’t everything, and they can easily present an optimistic view that, at its source, doesn’t actually signify an improvement in the economy. Rather, particularly in this case, these numbers instead highlight the fact that more people are leaving the workforce entirely, effectively not looking for work anymore, unemployment decreasing alongside employer hiring. (http://bloom.bg/ZkN3Ea)

This is no reason to panic of course, the economy has been growing slowly for the last few years and this is hardly a major shift off course. What’s more important to gleam from it is the lesson that the numbers aren’t always what matter the most, whether they are percentages meant to illustrate how well the economy is doing or how the stock market is faring or are simply financial goals as you plan for the future. Just as in this situation, where a number that we expect to be a good omen isn’t necessarily so, it’s always important to have an understanding of exactly what the numbers you’re working with will translate into in real goods and effects.

Whenever working with money and planning for future finances, it’s always a valuable exercise to attempt to understand and plan out just what that money you’re saving up will turn into once you have it; if you have a financial goal, know what it is you’re going to be putting that money towards. Doing so will make it easier to make assessments of how close you are to getting what you need from your financial portfolio, and it similarly acts as a means of focusing your buying power towards towards your long-term goals and any necessities, rather than allowing the money to fall prey to impulses. Much like with unemployment, recklessly hurdling towards an abstract goal will often cause some things to fall by the wayside, and you may run into some unintended consequences that you completely overlook because all of your focus is on whether or not you’re at the place financially (or otherwise) that you want to be.

Numbers are just that—twice removed from the reality of goods, properties, and services, they’re meant to allow us to keep track of our finances more easily. But as with any additional layer of complexity, it can at times be easier to see them and want more for the sake of more, rather than more for the sake of a tangible return. Even if you’re just looking to establish some financial security, giving yourself goals and making sure to approach not only the numbers but the realities of your finances critically will ensure that your money gets you where you need to go.

Image courtesy of www.morguefile.com http://mrg.bz/s3cVmP

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If You are Worried About Your Retirement, You Are Not Alone

Posted on February 11, 2013 by barb1311

Retirement might be years away for you, but you have this persistent nagging feeling inside. You might even be comparing your financial situation to specific friends, coworkers, or peers around you. You observe that you are the less financially prepared for your retirement than the others. You are not as relaxed about retirement; in fact, you are downright worried and ill prepared for this stage in your life.

The self-deprecating thoughts in your head might be chanting, “Just like the highly educated Mr. Jones over there with a very successful career and a fantastic financial plan, I could have, I would have, I should have…” I could have strived for a better job with a higher pay. If I had known foreseen tough times later on, I would have started saving for my retirement earlier. I should have contributed more money to my 401’k through the years. Stop with this negative self-talk. Don’t feel like you are alone on your own island of retirement worry. Although individuals around you might not voice any concern about their financial security in these “Golden Years”, new studies indicate that many Americans also feel insecure about their own retirement.

Despite a slow economic recovery, worries about retirement still exist today among Americans. A strong correlation exists between retirement concern and education/income levels. These retirement worries appear to be greater among those individuals with less education and a low income. On the other hand, the more educated higher paid individuals experience less worry about these retirement years. A strong correlation also holds true for retirement concerns among certain age groups. Contrary to previous years, new research indicates that the baby boomers and those individuals closer to retirement are not the most concerned about their retirement security. Instead, the younger and middle aged adults win the award for the age group most concerned about these retirement years.

So, why is retirement stress so prevalent in the younger generation now? According the Pew Research Center, a recent analysis of Federal Reserve data reveals that the reason “retirement concerns have surged among adults in their late 30s and early 40s is that the average wealth of this group has fallen at a far greater rate than for any other age group over the past 10 years.” Furthermore, this analysis suggests that the dwindling wealth among individuals in their 30s and 40s is due to this age group’s inability to benefit from recovering stock prices since the recession. Much of this age group abandoned the stock market entirely during the recession, and remained out of the market as prices began to increase.

With this awareness that many other Americans also worry about retirement, what can you do with it? Well, first of all, share your concerns with a financial advisor/planner if you don’t already have one. It is never too late to modify a spending/saving behavior, make a difference in your retirement future, and what better way to be guided through the retirement planning process than by an expert. Second of all, find solace in the fact that you are not the only person with retirement worries. Despite a slowly improving economy, many other Americans also share your concerns about your retirement especially now. Lastly, focus on yourself, and not on other people’s retirement situations around you. Stop negatively comparing yourself to others, and beating yourself up for not being as prepared as you want to be for this stage of life. You can drain so much of your energy out on negative thoughts about comparing yourself to others that you have no energy left to better yourself and proactively plan for a better retirement future. So, it’s time to focus on you now.

Brooks, Chad. “Retirement Concerns Plague Americans.” BusinessNewsDaily. 22 October 2012. <http://www.businessnewsdaily.com/3306-retirement-concerns-plague-americans.html>

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Maximize Your Social Security Benefits

Posted on January 28, 2013 by barb1311

You have worked hard all of your life. You have raised a beautiful family that you are proud of, and you and your spouse are finally ready to enjoy your golden years together. And yes, you have also planned and saved for these future retirement years. Maybe you planned many years ago or maybe you planned just recently; but either way, you probably factored in the boost offered from your future Social Security benefits. Whatever the boost might be, wouldn’t you rather maximize those benefits if possible? If the answer is a resounding “YES”, then you want to learn about the various claiming strategies, and fully discuss them with your financial adviser/financial planner. The proper strategy can amplify your lifetime Social Security benefits significantly.

An example of one strategy is waiting as long as possible to start claiming your Social Security benefits. The earliest age that a retiree can start claiming these benefits is 62 years old. However, did you know that once you reach your full retirement age (between 65 -67), your social security benefits increase by 8% each year plus inflation adjustments? Wow, the money claimed increase considerably just by waiting a little longer.

Are there claiming strategies that can optimize your Social Security benefits even if you need to start collecting at an earlier age? The answer is “Yes”. Advantageous strategies can be applied to this situation as well when you know how to maneuver through the claiming process… you just need the proper expertise to guide you through the rules. Once you know these rules and know how to navigate confidently through the claiming process, you can apply a strategy that works in your favor, and maximizes this money.

Some of these claiming strategies involve the idea of spousal benefits. Here, spousal benefits can be applied to a “Restricted Spousal” strategy as well as a “File and Suspend” strategy. According to Jim Blankenship, CFP, EA of Forbes Advisor Network, “File and Suspend allows for the lower wage earner to increase his or her benefits by adding the Spousal Benefit, while the higher wage earner continues to delay his or her benefit, adding the delay credits.” On the other hand, the Restricted Application for Spousal Benefits “provides one spouse or the other with the option of collecting a Spousal Benefit, while at the same time delaying his or her own retirement benefit.” All and all, any couple must carefully consider the particular rules pertaining to these strategies in order to determine the appropriate strategy that applies to their specific situation.

Overall, these claiming strategies can cushion your retirement years with thousands of dollars. If you are thinking about navigating through your Social Security claiming process alone, it might be very unrealistic because the rules behind these strategies can be complex and meticulous. Even the employees at the national and local Social Security offices cannot give any advice; therefore, it’s best to seek the help of a financial advisor who has an in-depth knowledge of the best Social Security strategies for retirees. The world today is very different… life expectancy has increased, pensions have dwindled, medical costs have increased, and the economy remains uncertain. Especially now, maximizing your Social Security benefits is necessary because these are unfavorable conditions. So, make certain that you fully learn and understand the rules of each strategy before you chose. You can add thousands of dollars to your retirement funds just by applying the right Social Security claiming strategy for you.

Blankenship, Jim. “Are You Leaving Social Security Money on the Table.” Forbes. 26 November 2012. <http://www.forbes.com/sites/advisor/2012/11/26/are-you-leaving-social-security-money-on-the-table-you-might-be-if-you-dont-understand-and-use-this-one-rule/>

Roberts, Damon. “The Retirement Planning Edge: Maximizing Social Security.” Fox Business. 27 November 2012 <http://www.foxbusiness.com/industries/2012/11/27/retirement-planning-edge-maximizing-social-security/>

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Make Sure That You’re Covered Long-Term

Posted on January 14, 2013 by barb1311

We’ve all heard the horror stories about the investor who did everything right, who had the right job, maxed out their 401k, diversified their portfolio until comfort in retirement was assured, only to have the rug swept out by a debilitating illness. For this exact reason, insurance companies have created a product called long-term-care insurance.

Since Medicare doesn’t pay for most nursing home costs, and Medicaid doesn’t ante up until your assets are almost depleted, investors who have wealth that they want to pass on to loved ones need to protect it. Long-term-care policies do just that, In fact, many insurance agents will tell you that as you near retirement age, long-term-care insurance becomes a real priority. That priority was much easier to satisfy before the policies became losers for the insurance companies, leading insurers like Manulife Financial to ask state regulators for average rate increases of 40%, and other insurers like MetLife, to stop selling new policies entirely.

As baby boomers who already have long-term-care insurance get older and file more claims the premiums are bound to continue to rise, and if you get into a difficult financial spot and let your policy lapse you’ve lost your entire investment. So, what are the options for someone who wants to protect themselves, but doesn’t want to get skinned doing it?

What are your options

First, it’s important to deal with an insurance agent who is knowledgeable in the products that he is selling, and is able to explain the options of different policies and the merits of each. There is a huge price range across different providers, and agents who only sell one product aren’t going to be able to give you the benefits of that variety.

As the premiums for long-term-care climb, many providers are addressing the rise in cost by offering custom options. For instance, instead of unlimited coverage, you can shave some money off your premiums by limiting care to three or four years. According to the Centers for Disease Control and Prevention (www.cdc.gov/nchs/data/databriefs/db91.pdf) the median stay in a nursing home is 671 days.

So, cutting down on the stay that you’re allowed could be a smart option for limiting costs. Some policies also allow you to reduce the annual inflation adjustment from 5 to 3 percent to cut those costs even more.

Options in insurance

Another option for investors who are unable to get long-term-care insurance, or find the costs too prohibitive, are the new, combo products being offered by insurers like Hartford Financial Services group, Prudential Financial, and MetLife. These permanent life policies and annuities feature accelerated death benefits, or living benefit riders.

What this means to you is that the death benefit of these life insurance policies can be tapped in the event of a diagnosis of chronic illness, and used to pay for care. Many investors like these policies because, unlike traditional long-term-care coverage, if you never need the care, the policy will pay your heirs just like a traditional life insurance policy. The living benefits of the combo products are usually limited to the death benefit for the policy, though, whereas long-term-care policies will pay all qualified expenses for whatever duration of stay the policy covers.
The decision between these two flavors of insurance is a personal one, but for investors who want to feel safe in their retirement, and who want to make sure that the fruits of their hard work can be passed down to their loved ones, some type of coverage is important. Talk to your financial advisor to see which one gets you closer to your retirement goals.

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Are Annuities a Key To Your Future?

Posted on December 26, 2012 by barb1311

With the future of pensions up in the air, Social Security on thin ice and 401(k) fees causing concern, more and more people are turning to other types of funds to lead them into retirement. One of their attractive options? Annuities. Unlike other investments, annuities are held through the insurance industry and are known for their flexibility which is lacking in many other funds. For some people these annuities are their main investment, others use them simply as a surplus income. Retirement plans are different amongst everyone, but there are a few reasons why you should be giving annuities a second look.

Flexibility – As mentioned, Annuities offer more flexibility than most other retirement funds. In your career, you went to work every day and earned money. In your retirement, it may seem like you wake up every day and simply spend money. Vacations, family get togethers, shopping trips, etc. It’s important to ensure that you have money coming in that can cover those expenses. One of the most popular annuities is a Single Premium Immediate Annuity (SPIA) in which one lump sum payment guarantees you a monthly paycheck for as long as you wish it to last. It simply acts as a pension plan organized and determined by your wishes.

Lifetime Payments – With the life expectancy rates seeming to climb every day, one of the biggest risks of retirement planning is longevity. Many types of funds can leave holders worried whether the income will last them for their entire lives. Of course pensions and Social Security are a lifetime option, but the future of both of those funds is beginning to be questioned by many. The SPIA is one of the only options that ensures lifetime payments. The payouts of a SPIA are determined by your age, interest rates, and time of purchase amongst other factors. Additionally, holders can determine whether they want the payments to cover a single life of married couple. They offer the longevity needed paired with the flexibility preferred.

Avoiding Risk – Everyone saw the devastating effect a market turn can have on the investment portfolios of recent and soon-to-be retirees. It can be a scary thought for anyone approaching that age. Annuities, with all their options and flexibility, offer a security from these market effects without enduring the poor interest rates in options such as money markets. Certain annuities protect your principle while investing in stock mutual funds, while others put your money in the market but guarantee your investment won’t dip below your original input. It’s quality peace of mind with the opportunity for growth.

With all the advantages of annuities, some people might run out the door and get themselves one ASAP, but there are certainly other things to consider before making any moves. Because of the options and flexibilities involved with annuities, they can be confusing and technical in terms of their contracts. Before you put your name on the dotted line, make sure A) you have an advisor you can trust and B) you get all of your questions answered. Ask about commission fees, fees for early withdrawal and surrender charges.

Another danger lies in interest rates, which can often have a great effect on the size of the payments you receive each month. The current interest rate is one of three factors determining the payment size, but it does have a significant effect on monthly changes. Try to find annuity options with a guaranteed interest rate that you know you can count on.

With all the changes shifting through the retirement funds and what seems to be the beginning of the end of pensions, annuities are becoming an attractive and viable option for most retirees. Even if people aren’t ready to abandon the more traditional offers, annuities can provide a comforting supplemental income. Take the time to look at the options of annuities and see if they could benefit you. It could pay off later.

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How To Take Advantage of Your 401(k)

Posted on December 10, 2012 by barb1311

So, you’ve been saving for retirement for years, spending your entire career penny pinching and saving every morsel you can, hoping to live out your years in a stress-free, fully-funded lifestyle. You started young and have been saving ever since. Most importantly, you have invested in the magical program people call a 401(k) at your company and have gritted your teeth as you watched a bit of every paycheck funnel into it. Good for you! You have taken an initiative that many people avoid. As a reward for your planning and diligence, you will be granted, no, not three wishes, but three tips to using your 401(k) in the most productive way.
Many people go through the effort of investing in their 401(k) plans, but make critical errors in how they invest into it. There are few ways to make sure that the money you pay in now, will give you the best payout in the future.
Tip 1: Make significant contributions. Many people think that their 401(k)’s future is mainly dependent upon the performance of the investments, but these people are mistaken. If you invest a small percentage of your income in well performing funds, you won’t find the success that investing a higher percentage in lower performing funds will afford you. Of course, this means a bigger chunk of your valuable paycheck, but if you can cut back and live frugally now, you will have more wiggle room later. Also, it’s critical that you invest enough to take full advantage of any match programs from your employer. That match offers you tax-free money on a shiny silver platter. Investing only a small percentage of your income into your 401(k) leaves this platter sitting on the table, out of your reach.
Tip 2: Invest for growth. You are cutting back, buying the generic cereals and stepping away from the gator skin shoes so that you can put all you can into your 401(k). If you are making those sacrifices, you owe it to yourself to get the most from that money. This can be done by making smart decisions inside of your funds. Like with any investment, this means taking on a bit of risk. This doesn’t mean playing Russian roulette with your funds, but being too conservative can almost negate the extra effort you are making. One way to do this is to invest more of your 401(k) money in stocks. If your investments face average market performance, putting a higher percentage of your investment in stocks, over bonds or cash, you will find yourself in a better position in the long run. Of course, this involves balancing your risk with the reward you are looking for, but if you consider getting a little riskier with your investments, you could find yourself with a lot more money later.
Tip 3: Avoid undoing all your hard work. Borrowing from your 401(k) can be one of the most costly loans you can find. By taking your money out of the fund, you will be costing yourself the growth that money would have given you. Life brings about surprises and emergencies that may force you to borrow from your 401(k), if this happens, make sure you plan for the company to take the loan payments from your check. If you find yourself wanting money for expenses, such as a new car, look into a personal loan or home equity line of credit for financing. Competitive rates on these options will leave you in a better long term position. The second part of this tip is to avoid cashing out your 401(k) when you leave a company. Much of your hard earned money will be whisked away by penalties, fees, and growth loss. There are a few different ways to avoid simply cashing out when you switch jobs. Many companies allow you to roll over your balance into their plans, which means your investments and growth will hardly skip a beat with the changeover. You can also roll your plan into an IRA, which offers a broad range of investments not offered with many other retirement plans. The easiest option may be for you to simply leave your money in the current employer’s plan if you have a significant amount already saved. The bottom line is that borrowing from your 401(k) or cashing out early can wipe away a lot of the money that you have been so painstakingly saving.

If you have been planning for your retirement and investing with your 401(k) you have put yourself on a path to success. By doing these few simple things you can make your path smoother and that success brighter. You are already going through the effort to save for your future, keep these tips in mind and your effort will be much more worthwhile.

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How To Keep The Housing Crisis From Bursting Your Retirement Bubble

Posted on December 3, 2012 by barb1311

Everyone dreams of that perfect little retirement home in the relaxing tranquility of some quaint town on the shores of something beautiful. Ahh, yes. We can picture it now. The feel of a cold drink in our hand and the sun beaming down on our face. The birds are singing and the waves are lapping at the shore. Then suddenly, “Pop!” What was that, you say. That was the sound of that dream bubble bursting for the 1.5 million older and retired Americans that have lost their homes to foreclosure along with much of the financial security that came with them.

The reality is that, for many older Americans, their dream scenario has turned into a living nightmare. Instead of visions of beach houses or lakeside homes, many retirees find themselves clinging for dear life to the homes they have inhabited for years. The housing crisis knows no boundaries, and it has certainly proved that by inhabiting the lives of many retired and soon-to-be retired individuals. Unfortunately, the tidal wave of foreclosures continues to splash through the 50+ age group.

The AARP released a report outlining the foreclosure climate in the lives of older Americans and the results were a little frightening. Over 1.5 million of them have already lost their homes. Currently, about 600,000 people in the 50+ age group are in foreclosure, while another 625,000 are over 3 months behind on their mortgage payments. 16% of all 50+ Americans currently owe more than their homes are worth.

These numbers are not what many Americans are accustomed to. The proportion of seriously delinquent loans held by older Americans has risen over 450 percent over the last five years. Many of these people have gone their whole lives with nearly perfect credit, but have now hit a solid wall of debt that doesn’t seem to be budging. Things aren’t getting any easier with age. Among Americans 75 and older, one in every 30 homeowners are in foreclosure. Five years ago, that proportion was just one out of every 300. The numbers are hurtling downward at an alarmingly fast rate, and they don’t seem to be slowing.

These statistics are more than just ink on paper. They are seriously altering the lives of many retirees, forcing some to re-enter the workforce or drastically change the budgets they had planned out years earlier. Their retirement dreams have disappeared and they are simply trying to stay afloat.

The report showed that younger Americans are struggling as well, but the number of older Americans entering the dreaded foreclosure zone is increasing at a much faster rate. One of the main questions is simply, “Why?” Why are so many older Americans falling into trouble? What’s the problem?

The problem is that many of these people set their budgets and their retirement plans before the economy, well, you know. Most of them are living on a fixed income and quickly find themselves plowing through their retirement savings. The income from their investments has been drastically cut, but their house payments have not. Picture this: the faucet of their main source of income has slowed to a drizzle, but the drain of payments remains wide open. It doesn’t take a financial expert to realize that it’s only a matter of time before the pool of funds will be completely dried up.

That can be a pretty disheartening image, but the bursting of the housing bubble doesn’t have to burst your bubble of retirement dreams, you simply might have to alter your path to get there. Planning for these difficulties ahead of time can drastically reduce the struggles you could face. Many people approaching retirement can analyze their investments based on earnings and interest rates of the current market and forecast their plans more accurately. It might not be as pretty, but it’s a more realistic picture of what things will look like.

The most important thing is to not be blinded by your dreams, but use them as your vision to create a plan that works for you and your future. With some planning and a little creativity, you could find yourself livin’ the dream in no time!http://www.aarp.org/content/dam/aarp/research/public_policy_institute/cons_prot/2012/nightmare-on-main-street-AARP-ppi-cons-prot.pdf

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Emergency Funds Are Like Spare Tires…

Posted on November 26, 2012 by barb1311

Emergency funds are like spare tires: you never think about them until you need one. This is an unfortunate truth for many people who don’t have a rainy day fund saved up for themselves. Some people fail to see the advantage in creating a fund, while others want to create one, but don’t know how. Creating an emergency fund is more important, and more simple, than many people believe.

The first thing to cover is why you need an emergency fund. This question can be answered easily by anyone who has ever needed one. Life is unpredictable. The situations that could arise causing a need for extra money are almost endless: divorce, healthcare, car troubles, emergency travel, or, as many people in recent years have encountered, job loss. Things come up, things that you can’t see coming, and it’s much easier to roll with these punches if you have prepared for them in advance.

The amount needed in this fund varies according to your situation and lifestyle. Contingency plans are most successful when you plan for the worst case scenario, which in this case, is job loss. You need to create a monthly budget of your expenses in that case that you suddenly find yourself with no income. This means your rent, food, utilities, insurance, debt payments, prescription medications, cellphone bill and so on. The bare minimum amount in your emergency fund should be equal to three months-worth of these expenses. The overall goal is to have six months of your expenses available to you in the fund. This may seem intimidating at first, but every little bit helps, so put in what you can over time, and aim for that target number.

Many people think that these emergency funds are best located in a box buried in the back yard or stuffed between their mattresses, but, believe it or not, there are better options. The main requirement of the fund or account is that is must be easily accessible. Most emergencies don’t allow for the months or years needed to access money in some investment accounts. You should be able to access your funds within one business day. This is the case with traditional savings accounts or money market accounts. The drawback of these is the lack of growth in those accounts. There are other accounts that allow moderately quick access, less than 30 days, while still allowing you to earn money from the investments.

One of these options is a bond mutual fund with either a short or immediate duration. These don’t offer the protection of other accounts, but can bring about modest growth without locking your money away. Investors must understand that their funds are vulnerable and can expect the value to fluctuate a bit. Many mutual funds also offer more flexible payouts directly to checking accounts, as well.

Another suggestion in creating an emergency account is to cut into your long term investment contributions. 401(k)’s and IRA’s are critical to your future, in the long term, but if you are walking around with a great long term, and nothing for the short term, you could find yourself in some trouble. This doesn’t mean you need to take thousands from your retirement contributions, but forty to fifty bucks a month until you have yourself protected isn’t going to drastically affect your plans 30 years from now, but it could be lifesaving in just a few.

One of the easiest ways to protect yourself in an emergency such as a job loss is to take care of what expenses you can eliminate ahead of time. This means paying off debt. The debt on high interest credit cards can get a lot more painful if you don’t have an income. This not only cuts down on your expenses, but if you’re paid up to date, you allow yourself some room if you need to use those credit cards as a source of financing in an emergency.

The two most important aspects of creating an emergency fund is having the foresight to know you might need one and having the discipline to be able to create one. If you have those two things, the rest is easy. Just account for your monthly expenses, plan an account to funnel money into, and budget your income to allow that account to grow.

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Top Three Priorities in Pre-Retirement Planning

Posted on November 5, 2012 by barb1311

Setting priorities for retirement planning is the first step to a secure retirement. Many retirees saved well enough but did not consider how differently their financial needs would be once they the workforce.

The whole emotional concept of financial security is in itself a major shift in thinking and feeling. During the decades of employment, the real sense of financial security is in having a secure job and a paycheck. After the final paycheck, financial security comes from the peace of mind in knowing there is a sound plan in place that considered the changes that a retirement lifestyle would bring.

Priority # 1 — Liquidity is the often most overlooked need in setting up a retirement plan. Having all of your retirement savings in 401ks and IRAs may have saved a lot of taxes on those accounts while accumulating them. However, the consequence of having to pay tax on every dollar needed later in life and at unknown tax rates can be harsh.

Setting aside investments in non-qualified (IRA / 401k) accounts is a wise idea as you approach retirement. There is a strong advantage of having a source of funds that do not trigger significant taxation when needed.

Priority # 2 Lifetime Income

Pension/ SS

Priority # 3 Unexpected LTC Expenses

Title
Introduction of topic
Example
Number of things that go wrong or could go wrong, things that need to be fixed
etc.
Offer a Solution
Wrap-up

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Running Out of Money

Posted on October 29, 2012 by barb1311

The #1 Fear of Retirees

Running out of money remains a big fear of the currently retired as well as the millions of Baby Boomers close to retirement. Uncertainty about the future has never been more real and significant in the minds of these two groups of people. It is interesting that this fear seems to have little bearing on how much money someone has. The wealthier seem to fear running out as much as those who truly do have a reason to be concerned.

The biggest cause of this fear is uncertainty about how to invest and the unknown about future returns on investments. The past decade of market volatility has robbed the 401ks, IRAs and personal savings of the much needed funding for a secure retirement. Many have come to face the harsh reality that what they believed to be true about investing has turned out not to be true. That is, the old “buy and hold” approach has turned out to disappoint many who found little or no growth on their money over the past decade.

The issue at hand is more than just adequate account balances. Financial security must be considered from an emotional viewpoint before and after retirement. While working, the sense of financial security comes from having a job and a paycheck. Once retired, that sense of security changes dramatically. It now becomes the reality that your financial security comes from how much money you have saved.

Resolving this fear of running out of money starts with selecting an advisor who understands both the practical and emotional risks of retirement. This advisor must be experienced in working with retirees. Most financial advisors have a focus in helping their clients accumulate their money. The expertise in managing a client’s savings once retired is a distinctly different. All too often, a trusted advisor who helped a client accumulate their retirement funds does not have the training or expertise to make the appropriate changes in strategy to protect those funds against the risk of longevity.

Just as in the area of medicine and your health, getting a second opinion before making an important decision is always beneficial. That opinion may confirm that you are on the right track and thus your peace of mind is secured. Or, you may need to face the reality that what worked to get you to this point, will not be the same plan for your future. Either way, a second opinion is usually well worth the time and effort.

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