There are only a few days left to go until it’s a new decade and boy where did time go. We remember celebrating the new millennium with family and friends only a short time ago. In 1999, Michael Jordan retired for the 2nd time, President Clinton was acquitted, and The Dow Jones closed above 11,000 for the first time ever. Looking back over the past ten years, there is still no better NBA super star as the great Michael Jordan, politicians continue to fool around, and The Dow Jones is still not back above 11,000. There are many lessons to be learned.

In the 90’s it seemed like all the stock market did was go up. Yet, in the last decade we have suffered two major bear markets. In the first one, the S&P 500 Index went down 49% and this last time it went down 57%. Buying and holding onto investments for a retiree living off a stock market account just didn’t work. Today and in the future, a retiree needs to be prepared as the world has become faster moving and more volatile. There are steps that can be taken to protect your principal against loss.

Indexed annuities, proved to be one of the biggest advancements in the last decade. Sure they aren’t perfect and aren’t the solution for every investor, but the concept is simple with most accounts. Set aside money for the long-term and an investor can participate in the good years of the stock market, while avoiding losses in the bad years. Every time an investor makes money it becomes their new starting point. They can only go forward and never backwards, due to a stock market decline.

The last decade was a yo-yo economy. That is, “You are on Your own.” The 10 largest bankruptcies in US history occurred in the last decade. Toledo and Northwest Ohio has felt a large brunt of this as we still suffer with major employment problems and pensions that were once considered safe have been turned over to the Pension Benefit and Guarantee Corporation. Relying on someone else after years of service isn’t a sure bet anymore. Plus, many other companies in the last 10 years have done away with traditional defined pension plans and have turned to defined contribution plans putting your future retirement in your hands. For some, that may seem scary, while for others having more control over their own future is a great opportunity.

The government has spent our country into bankruptcy. In the last few years, our politicians have spent more money than we can even imagine. The website www.usdebtclock.org shows this point in real time. If you haven’t visited this site before, you really should. Here are a couple highlights. Our nation currently has over $12,000,000,000,000 in debt. It would take every US tax payer over $111,000 just to pay off our current level of debt. Keep in mind, we said tax payer, because only about 1/3 of the population of the US pays taxes.

Now let us look at what everyone owes. The total future liabilities for social security payments, medicare costs, and prescription drug benefits, each liability per citizen would be over $346,000. Add the estimated $54,000 that every person has in personal debt and we are literally in a world of hurt.

How will the government ever collect this debt? In our opinion it is simple, raise taxes. Taxes currently are at one of the lowest levels in history. According to some estimates 40% of a family’s net worth is in their retirement account, so where do you think higher taxes will come from? If you are like us and feel that taxes will be higher in the future, you will want to learn how to correctly move your money in the right direction. That means moving money from taxable to tax-deferred accounts to finally tax-free accounts.

The next decade will be history in the making. Change is coming, and depending upon how you plan for change, it can be your best friend or worst enemy. Take what you have learned in the last ten years and use that knowledge to put a plan in place to improve in the next decade. If you don’t feel that you know all you should know about retirement, take time to continue to get educated and then take action.

Send your questions to letters@toledofreepress.com or for more information about The Retirement Guys, tune in every Saturday at 1 PM on 1370 WSPD or visit www.retirementguysradio.com. Securities are offered through NEXT Financial Group Inc., Member FINRA / SIPC. The Retirement Guys are not an affiliate of NEXT Financial Group. Their office is located at 1700 Woodlands Drive, Suite 100, Maumee, OH 43537. The guarantee of an indexed annuity is subject to the claims paying ability of the insurance company.

This entry was posted on Wednesday, December 23rd, 2009 at 1:52 pm and is filed under Retirement Guys, Toledo Business Link.
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