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Stock Ideas Investors Daily Edge The Baby Boomers’ Last Window of Opportunity
Stock Ideas Investors Daily Edge The Baby Boomers’ Last Window of Opportunity 
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| The Baby Boomers’ Last Window of Opportunity |
| Wednesday, 29 October 2008 | ||||||||
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"Living on $1700 a month sounds like a very slow, painful existence. Not what I planned for in my retirement." If you aren't already aware of it, the baby boomers have started to retire. They first hit the system a few years ago. Over the next twenty to thirty years, our culture will be challenged as never before by the largest shift of population ever to leave a work force and begin retirement. You also have to know that the Social Security System was flushed away by congress a long time ago. The general fund, or the excess contributions made to Social Security for the last 50 years, was squandered along with another nine trillion dollars. That leaves all of us over 50 with the responsibility of funding most, if not all of our retirement. Unfortunately, the down turn in the stock market, as the result of congress mandating that Fannie Mae and Freddie Mac guarantee mortgages to people who could never possibly pay for them, has crushed an entire generation's retirement funding. The simple fact is, since '87, the majority of Americans have poured almost all of their retirement dollars into stock mutual funds in their IRA's and their 401k's. Prior to the mid 80's all of it went into bank investments. Our exposure to the stock market is the largest and most wide spread ever. Losses in investments this time will be much greater than 1987. Time has almost run out! For the majority of Boomers there is only one more opportunity to secure their retirement. Most of us will live far below what we should have been able to afford no matter what we do. But, if we don't spend the next ten years doing more than playing the stock market lottery, we are in deep kimshi. Every person over the age of 50 has no choice but to shift into a reduced risk investment strategy. We no longer have enough time in our working lives to wait out another disaster in the stock market. We also cannot delude ourselves that we will somehow avoid another huge down turn in the market.
The truth of the matter is that the very nature of the stock market is to flush out the weak every few years. No one knows what will cause the next explosion, but it is coming. There is some good news. Holy cow! Do we need some good news, or what? Reduced Risk Portfolio. Most investors avoid this type of strategy because it implies stodgy, turtle like returns. But if you reduce the risk level of your holdings by diversifying into corporate or tax-free bonds, you don't necessarily reduce your return. In fact, history has taught us you actually increase your overall return because you don't give back any in a correction, almost zero. The stability bonds add to your portfolio will actually let you sleep at night. You know going in exactly how much you will make and exactly when it will appear in your account. And with a little effort, you can see the same returns from bonds that the stock market has produced long term. In the past few corrections you ended up giving back almost as much as you earned during the Bull Run. The really sad part is that most people have to get hit over the head many times to get the message. Most have nothing left by the time they learn the truth about stocks. The critical point for the boomers reading this is, you don't have the time anymore to wait out another correction. If we get slammed again, we don't have the working years left to replenish our accounts. We will be up the proverbial creek. This is your last window of opportunity to secure a retirement. If there is any good to come of this sell off it may be a final wake up call for us to stop playing Vegas with money we can't afford to lose. We are not 35 years old anymore with 30 years to get it right. Get it right this time or learn to live below the poverty level. In my head I am still 25. I am still thin, fast and almost immortal. But my lower back tells me loud and clear I am 55. We all need to feel our age in our wallets, too. This country is on the verge of a financial tragedy. If the baby boomers don't wake up and get their money house in order, we could be setting up our children to live at the third world level. The financial burden of keeping us in our old age will make their lives a mere shadow of what we have known. Our time is not running out, our time is up. Let the other guy go down with his ship. We live to fight another day. Steve [Ed. Note: Want to make stock market returns... without taking on stock market risk? Want to derive capital gains and income from your investments? Want to keep your wealth safe and secure in these turbulent times? Steve McDonald can show you how, with a carefully selected portfolio of investment grade corporate bonds. Learn more about the Bond Trader here.] P.S. To let me know what you thought of today's article, send an e-mail to: This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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