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There are three parts to Medicare and two of the three will charge you a monthly premium. Medicare Part B carries a monthly premium of $88.50 in 2006. Part D premium amounts vary by the plan you choose; Part D plans average around $35 per month. Both Medicare Part B and D have annual deductibles that you must meet. Do you really have to pay all these expenses?

If your spouse works and can cover you under a group health plan that is due to their employment, you can decline the Medicare Part B coverage. Declining this coverage will save you the $88.50 each month. As long as you are covered by a group health plan from your spouse?s employment you will not be penalized for dropping Medicare Part B. If you do not have other health insurance and are under the age of 65 you can still decline Medicare Part B. When you turn 65 you will get another chance to enroll without a penalty.

If neither of these circumstances apply to you and you drop Medicare Part B, Social Security will charge you a premium surcharge of 10% for each year that you were not enrolled in Medicare Part B. This can quickly become expensive.

The other option for dealing with the Part B premium Read more…

Wealth seems to be everyone’s dream; the ability to relax a little more, to not stress so much about finances and to enjoy the “good life.” So often it is believed that wealth is only attainable by those with large incomes. Those with smaller incomes may not put anything aside, assuming such small savings won’t make enough of a difference in the long run. In my experience in the financial services industry, there were several times when I would help an elementary school teacher or janitor with their sizeable 403(b) account. Obviously for them, small savings over time made a big difference. In the same category are those who have large incomes and assume they always will. They constantly spend to the top of their income level and set little or nothing aside for the future. Yes, I also remember helping doctors or attorneys take loans out of their 401(k) accounts. I found that it wasn’t so much what you made but everyday decisions that determined long-term success.

When I once asked a janitor of an elementary school how he had accumulated his 1.7 million dollar 403(b) he said, “I just started putting money into it when I first came to work here, a little bit each paycheck.” Now, 40 years later as he approached retirement with a steady pension and a large 403(b) account he was financially wealthy. Avoiding financial mistakes is the key for anyone to retire well. This article lists some of those mistakes and ways to steer clear of them.

Waiting Until You’re 55

Not starting to save soon enough is number one on our list. Beginning early to save for retirement can make a huge difference in the long run. To illustrate this, let’s assume we have two people saving for retirement, we’ll give them simple names that correspond with the age they started saving, Mr. 25 and Mr. 45. Mr. 25 puts $3,000 into an IRA each year until he retires at age 65. Assuming he gets an 8% growth rate on average, he amasses $839,343 or almost a million dollars by age 65. If Mr. 45 were to put the same amount aside but start at age 45 instead of 25, he would only have $148,269 saved, definitely not enough to start retirement with. For Mr. 45 to end up with the same amount as Mr. 25 he would have to save almost $17,000 per year until age 65. $17,000 per year for 20 years equals $340,000 cash out of pocket, whereas $3,000 per year for 40 years is only $120,000. Mr. 25 only had to save about one third the amount Mr. 45 did all because he started early. Letting compounding do the work for you allows you more money for other things you want.

1% Is Enough, Right?

Putting aside too small a percentage of income is another mistake people make. It may be difficult when just starting out and times are lean, but you will thank yourself in the long run if you make this a priority. Going back to Mr. 25 again from above, if he would have only put away $1,000 each year, his ending balance would have only been $279,781 in 40 years, again assuming the 8% growth rate. We know how much $3,000 per year would have saved him, but what about $6,000 per year? He would have $1,678,686. Doubling his savings doubles his end result.

I’m a Millionaire!

Not realizing just how much needs to be saved in order to retire is our next mistake. While the 1.6 million in the above example may seem like a lot of money, it won’t pay the bills in 40 years. Assuming prices go up by 3% each year, 1.6 million will only have the buying power of a half a million dollars in 40 years when Mr. 25 wants to retire. Assuming Mr. 25 lives to the ripe old age of 90, a 1.6 million dollar account will give him about $2,300 dollars of income each month in real terms. This assumes that he earns 6% on his money after he retires. Does it seem odd that our 1.6 million dollars is now only worth $2,300 dollars per month? Inflation is the culprit. In actuality Mr. 25 will be getting about $9,800 dollars out of his account each month in retirement, but because prices for everything will be so much higher in 40 years it will only be able to buy the same amount that $2,300 dollars buys today. This is what “real terms” means. Mr. 25 will have to determine if $2,300 per month will be enough to live off of in retirement. Most likely it will not be enough unless he really likes ramen noodles.

Do I Get a Checkbook with my 401(k)?

Using Retirement Accounts as income before retirement is becoming a mistake that more and more people are making. This is especially true for those who have employers contribute to their retirement accounts. While it is tempting to assume this is just extra money you can spend, it has terrible long-term effects. Taking as little as $5,000 out of your retirement account at age 30, is like taking out $35,000 in 35 years. If it would have been allowed to stay in the account and grow over 35 years, it would have accumulated to almost $35,000. The other problem is that you will most likely have to pay taxes and a 10% penalty on the money because it is being taken out before age 59 1/2. Now to get $5,000 after the taxes and penalty, you have to take out over $8,000, which would equal over $55,000 lost in 35 years.

I’m Sure my Basket Can Hold All of This

Not diversifying or putting all your eggs in one basket is another financial blunder. I was a retirement specialist working with 401(k) and 403(b) account owners when the market crashed in 1999 and 2000. How vividly I remember talking with people in their fifties and sixties who in February of 2000 (right before the NASDAQ started falling) Read more…

Are you between the ages of 55 and 64? If so, you belong to a peer group that is apparently quite concerned about saving for retirement – but not at all sure how to convert those savings into a steady income stream. If this describes your situation, you will need to take action to ensure that you have the financial resources available to enjoy the retirement lifestyle you’ve envisioned.

But before we look at how you can help take control of your retirement income scenario, let’s look at some interesting statistics. A Prudential Financial, Inc. study of “near-retirees” – those in the 55-64 age group – found the following:

Eighty-three percent of those surveyed think it is very important to generate an income that can provide a comfortable retirement lifestyle – but only 20 percent say they are well-informed on how to do so.
Ninety percent of near-retirees are either guessing how much income they will have in retirement or have no idea of how much income they will be able to generate during their retirement years.
Only 15 percent of survey respondents are focused on “generating retirement income,” while the remaining 85 percent are still concentrating on building a retirement nest egg, preserving their savings or working toward better returns.

Generating Retirement Income

If the above statistics are indicative of the national populace, it seems clear that many near-retirees are going to have to start taking action to meet their retirement income needs. Here are a few steps to consider:
Evaluate your available financial resources. When you retire, you will probably be able to draw income from a variety of sources: Social Security, your 401(k) or other employer-sponsored plan, your Roth or traditional IRA and your other savings and investments. Well before you retire, you will want to estimate how much money you will likely have accumulated from these resources.

Calculate a withdrawal rate. Once you know about how much money you will have available during your retirement years, you’ll want to determine a suitable withdrawal rate – that is, you’ll need to determine how much Read more…

If you fall into the Baby Boomer generation, having been born between 1946 and 1964, this 3rd stage of life, retirement, is right in front of you. Keep in mind, that potentially, this is the longest stage of life, possibly lasting 20-30 years. Dont’ fail to prepare for this very important transition into your retirement years.

The prospect of actually becoming a retiree looms larger as the years go by. Fortunately, it’s just become a little easier to build savings for your retirement years. Why? Because, starting Jan. 1, you can put in $1,000 in “catch-up” contributions to your traditional or Roth IRA, up from $500 in 2005. So, given the $4,000 annual limit for regular contributions, you can put in a total of $5,000 to your IRA in 2006.

Fully funding your IRA should be one of your top investment priorities. Keep in mind that IRAs offer two major benefits:

Tax advantages – If you have a traditional IRA, your earnings have the potential to grow tax-deferred, so your money can grow faster than it would in an investment on which you paid taxes every year. (You will eventually have to pay taxes on your earnings, but, by then, you may be in a lower tax bracket.) Also, depending on your income level, your contributions may be tax-deductible. When you have a Roth IRA, you can withdraw your contributions at any time, free of taxes. You can also take out earnings, free of taxes, as long as you don’t begin withdrawals until you are 59-1/2 and you’ve had your account for at least five years.
Variety of investment options – You can invest your IRA in virtually any security you choose – stocks, bonds, Treasury bills, certificates of deposit, etc. In fact, you’re not confined to just one type of investment within your IRA; you can create a diversified portfolio containing a variety Read more…

The meek shall inherit the earth, at least if it isn’t lost to margin calls. In a world full of opportunities comes an equal number of risks. On-line investing has brought Wall Street into the study, kitchen, living room, or wherever an investor wishes to trade. For the elderly, this can be a problem. While many may think of rocking chairs on the porch or shuffle board on a cruise ship, the real retirement for many professionals means trying to manage their investment portfolio to maintain income and growth. For many, that also means taking an active role in this process. This is not Bingo, and due to the very nature of the process, can be much like gambling, addictive and risky.

One of the longest running pieces of financial advice has been to carefully manage your investments in terms of a financial triangle. This triangle is made up of varying levels of financial tools or instruments and each layer closer to the top reflects additional risk. This triangle starts with a bottom denoting safe, risk free investments such as treasury obligations or bank certificates of deposit. As the type of investment increases risk, and therefore a potentially greater return or loss on invested capital, the higher on the triangle it goes. General belief is that each level as a percentage of a person’s investment portfolio should be adjusted as they get older and closer to retirement to reflect a more conservative, risk adverse position. This is in line with the concept that there are fewer earning years, or no earning years, left to support the recovery of a financial loss if a risky investment goes bad.

Investment in the stock market, in general, has been very good over the long term. The problem for the typical retired person involved with on-line investing is that they don’t have a long term over which to recover short term losses if they occur. In addition, this description of the stock market is just that, the overall stock market, not individual stock issues.

Before you or a loved one decide to “play the market” or be a “day trader”, be aware that significant risk is involved. The following are points to note for the elderly investor.

1. The Market goes on forever. The market for a stock can now be beyond the typical stock market day of 9:30 a.m. to 4:00 p.m. Eastern time. As the markets continue to evolve, there are now markets before the normal market opening and after the market close. If your on-line firm does not participate in these markets, you may be at risk if your stock position trades actively in before or after hour trading due to news on the company while you are on the sidelines. Stocks can trade wildly up or down in these non-market hours.

2. The market can be a terrible mistress. The need to monitor investments can dominate your time if you are in a position that is movement sensitive and you are trying to trade the stock for the short term. You can find yourself becoming isolated, not wanting to step away from your computer screen in fear of missing an opportunity, or facing a loss.

3. Losses are real. Most people believe they know when to get in when buying a stock, but it is human nature to hold on to an investment when it is going down in value, hoping and praying that it will return to at least break even. It takes a lot of discipline and the on-going use of stop loss orders to make sure that your emotions do not leave you with a significant loss if the market is “irrational” and goes against your position. Look at the wild fluctuations of a Read more…

What are your dreams? What is your focus? You can not travel where you can not ?see? the road.

Do you long for a beach condo? The chance to travel? A private cabin in the mountains?

Please allow yourself to keep dreaming and keep building – building your life around dreams you can see clearly and almost taste.

IRA building blocks can help fund your retirement dreams.

The Roth IRA: With this block you will pay taxes now and never pay again.

You contribute up to $5,000, or 100% of your earned income (whichever is less) annually, after taxes, and your investment earnings accumulate tax-free.*

Then you can:

…unless the stocks you own ARE beating the market!

There is no way on earth you could ever beat the market if the stocks you hold are not keeping up with the market. And hopefully, staying ahead of the market.

But yet, that?s what lots of people try to do. They?d rather keep all the dogs in their account and maybe ?take a flyer? on one stock, hoping for a miracle. It?s like trying to win a NASCAR race with your Ford Taurus. It just ain?t gonna happen.

But hey, maybe you don?t want to beat the market overall. Maybe you just want to own the BEST semiconductor stocks, or the best retailers, or the best utilities.

Seriously, how would you even KNOW if your stocks or mutual funds are beating the market, or are the best names to own in their group? Well, I can tell you this…

the best indicator I?ve ever seen in twenty-plus years in the business has been relative strength.

What is relative strength? It is simply the measure of how your mutual fund or stock is doing, compared to a group of other stocks, funds or indexes…or the market overall.

Perhaps you want to compare Intel with other semiconductor stocks. Maybe you want to compare Microsoft with the S

Variable annuities, I can hear people cringe at just the name, in IRA accounts, I think I just heard some people pass out! What am I insane to bring up this topic of putting variable annuities in IRA accounts? Maybe, but what is the big deal anyhow? There really is not any.

Think about all the different types of mutual funds that you can invest in. Now, can any of these mutual funds guarantee you: Your money back, either lump sum or through withdrawals? Can they guarantee you a withdrawal amount, without annuitization, for the rest of your life? Can they guarantee you a future income that can compound at anywhere from 5 to 7%? Or how about, can they guarantee your beneficiaries any amount of money? Can they provide your beneficiaries with an extra amount on the earnings in your account? The answer to all of those questions is no.

No other investment available can offer you any of the items listed above, except a variable annuity. People always say a variable annuity offers only tax deferral and high fees, that?s it. That is not true. Through living benefits a variable annuity can provide you either; income for life, (not through annuitization either), guaranteed withdrawal benefits, guaranteed minimum income benefits and guaranteed account value benefits.

In today?s world a variable annuity can guarantee what everyone wants, your money, sometimes more, back. Does a variable annuity have higher fees than a mutual fund, yes they do. Are they outrageously high like people say they are? Some are, but most are not. It is all what you make of it, not all variable annuities are created equally. Again, mutual funds cannot offer the same type of guarantees that variable annuities offer.

Most of the variable annuities on the market today offer optional benefits, which means you have more control over the cost. If you do not want a certain benefit, then you do not have to buy it. It has become that simple, you now have more control over your annuity fees than ever before in history.

A variable annuity is a long term investment. An IRA is a long term investment. Both of these accounts grow tax deferred and withdrawals are going to be taxes as ordinary income. The fees are not that much different than a mutual fund or a fee-based planner. The variable annuity offers you guarantees through living benefits, a mutual fund offers no such guarantee. IRA?s are geared to give you income during retirement and so are variable annuities and, now with no annuitization living benefits, variable annuities can do this even more effectively than ever.

It is as obvious as night and day between what a mutual fund can offer and what a variable annuity can offer. With the annuity you now have the upside potential of the market, with total downside protection. With Read more…

Was singer Stephen Stills giving investment advice when he wrote the song ?For What It?s Worth?? Or is this just another investment firm experiencing a ?60?s flashback?

Take it from me; a little paranoia can be a good thing. It makes you very aware. And you need to be aware…not only of trends in the marketplace, but also longer term trends that are evolving all around us.

Let me explain. Imagine you were turning age 65, not today…but way back in 1950. Your average life expectancy beyond 65 back then was 13.9 years. This was the original idea behind social security…they just didn?t expect so many folks to be living past 75 or 80.

Today we?re approaching the point where people will have an average life expectancy of more than 20 years after retirement. Going forward, many will be retired for 25 years, or even longer! And if you?re blessed with some luck and you worked hard at staying in good shape, it may be even longer than that.

That?s 25 years or more without a paycheck! With most folks simply ?working for the weekend,? that?s enough to make most baby boomers paranoid.

But here?s where it gets worse: Many have nothing substantial saved for retirement!

I had a 60 year old prospective client tell me recently (with a straight face) that he was ?living in his retirement plan.? Meaning, he had nothing set aside for retirement. He simply planned on selling his expensive home when he retired and expected to live on whatever he could get for it.

Ok. I understand. But this is where it gets even more interesting. In our conversation, he went on to tell me, ?Come on, my wife and I work hard. We only take two vacations every year…when some of our friends seem like they?re away more than they?re home! And since we work hard, we also figured we deserve to drive around in new cars every two or three years. And don?t talk to me about our club membership, that?s our social time. After all, we deserve it.?

Not only did this guy not look ahead and think through to the end of the game, he also expects that when he?s retired, he?ll be comfortable in a completely different lifestyle…living in a scaled down home, no vacations, no new cars, maybe no private club either. Wow. A total change. He may have a long adjustment phase.

So, what will you do? What?s your game plan…sell your home and move to a sunnier climate? The demographics show that the baby boomer generation is the largest in the United States. Read more…

It?s often said that anyone can make an investment, but only a very few can manage the money. Investing is an action, managing is a process.

Investing is a lot like marriage, anyone can get married. But marriage carries a great deal of risk. If you are not willing to put in the work, it can turn out badly and often fail. But, if you are willing to put in the necessary work, marriage (and investing) can be an extremely rewarding and fantastic experience. Getting married is an action; a successful marriage is a process.

The problem is many people give up too quickly and are not willing to invest the time and the effort.

You can say the same for most advisors.

Focus On ?What? Instead Of ?Why?

I choose to chart (on average) 75 stocks each day by hand. Sure, it would be easier to just ?watch? the changes on the screen. The computer is such a wonderful tool. It updates every chart for every single stock, mutual fund, index, commodity or market I could possibly follow.

There are lots of methods to subscribe to with investing. Charting stocks using ?point and figure? is the tool (or method) I?ve chosen for successful investing. It is NOT a black box. Point and figure charts tell you ?what? is moving up. But the charts don?t tell you ?why? they are moving. Does ?why? really matter?

As mundane as it may seem to chart dozens and dozens of stocks by hand every night, I like charting by hand. I need to chart by hand! It gives me a ?real feel? for what is happening each day in the market.

And when you?re charting several stocks by hand that reside in the same sector, you?ll sometimes see them rise together (or fall together), which drive the changes in a sector. Remember, 80% of your return is determined by what?s happening in the market and what?s happening in the sector you are invested in. So when you?ve got your ?ear to the ground? (by charting some of your stocks by hand), you get a true indication of where money is flowing in the market.

With these point and figure charts, you can suddenly see the way the market moves…like the tide moving the sand on the beach. To some it is slow (and boring). To others it is a process. The process of managing your money.

How To Be Like Everyone Else

When I began charting years ago, it was just like pulling my sorry butt out of bed in the morning to get on a treadmill! Not my idea of a good time! But I also knew Read more…