Why Retirement Savings Require Your Active Involvement

Retirement in the past

Up until the 1980s, Americans didn’t worry much about retirement. People either worked or, after the 1930s they had social security and pensions. And that seemed to be more than enough for the golden years and relaxing after a career span of 25 or 30 years working.


Fast forward to today, pensions outside government don’t exist anymore, social security seems to be on the rails, and folks in every walk of life have a far more intimate understanding of the effects of inflation and time on their bank accounts. Add to the picture that people are living longer, and basic savings just don’t seem to be enough anymore.

Unfortunately, if one just watches the news the advice on how to plan, he or she would likely end up with a prescription for depression. Hearing repeatedly about government debt and the weakness of the Social Security Program don’t engender faith in benefits lasting through retirement. Especially, when the national debt skyrockets to almost 20 Trillion dollars in 2017. It is equivalent to more than 61 thousand dollars per capita. The bad news is that debt needs to be repaid through taxes eventually.

S&P 500 Index 1997-2017

S&P 500 Index. Average annual return was 5.3% from 1997-2017

Market Risks

The stock market has been looked to as the solution for fast investment growth, but most people don’t have the time or knowledge to actively manage their accounts, leaving their nest eggs to fund managers.  And, most of them produce a meager return and are not able beat the market ( 5% to 6% average annual return over the last 20 years). And that’s not adjusted yet for fees, taxes and inflation. When the stock market produced negative returns on hands off investing through funds, especially during the 2009 Recession, even the fabled buy-and-hold stock strategy didn’t seem to work for retirement protection.

The fact is, the only folks who have been able to not just protect their investments but make sizable returns that one can live on are those who have actively engaged in the market as well as outside it. For example, a diverse holding between stocks and real estate would have produced whopping returns had folks jumped in during losses of 2009 and kept buying through to now in 2017. Today, both markets are roaring and many feel it’s the time to liquidate and take some positions off the table. But folks who don’t actively planning for their retirements will never be able to participate in this sort of opportunity because they are not engaged, doing the research, understanding how markets operate, and learning from experience. They pay a fee to someone else to do all that work and, in return, that person takes the lion’s share of the fund’s profit.

The above said, if you’re interested in learning how to prepare your retirement better, then stick around and return to our site regularly. Not only will we be providing regular points of advice and tips on Twitter and Facebook, we will also be writing and publishing regular in-depth articles on investing with smarts, not sitting in the back seat and letting someone else drive the car.

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