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Friday, January 13, 2012

The Old Rules Don't Apply

I like to think that there have been times in the past when we have been able to count on plain old steady investment growth.  You know, just a regular seven percent (7%) on our savings and 401k and the benefit of compound interest.  It is frustrating for those who have discipline and save through dollar cost averaging, to not find investments that will simply pay off with regular deposits into retirement accounts, or other future needs.
It is the essence of financial planning and what makes it so difficult.  Over time, all we face are ups and downs; some are just more extreme than others.  We therefore cannot achieve a strategy that will work for our time horizon and risk tolerance.  We need a plan that will allow us sleep at night.  In “normal” times, the old rules could still net a decent payout.  But with stocks, bonds and cash all still in a state of flux, it is even harder than ever to know what to do.
Especially for those planning to retire in the next few years, it can mean placing retirement plans on hold until their investments perk back up.  Unfortunately, that could be a long wait.  In the meantime, perhaps we should not let life just pass us by and as AARP The Magazine notes in Live For Today, Save For Tomorrow, planning to work longer may be a good strategy  to accomplish our financial goals, and have the  needed funds to retire later, all while we still enjoy our current status.  No matter what our age, as we enter the new year, we should have a strategy in place to plan for our future and retirement.  Rather than focusing only on the difficulties we face in the current economy, we need to embrace a long term view of our financial decisions that can help ride out these tough times and redefine what a meaningful retirement will mean to each of us.  The old rules don’t apply, but each of us has the power to take control and make our own.
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