Is Your Money Frozen in Your Retirement Plan?

One of my biggest beefs with government-controlled retirement plans, such as 401(k)s, IRAs, 403(b)s and Roth Plans, is the total lack of liquidity. The money you’ve socked away in your conventional retirement plan is about as solidly frozen as the iceberg that sank the Titanic! And because of this, if your financial ship hits rough waters, you might end up sinking as well.

Here’s the critical question: How quickly and easily can you get your hands on all the money in your retirement account if you need it before age 59½?

We all know life happens. Cars break down. Roofs need replacing. A tough medical diagnosis can create mountains of unexpected bills to pay.

Every year many participants in employer-sponsored government-controlled retirement plans make early withdrawals for a number of reasons. And every year, the IRS collects penalties related to those early withdrawals.

In fact, in the last year for which statistics are available, the Internal Revenue Service collected $5.7 billion dollars in penalties from Americans who took out $57 billion from their retirement funds before they were supposed to. [Read more…]

Retirement Planning that Helps You Sleep at Night

Let me be blunt. If you’re like the vast majority of Americans, your retirement plan is about as good as the survival plan of that last lemming heading over the cliff!

For most of us, our “retirement planning” has been manipulated by our employers, Wall Street, and celebrity talking heads – all of whom have their own agendas that don’t seem to prioritize our financial security and well-being. And the vast majority of personal financial advisors have chosen to stick with conventional strategies without even questioning the less-than-stellar results they’ve given us over the years.

Risk, a four-letter word?When a “plan” proves that it isn’t getting the results it’s supposed to produce, doesn’t it make sense to come up with a different plan? (The answer is “Yes!”)

Over the next several blog posts, I’ll illustrate specifically how and why your conventional retirement plan is failing you and changes you can make that will let you build a retirement savings fund that is safe and secure – guaranteed.

Let’s start with the problems of conventional retirement plans. I know of at least six major pitfalls and traps and I’ll cover each one in detail. The first painful trap is RISK. [Read more…]

Important 401K and IRA Advice

While doing my research for my new book (The Bank On Yourself Revolution, to be published on February 11), I came across four stunning new wealth-killing revelations about 401(k)’s and IRA’s.

If you have money in one of these plans, I urge you to read this advice about your 401K and/or IRA today to find out how to protect yourself from making costly mistakes:

Wealth-Killer #1: The fees you’re paying may be much higher than you think

Target Date FundsI’ve written in the past about how Congress passed a law in 2006 protecting employers from liability as long as they automatically put employees’ contributions into certain types of mutual funds, known as “default” investments.

Target-date funds (TDF’s) have emerged as the default investment of choice. Unfortunately, they’ve also proven to be very risky AND they’re among the most costly mutual funds you can buy. (Would it surprise you to learn the mutual-fund industry lobbied Congress to get that law passed and make sure their interests were protected? Didn’t think so.)

So last month, an article in Forbes (“The Trouble With Target Funds”) revealed that, according to the prospectus of one popular target-date fund, your projected fees and expenses for each $10,000 invested is $2,478 over a ten-year period (assuming it grows at 5% a year).

That’s 25% of your savings!

So, if you had $300,000 in that fund for ten years, you’d get soaked for – are you sitting down? – $74,340! (And that’s just over a ten-year period!) It also doesn’t take into account all the other fees you’re charged in a 401(k).

The author of this article concluded…
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