Financial Planning

Will Your Money Last as Long as You Do?

April 5th, 2018 by Pamela Yellen | Leave a Comment

Too many people determine how long they think they’ll live based on arbitrary factors.

And nearly half of pre-retirees and retirees underestimate how long they’ll live by five years or more, according to surveys by the Society of Actuaries.

That’s a big problem when it comes to making sure your money lasts as long as you do.

And very few people surveyed understand how variable life expectancy can be: Whatever the statistics say is the average life span for someone of your age and gender, you have a 50% chance of living longer than that age.

In other words, planning for living to an “average life expectancy” is a recipe for disaster!

By age 65, men in average health have a 40% chance of living to age 85, and women have more than a 50% chance.

And if you’re healthier than average, well now you’ve got a 50% chance of living to age 85 if you’re a man, and a 62% chance if you’re a woman.

Of those turning 65 today, 25% will live past 90, and one out of 10 will live past 95, according to the Social Security Administration.

What if you’re the lucky one who hangs on until 100 or longer? You don’t know for sure, do you? But just how “lucky” will you feel if you can’t provide for yourself in those final years?

My 95-year-old mother-in-law lives in an assisted-living facility in Arizona. When her husband died, she got a life insurance settlement and has been receiving a nice pension payout every year. [Read more…] “Will Your Money Last as Long as You Do?”

Four Years after Publication, This New York Times Best-Seller on Bank On Yourself Still Generates Rave Reviews on Amazon

March 20th, 2018 by Pamela Yellen | Leave a Comment

Picture of the Bank On Yourself Revolution book cover

Pamela Yellen’s book, The Bank On Yourself Revolution, hit the bookstores in 2014. It was an overnight sensation, landing on the bestseller lists of The New York Times, Amazon.com (where it was a #1 bestseller), and USA Today.

Shoppers on the world’s largest bookstore, Amazon.com, have consistently praised all of Pamela Yellen’s books … and this one is no exception.

And in fact, nearly 80% of reviewers have given Pamela Yellen’s Bank On Yourself Revolution a 4-star or 5-star review. Many also used glowing terms to describe their personal experiences with the Bank On Yourself concept.

Why is the Bank On Yourself concept receiving so much positive attention from Americans interested in a secure financial future? We’ve sifted through Amazon’s book reviews to find the answers. (All reviews are quoted verbatim, except for spelling and grammatical corrections and minor edits for clarity.)

According to Amazon Reviewer “Valentine,” Bank On Yourself Is “The Best Lifelong Safe and Guaranteed Wealth-Building Strategy Everyone Can Employ”

Why is the “Father of the 401(k)” Now Putting His Money into a Bank On Yourself-Type Plan Instead?

March 12th, 2018 by Pamela Yellen | 2 Comments

It caused quite a stir when the man who is credited with being the “father of the 401(k),” Ted Benna, recently announced that he’s put a substantial part of his own money – “probably the biggest part of my wealth” – into what is most commonly known as a Bank On Yourself plan.

You see, for at least six years now, Benna has been calling the 401(k) a “monster” that “should be blown up.”

Benna is credited with finding a way to capitalize on the tax code to create a way for working men and women to supplement the pension plans that many workers used to have. Those pensions plans have been disappearing, and 401(k)s were created to hopefully help pick up the slack.

But over the years, Benna watched Wall Street and Big Business pervert the 401(k) in ways he couldn’t possibly predict.

In a recent interview, Ted Benna discussed three reasons why we should be very leery of 401(k)s and IRAs:

The government may repeal the 401(k) and IRA, so you won’t be able to put any more money pre-tax into these accounts, or the amount you can put in will be drastically reduced (Congress considered doing that again last year!)
Benna believes the next stock and bond market crash is imminent and could wipe out 40% of the typical portfolio
Wall Street has hijacked these plans, and the excessive fees charged by mutual fund companies and plan administrators are robbing you of up to half of your nest egg

I’ve Been Sounding the Alarm About 401(k)s and IRAs for Even Longer than Benna

The Stock Market Never Goes Down Any More? (Really?!?)

January 18th, 2018 by Pamela Yellen | Leave a Comment

What was until recently an unloved bull market has now reached the point of “euphoria,” and investors are “having a hard time imagining a decline,” according to Morgan Stanley.

After all, what’s not to love about a bull market that has only two directions – up… and up faster?

It’s being called a “market melt-up,” and the main fear people now have is of missing out.

Those caught up in the euphoria – and the fear of missing out – might want to consider the following:

The S&P 500 is trading at 2.3 times its companies’ sales – a smidgen below its dot-com peak
Price-earnings ratios have only been higher for 1% of the stock index’s history
The cyclically adjusted price-earnings ratio is higher than before the crash of 1929, and higher than at any moment in history except right before the dot-com crash

Those of us who experienced the pain of the dot-com meltdown in 2002 and the financial crash of 2008 hope that the market will never become that irrationally exuberant again.

Back then, people justified their exuberance with the mantra that “this time it’s different.” [Read more…] “The Stock Market Never Goes Down Any More? (Really?!?)”

Why You’ll Need $500,000+ in Retirement for Medical Expenses Alone

December 4th, 2017 by Pamela Yellen | Leave a Comment

Retirees spend more than a third of their Social Security benefits on out-of-pocket medical costs, on average, according to a new study by the Center for Retirement Research at Boston College.

Even after factoring in other sources of income, medical spending still took a huge bite – 18% – of seniors’ total retirement income.

A 65-year-old couple retiring now will need $315,000 to cover out-of-pocket health care costs during retirement, according to a study by Fidelity.

The news gets even worse, however, because these numbers do not include the cost of nursing home or home health care.

That can range from $60,000 a year for home health aides… to over $95,000 a year for a semi-private room in a nursing home, according to the Genworth 2022 Annual Cost of Care Survey: Costs Continue to Rise Across All Care Settings. And if you prefer a private nursing care room, you’ll have to cough up almost $108,000 a year.

Ignore the likelihood of needing long-term care services at your own peril: At least 70% of people over age 65 will require long-term care services, and more than 40% will need nursing home care, according to the U.S. Department of Health and Human Services.

Based on the average cost of a nursing home room and the average length of stay – which is 2.8 years – you would need over $250,000 to cover a single stay. [Read more…] “Why You’ll Need $500,000+ in Retirement for Medical Expenses Alone”

Savings Rate Falls to 10-Year Low

November 9th, 2017 by Pamela Yellen | Leave a Comment

Americans are saving much less and spending more – even though their real disposable incomes are unchanged.

The savings rate just fell to a 10-year low of 3.1%, according to the Commerce Department.

What’s most worrisome to economists is that savings rates below 4% occurred before the last two major market crashes, as people felt what turned out to be a false sense of security, due to rising stock prices and/or home values.

Looks like it’s déjà vu all over again…

I recently wrote how the current bull market is the second longest in modern history. If it manages to last until summer, it will become the longest-running bull market at 9½ years.

A bull market has never made it to its 10th birthday.

In addition, historically, the longer a bull market lasts, the harder and deeper it crashes.

Which indicates the optimism that’s caused Americans to save less and spend more is misplaced. And, to take a line from the movie Grease, that means a lot of people are cruisin’ for a bruisin’.

The vast majority of Americans have little or no savings outside their retirement accounts, according to the latest Federal Reserve Survey of Consumer Finances. [Read more…] “Savings Rate Falls to 10-Year Low”

Nobel Economist Warns of Irrational Exuberance in the Stock Market

November 1st, 2017 by Pamela Yellen | 4 Comments

Richard Thaler, who won the Nobel Prize in economics in October of 2017, observed…

We seem to be living in the riskiest moment of our lives, and yet the stock market seems to be napping.”

Thaler has made a career of studying irrational and temptation-driven economic behaviors.

The current bull market is the second longest in modern history. If it manages to last until August 22, it will become the longest running bull market, at 9½ years.

No bull market has ever made it to its 10th birthday.

Which brings me to a very simple, but profound question…

What Happens When a Bull Market Ends?

Federal Reserve Survey: Your 401(k) and IRA Won’t Give You a Decent Retirement

October 23rd, 2017 by Pamela Yellen | 8 Comments

If you’re counting on your 401(k) or IRA for retirement income, I have some bad news for you…

A new analysis of the Federal Reserve’s latest Survey of Consumer Finances by the Center for Retirement Research demonstrates that 401(k) plans are destined to fail millions of Americans.

The Federal Reserve survey is updated every three years, and the latest one reveals that, in spite of the long-running bull market and an improving economy … the typical couple nearing retirement will only receive $600 per month from their 401(k)s and IRAs combined.

That $600 a month is not indexed for inflation, so its purchasing power will decline over time.

And that $600 a month is likely to be the only source of income people will have to supplement Social Security because the typical household has virtually no other savings outside of its 401(k) and IRAs.

In other words, planning for living to an “average life expectancy” is a recipe for disaster!

According to Amazon Reviewer “Valentine,” Bank On Yourself Is “The Best Lifelong Safe and Guaranteed Wealth-Building Strategy Everyone Can Employ”

In a recent interview, Ted Benna discussed three reasons why we should be very leery of 401(k)s and IRAs:

I’ve Been Sounding the Alarm About 401(k)s and IRAs for Even Longer than Benna

What Happens When a Bull Market Ends?

The Retirement Savings Shortfall News is Even Worse for Younger Workers with 401(k)s