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News from my morning newspaper; Burning down the house! September 23, 2008

Posted by shaferfinancial in Uncategorized.
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Right on cue, the newspaper has financial news that reiterates exactly what I have been saying.  A New York Times article titled “Older Americans bear the brunt” tells us that “today’s retirees have less money in savings, longer life expectancies and greater exposure to market risk than any retirees since WWII.”  Multiple surveys have pointed out many workers nearing retirement age are “putting off their plans to retire, curtailing contributions to their 401K accounts, and borrowing from their accounts to pay for living expenses…”  A higher percentage of individuals over 55 are working than ever before.  One retiree describes his situation, “his expenses exceeded his income so he began occasionally selling some of his stock, then the stock prices fell so any sale meant taking a loss.”  “Now he is looking at taking  a loan on his house.  We’ve been watching every penny. And everything keeps going up.”

And beside that article another one from the AP wire. 15% of homeowners are spending half of their income or more on housing costs, according to 2007 data released by the US Census Bureau.  Anything over 30% is considered over extended, which covers 38% of homeowners with a mortgage!  Wow!  Now we begin to understand why foreclosures are so high!

And of course full page advertisements from financial companies telling the reader “how to handle market volatility.” [By giving them your money of course]

So all this doom and gloom is expected from the mass media.  But where is the discussion about how this happened?  Why no real reporting on how folks got to this point?  The closest we get to the point is this statement: “As companies have switched from fixed pensions to 401K accounts, retirees risk losing big chunks of their wealth and income in a single-day’s trading, as many have in the last month.”

Regular readers know where I stand on this issue.  Learn to be an active investor.  Use equity management to assist in building wealth.  Don’t become a “victim” to the stock market or the real estate variability.  Learn about risk and how to manage it.  Don’t allow yourself to run out of money before you die!

 

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