Time Magazine did an issue called “Why Its Time To Retire the 401K” back in October 2009. They addressed the issue common to virtually every retirement plan – risk. Time gave heartbreaking accounts of folks just about to cross the finish line into retirement when 2008 hit. Imagine paying into your retirement all of your life and just before you reach your life long dreams, the rug is pulled out from under you. That risk is what you get with traditional investment plans. Disaster is a common result from a 401K or IRA.. But is that really any way to plan your life? If your plan is subject to market risk, your future comes down to the flip of a coin.
Here’s a vivid example of just how much luck plays into your future with a 401K/IRA. It’s called The Sequence of Return Risk. If you had $1M in the year 2000 and took an income of $65,000 a year, you would be dead broke in 2014. (Crazy how quickly you can blow through a million bucks!) BUT.... if the returns were flipped, so in 2000 you actually made what the market did in 2014 and in 2001 you made the returns of 2013 and so on. Same market results - but flipped the order, you would have $877,145. It's just the luck of the draw. Folks retiring in 2000 and 2008 got destroyed. Do you really want to plan your life that way? Truth be told, unless you eliminate risk it's no plan at all, it's only hoping. Continue Reading
Submitted November 09, 2017 at 09:44AM by DavidDefoor http://ift.tt/2m7rlVj
