ST. GEORGE —Current economic research confirms what many working people have long suspected: The middle class in America is vanishing at an astonishing rate.
Multiple surveys and research studies indicate that Americans, especially middle-class Americans, feel less prosperous now than in the last 50 years. Such findings represent the most downbeat assessments of personal progress in the last half-century. Of course, the pandemic has only made things worse.
An alarming number of people say they feel they haven’t made any progress in their financial lives. Many feel they are moving backward and that their status as “middle class” is questionable.
An economic downturn fueled by the pandemic, upheavals in the stock market, joblessness and an overall lack of faith in government solutions have contributed to the high numbers of people who say they can’t get ahead. Retirement planning is out of the question.
Median household incomes have been in decline since 1999. Taxes have increased, and the buying power of the dollar is less every day. With the financial “right now” in so much upheaval, it’s little wonder that most people cannot begin to contemplate the future.
However, the future will come, whether we prepare for it or not. If you want to be in a better financial position, you must consider ways to create multiple income streams both now and when you retire.
A sucker punch to your wealth
Most people are not told the whole story about money and how to make every dollar work harder for them. The financial media has drilled it into their heads that they have no other choice but to subject their cash to risk, even when they are retired.
Many Americans are conditioned to believe that the only way to finance large purchases, such as real estate, automobiles or business equipment, is to crawl to a lender for a loan. Debt has been easy to access, and nearly half of all retirees are still paying mortgages and credit card debt long after leaving their jobs.
It’s evident the old rules about how best to save for retirement no longer make sense and that losing even $1 in retirement is not acceptable. It’s more critical than ever before to re-balance one’s portfolio. Depending on your age, risk tolerance and current situation, you may want to move more of your wealth into “safe money” products such as life insurance and annuities.
You do have choices.
If you are serious about not running out of money in retirement or downgrading your lifestyle, you must actively engage with your money. It is not just about accumulation; it is also about distribution. How long will your money last?
You must do the following:
- Find a trustworthy, honest financial guide experienced in the “distribution” phase of finances.
- Partner with your advisor to review and re-balance your portfolio as needed.
- Research safe money products, especially annuities, which provide contractually guaranteed safety of principle, have tax advantages and allow for steady growth.
- Plan for health and long-term care needs.
- Create a retirement and income blueprint and follow it.
A realistic approach to money and retirement, along with specific products, will help you make the most of the time when you no longer want, or are unable, to work.
Then there is the monster in the corner: inflation. Inflation should be considered in order to carefully and strategically invest and mitigate inflation, especially as period of retirement continues to stretch.
You may have heard about the “investing time horizon,” the time you will need to begin the distribution phase of your asset base. But with many people living well into their 80s, even 90s, that time horizon has become your life expectancy. You are very likely to discover that your retirement is as long or longer than was your career.
That’s why I feel that many, if not most, retirees need some allocation to alternative investments to stay ahead of inflation. Otherwise, they could find themselves with a lot less spending power.
Armed with relevant, actionable strategies and information, you can make the kinds of radical shifts that will enable you to retire with more wealth and less stress. If you don’t, you will continue to pay more in taxes and fees than necessary, be exposed to market volatility and wind up with less than you should have in retirement.
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