Category: Retirement Plan Alternative

Average 401(k) Balances Have Barely Budged in 5 Years

December 6th, 2023 by Pamela Yellen | Leave a Comment

Fidelity Investments, the largest provider of 401(k) plans, just reported that the average 401(k) account balance barely budged in the 5 years since the 3rd quarter of 2018. They increased by only $1,200 from $106,500 to $107,700… less than 1.2% total.

To make matters worse, inflation was a whopping 21% during the same period. (Here’s a great inflation calculator.) That means those average 401(k) accounts needed to be at nearly $129,000 – just to keep up with inflation!

Okay, but what if you waited longer, say 10 years, like the “experts” say you should. On the surface, that looks better. The average 401(k) was $84,600 10 years ago and is now $107,700 (a 27.3% gain). But inflation over that period was 30.45%, so the average 401(k) would have to be at $110,357 today to keep up with inflation.

In 2022, the average 401(k) balance plunged 22.9%, according to Fidelity Investments. As I write, the market has been rallying, but you’d need an increase of almost 30% to get back to where you were… and another 3.5% increase to keep even with inflation in 2023, let alone have a gain. It’s pretty nasty news if 2022 was the year you had planned to retire.

And the typical IRA hasn’t fared any better over the last ten years, according to Fidelity:
Average Retirement Account Balances [Read more…] “Average 401(k) Balances Have Barely Budged in 5 Years”

Is There a Safer Place for Your Money Than in a Bank?

March 21st, 2023 by Pamela Yellen | Leave a Comment

The problems at Silicon Valley Bank, Credit Suisse, and First Republic Bank are fueling anxiety for people who want to make sure their money in banks and money market funds is safe.

Adding to the fear that this may just be the tip of the iceberg is that banks borrowed a record amount from the emergency last-resort support the Federal Reserve set up in the last week.

So, it’s not surprising people want to know how safe their money is in a Bank On Yourself plan. Read on for the answer. And, since you must “park” your money someplace, I’ll also explain why you would be hard-pressed to find a safer, more advantageous place to put your dollars – in good times or bad – than in a Bank On Yourself plan. [Read more…] “Is There a Safer Place for Your Money Than in a Bank?”

Why “10 Times Your Income” Isn’t a Smart Retirement Goal

February 22nd, 2023 by Pamela Yellen | Leave a Comment

ChatGPT has been making headlines since it launched last year and gained 1 million users in the first week.

If you’re not familiar with ChatGPT, it’s an artificial intelligence computer program that generates human-like answers to almost any question you ask.

So I decided to conduct a little experiment and ask it a simple question:

How much do I need to retire?”

Here’s what the “robot” told me:

The 5 Biggest Financial Threats You Face in 2023

January 9th, 2023 by Pamela Yellen | Leave a Comment

As the New Year gets underway, it’s good to set goals and make plans – but it’s also important to review the biggest threats you face.

Here are the top 5 threats to your financial future in 2023…

Threat #1: 2023 Recession

If you had money in the stock market, you know how bad 2022 was. The S&P 500 lost nearly 20%, and the average 401(k) lost 22.9%. Seeing one-fifth of your life savings vaporize in a single year is a hard pill to swallow.

And after having the worst year in the markets since the 2008 financial crisis, it’s only natural to want to put that behind us and move on. However, what we want to happen and what is happening are two different stories. Economists surveyed by Bloomberg see a 70% chance of a recession in 2023 – which means it’s very likely things will get worse before they get better.

Threat #2: High-Interest Rates

The Secret to Eliminating Your Financial “Icks” in 2023

December 12th, 2022 by Pamela Yellen | Leave a Comment

Two-thirds of Americans intend to make a financial New Year’s resolution for 2023, but only 20% are confident they’ll be able to keep their resolution.

That’s according to a new survey from The Ascent, a Motley Fool service. It’s not surprising why. It’s been a very challenging year, and everybody’s got a case of the financial “icks.”

In a year that many would just as soon forget, a few of the “low lights” include…

Inflation hit a 40-year high
Americans have gotten themselves into a savings crunch with mounting piles of debt
The Federal Reserve continues raising interest rates at a dizzying pace, and market volatility has spiked as investors try to second-guess the Fed’s next move
The stock market entered its longest bear market since the 2007-2008 crash
The once-hot housing market has fallen off a cliff
The crypto bubble has popped
The war in Ukraine has gone on longer than anyone expected, impacting supply chains and more

A Majority of People Worry about Money Daily, and Many Lose Sleep Because of It

Are “Termites” Destroying Your Financial Foundation?

August 24th, 2022 by Pamela Yellen | Leave a Comment

Chomp… Chomp… Chomp…

That’s the sound of termites destroying your financial foundation.

But most people aren’t aware it’s happening. And it’s claiming more victims than you might think.

Of course, you’re aware of how inflation is eating away at the value of your dollars. You feel it at the grocery store, the gas station, when you pay rent, and just about everywhere you look.

But, if, like many Americans, you own a term insurance policy, personally or through your workplace, it might not even be worth the paper it’s printed on when you need it.

Inflation has been running at a 40-year high, currently around 9% per year. But let’s say the Federal Reserve gets it right and brings inflation down to 4% annually in the next few years.

Imagine that you have a $500,000 20-year term policy. In the event of your death, the benefit your loved ones would receive will lose up to 56% of its purchasing power.

Shaky Economy Stressing You Out? Here’s What to Do…

July 8th, 2022 by Pamela Yellen | Leave a Comment

Feeling like a deer in the headlights right now? You’re not alone! Soaring inflation, stock market crashing, a pandemic that just won’t go away – and the only light at the end of the tunnel looks like the oncoming train of recession! We’re all getting squeezed from both ends…

It’s costing you 60% more than last year to fill up your gas tank.

Last month, you thought about buying a new home. This month mortgage rates have priced you totally out of the market.

Global supply chain glitches mean that things you bought all the time are almost impossible to find. (Seriously, a sriracha hot sauce shortage?!?)

Your low-interest charge cards are projected to average 20% in a couple of months – and the high-interest rate ones will be off the charts.

A few months ago, you were sitting on your big, juicy 401(k) or IRA and thinking of early retirement. Now, you’re praying they’ll let you keep your job when you’re 82.

Not long ago, you looked at your retirement account balance and felt euphoric. A humongous asteroid could be heading toward earth and the market would still go up! I can relate. [Read more…] “Shaky Economy Stressing You Out? Here’s What to Do…”

How to Shield Yourself from Market Volatility, Inflation and Interest Rate Woes

March 9th, 2022 by Pamela Yellen | Leave a Comment

Stock market volatility has returned with a vengeance, as this chart of the Dow over the last 3 months starkly illustrates.

Down Jones Industrial Average

We’re facing a whirlwind of economic challenges we have little or no control over. Here are the top 5 currently contributing to the volatility:

Challenge #1: Inflation has hit a 40-year high

That’s hammering consumers, wiping out pay raises, and reinforcing the Federal Reserve’s decision to rip off the band-aid and raise borrowing rates multiple times this year alone, which some economists fear will trigger a recession.

Shock #1: Your Social Security Benefits Can Be Taxed

Threat #1: 2023 Recession

Threat #2: High-Interest Rates

In a year that many would just as soon forget, a few of the “low lights” include…

A Majority of People Worry about Money Daily, and Many Lose Sleep Because of It

However, the devil is in the details, especially when it comes to retirement income, government benefits, and taxes!

Challenge #1: Inflation has hit a 40-year high

Challenge #2: The pandemic and rock bottom interest rates pushed home prices up at a head-spinning rate