From what I can glean, there is definitely a retirement crisis beginning to bubble in this country. Or is that an understatement? How so? Well, it seems to be affecting some 50 million retirees because according to MotleyFool.com, more than 39 percent of investors who are presently in or near retirement have saved less than $25,000 for their golden years. Yes, you read that right, $25,000. Astonishing, eh? Clearly, this is the lowest American savings rate since the Great Depression. Jon Hagan Hicks, who is the chief investment officer for J. Hagan/Warren Wealth Advisors based in Louisville, Ky., says that retirees are behind the eight-ball for saving enough for retirement. “We expect interest rates to remain low and the stock market to be very volatile for 2008. This is a very bad combination for retirees to earn a reasonable rate of return in traditional investments.” Hicks has a reputation as being quite astute when it comes to this subject and his words are well respected in the industry. He specializes in alternative investments, financial management theory, and asset management. As president of J. Hagan Wealth Advisors, Hicks has created and managed traditional investments, real estate portfolios, hedge funds, and mortgage-backed securities. He says that although younger investors may have enough time to weather the storm in the equity markets, he expresses concern about retirees. A lot, he notes, have lost principal recently and he sees many savings in low-yielding accounts. “If food, energy, and healthcare costs keep increasing at their recent rates, many retirees’ portfolios may expire before they do.” As to a solution, Hicks maintains that a retiree must seek out expert advice to avoid as much volatility as possible in their portfolios while still looking to maintain a healthy income stream. But he does throw up a red flag. He says the biggest problem is that many retirees are trying to manage their finances on their own without expert help. In fact, it is noted that nine out of 10 investors don’t even have a financial plan. Basically, not only have people not saved enough but they don’t even know where they are going. I can attest to this when I look at many of my friends, again most of whom do not have any specific plan and they are all at retirement age. Hicks doesn’t prop up any specific vehicle. He is too honest for that. When he is asked about specific investments, he simply advises that every individual investor has different objectives and needs and that no specific product is right for everyone. That’s the primary reason he advocates getting expert advice. In sum, he reiterates specific steps that retirees can take to better position themselves.
- Seek out professional help to establish a plan
- Make sure the plan includes assumed rates of inflation and realistic rates of return
- Seek investments that have low volatility
- Review the plan annually
