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Boomers Rethink Retirement
The expensive approach to retirement is to pile up so much money that you'll be safe no matter how long you live or what goes wrong with your health or the markets. But for many Baby Boomers, the amount required seems ridiculously out of reach.
Boomer assets in IRAs and defined contribution plans such as 401(k)s fell more than $2 trillion last year, according to the Investment Company Institute. The repercussions of the financial crisis will be felt for years in the retirement accounts of millions of Americans. Those who saved industriously have watched their account balances crumble, and the recession has set back that half of employees who lack even basic savings options like their 401(k)s.
In these seemingly out-of-control times, you can actually control many of the factors that will affect your retirement.
Retirement Income Investment Options
The challenge facing mutual fund companies and life insurers is to transform volatile stocks into stable investments that offer retiring Baby Boomers predictable income or protection from losses.
As if that isn't hard enough to accomplish, they are trying to do it at a low cost to investors and in a way that doesn't lock up money for years, as has been the case with many traditional guaranteed investments such as annuities.
Appetite for these products was heightened last year when even conservatively managed funds delivered steep losses to those on the cusp of retirement. Chief among the losers were most target-date mutual funds, which offer a mix of stocks and bonds tailored to an investor's expected retirement date. Most were loaded up with stocks, based on the idea that even at retirement as investor could live another two or three decades and needed the growth potential. The result was that the average target-date fund lost 32% in 2008.
The bear market also took its toll on many "payout" funds, which aim to deliver steady retirement income but don't guarantee it. Sold by giants such as Vanguard Group Inc. and Fidelity Investments, many of these funds suffered big losses last year, which led to lower payments to investors.
Although more firms than ever are trying to come up with products designed to make stocks safer for older investors, the track record of such investments is mixed, at best.
Source: The Wall Street Journal, July 6, 2009
Rebirth of the Newspaper
The production and distribution costs of newspapers is and has been very expensive when compared to digital cost and distribution of information today. The only reason newspapers have survived for so long was because local newspapers were a geographical monopoly that could demand a subscription fee in addition to receiving advertising funding. However, there are no monopolies for long on the Internet.
Now that the Internet has created Craig's List as the rebirth of the local newspaper "want ads" and social media (blogs, networks, RSS, Twitter, etc) as the places to get the news and opinions you want to read, most newspapers across the world are dead or are counting the days on their death bed.
Of course, a few quality and expensive newspapers and periodicals, like The Wall Street Journal and The New Yorker, will survive in printed form delivered to your house, office or Post Office box. And advertising-driven local newspapers will still appear at low-or-no cost on a weekly basis to encourage consumers to get out and buy something at their local shopping centers.
But the future of news distribution will be digital via the Internet and mass-customized to fit the reading/viewing desires of individual consumers. This newsworthy content will be read on the computer screen, book/newspaper replacements like Amazon's Kindle, or printed out on demand by the reader on their home or office Kodak or HP printer.
A Life Line for Dying Newspapers?
Here in Ann Arbor, MI, USA, the local newspaper is ending daily printing and distribution by moving to a combination of a daily online presence (www.AnnArbor.com) and advertising-driven paper distribution on Thursdays and Sundays. The biggest challenge is how to monetize their projected high employee overhead cost with only a semi-weekly paper publication that is advertising financed...since they no longer have a local news monopoly. A number of free online local blogs are continuing to emerge, like www.AnnArborChronicle.com and www.BigHouseBlog.com, and are rapidly filling the gap of daily news distribution.
"You and I do what many dream of, all their lives."
John G. Agno, Editor, mailto:johnagno@... ...or... Join me on Twitter: http://twitter.com/johnagno
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