Have You Lost Your Grip on Your Retirement Plans?

We’ve heard the horror stories of people who fail to plan adequately for their retirement. Some have been put out of their homes.  Others can no longer afford to keep up the cost of car payments or repairs, and have lost the ability to do even basic errands.  And some just simply run out of money and lead marginal lives.

But more often the stories we’re hearing are about those who find if they retire on the date they’d originally planned, they’ll come up short. They won’t have enough for a comfortable life in their golden years.  As they get closer to retirement, they suddenly discover their retirement savings and investment plans won’t deliver the funds they’d anticipated.

Most are casualties of a plummeting stock market that decimated their 401(k)s or IRAs.  Even the so-called “safe” or “conservative” stocks – the stocks plan managers choose for participants – took a big hit in the recent equities bear market.

Emily Brandon, Senior Retirement Editor at U.S. News and World Report, has a good suggestion for how seniors can improve their retirement budget:  Simply work one additional year. “A single extra year of work can boost your Social Security payments, give you more time to accumulate retirement savings and shorten the period of retirement you need to pay for.”

Social Security payments are calculated on the thirty-five years in which you earned the highest salary.  Chances are you’re earning more than you did, say, thirty-four years ago.  So if you work an additional year, you can boost your average salary number by a surprising amount for purposes of Social Security.

Also, the federal government incentivizes Social Security recipients who delay the date they start collecting. The longer you wait to collect, the bigger your monthly check – up until age seventy.

Brandon makes some strategic IRA distribution suggestions for those who are willing to become “super savers” in that additional year of work. She also suggests working that extra year if your portfolio has shrunk because of low-performing stocks. It’s better to delay making withdrawals when your portfolio is down so that it has time to build back up.

Tellingly, one strategy Brandon doesn’t bring to the table is re-allocating into hard assets.  Though she says, “You could also work an extra year if your investments are performing poorly and you want to give them some time to recover before you begin withdrawing money from your portfolio,” she doesn’t address the possibility that they may not recover in that year.  They may even plunge further.

In fact, while the focus of the piece is on the benefits of working an extra year before retiring, since she does touch on stocks held in retirement accounts it seems strange she doesn’t address the vital issue of age-appropriate risk.  If you’re bumping up against retirement you should have long since begun diverting the bulk of your holdings away from high-risk equities into more stable investments.  This is increasingly crucial now as markets are so severely out of whack so far this year, and more than one expert is predicting, or diagnosing, a worldwide recession in 2016 -2017.

Traditionally soon-to-be retirees were herded into bonds, but these no longer offer the safety they once did.  More and more, the only secure place these days is in tangible assets.  If you have the cash, and the nerve, to plunge into real estate, buildings and land are certainly tangible.  But while they’re generally profitable, they lack quick liquidity.  So another use for that extra working year might be to seriously consider rolling over your 401(k) (or IRA, 403(b), etc.) to a gold IRA.  This lets you keep some stocks as, hopefully, a growth generator, but also allows you to hold actual physical gold and silver in your retirement account – assets whose value can’t be trashed by an out-of-control stock market, China or tailspinning oil industry.

While stocks have been tanking this year, gold’s been on a tear.  Even back in 2015, when the yellow metal’s performance was less impressive, some analysts predicted it could go as high as seventeen hundred dollars per ounce by the summer of 2016. At this juncture, given the weakness of the global economy, that calculation seems entirely possible.

So if you decide to delay your retirement and passively wait for your stock investments to come back, you might find you’ve waited in vain.  But if you invest in gold coins and gold continues on its impressive run, you’ll have ended your career on a high note – and with a truly high-value portfolio.