Boomers, Markets & Money

A Down-to-Earth Discussion of Financial and Lifestyle Information for Baby Boomers


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Resources for Baby Boomer Entrepreneurs

The over 50 set are becoming entrepreneurs

Baby Boomers Open Small Businesses (Click to Enlarge)

Many Baby Boomers are starting small businesses

  • To pursue an interest or goal they didn’t have time for when they were younger
  • For flexibility in work hours or location
  • Persistent unemployment. The 55+ age group has the longest period of unemployment before being hired. Do you think there is age discrimination involved?

One important point I came across when researching this post—Don’t lose your retirement money!

You have less time than other age groups to make up your losses, so take less risk. Don’t use funds that you need to live on in retirement.

Here are some helpful small business resources:

  • Small Business Readiness Assessment. The U.S. Small Business Administration’s (SBA) online checklist forces you to examine your personality, physical and emotional health, as well as skills and experience. The main strength of the checklist is that it forces you to slow down and really consider the many different factors that are needed to run a successful business.
  •  SCORE, a volunteer resource partner of the SBA, offers free business counseling. Help is available for established businesses, start-ups, and non-profits. Chapters also offer small business workshops. I’m partial to this organization since I volunteer with the Rhode Island chapter.

 Visit the SCORE website at www.score.org to find:

A mentor. Free, confidential counseling is available face to face or by email.

Chapters near you. Type in your zip code for a map of local chapters.

Online workshops. Many live webinars are offered in English and Spanish.

Templates and Tools. Over 100 articles are available with advice on small business challenges. For example, I found an interesting article “10 Steps to Protect Your Great Idea.”


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Review of PBS Frontline’s “The Retirement Gamble”

I recommend that you watch the eye-opening PBS Frontline Special “The Retirement Gamble.” Thank you to Claire for suggesting it.

Some key points from the program:

  • Many hidden layers of fees are eroding individual investor wealth.

Jack Bogle, founder of The Vanguard Group, gave an example of how much fees cost an individual over a 50-year investing lifetime. If this consumer receives a 7% annual return and pays 2% in annual fees, fees will erode two-thirds of the investor’s gains. Bogle said you can see these results on a compound interest table.

I decided to do just that and found an investment calculator at Buyupside.com. (Please click on the image below.)  Using the same figures show that the portfolio would be reduced by 63.58%. We should all be checking the fees on our retirement plans!

Annual Fees Greatly Reduce Portfolio Results

Investment Key Calculator (Click to Enlarge) http://www.buyupside.com

  • Robert Hiltonsmith, a policy analyst at Devos, examined his own retirement plan to see what fees were taken out of his account. He found that about 25 fees were extracted from his account by mutual funds, fund brokers, plan adminstrators, etc.

  • Teresa Ghilarducci, economist at The New School for Social Research said:

401(k) plans were originally designed for wealthy people. Now, the advisors middle class have access to are really just sales people.

American consumers don’t know the price, quality, or dangers of their 401k plans due to strong industry lobbying.

“So we know after 30 years of this 401(k) experiment that people do worse in 401(k)s than they would have if their money was in a traditional plan or if it was in a plain vanilla retirement account.”

  • Many of the options in plans are mediocre and many people are not prepared to invest their own money.

This became clear to me when I had someone from a cable company come to my home to repair the phone. When he saw that I had the TV set to a financial news channel, he began telling me that he had all of his retirement money in marijuana stocks. Although his portfolio had lost 50% of its value at this point, he was very optimistic about his future prospects. I was very shaken when he left as I wondered how many people were investing their retirement funds this recklessly.

  • According to the Department of Labor, there are no clear standards on who can give advice to consumers of retirement plans. Also, there is no clear way for a consumer to tell who has the expertise to advise them. There was intense industry lobbying when new standards were proposed, forcing them to be withdrawn.

Source:

PBS Frontline. Videos and transcripts.

Related Posts on This Blog

“Resources to Help You Decide  When to Take Social Security”

“A Critical Step for Preparing for Retirement”

“How the Heck Do I Invest My Money?”

“Book Review -‘The Bankers’ New Clothes: What’s Wrong With Banking and What to do About It”