Retire on Caviar or Cat Food, Your Choice

Today's, or more accurately, tonight's discussion's focus will take a slight turn from the topic of food per se', but financial stability in later days. Recently, I came across an article stranglely in the Physician's News Digest that brought to mind some rather fundamental considerations that lifestyle conscious individuals may benefit from.

The subject in question pertains to concerns relating to an individual's specific financial strategy or philosophy leading to stability upon retirement age. Let us ponder the situation, for example a situation of having ample liquid assets to them all in government bonds or credible stocks. On the surface such a condition may appear, particularly ideal for those intending to live out their golden years in peaceful confort. However, in this world inflation can have no place. You see, if inflation occurs then income must increase or the 'money starts to get funny'. In other words, infinite becomes FINITE real quick. And, in turn the bills begin to add up. Suddenly life isn't so rosy.

From this point on, the article progresses back and forth between Classical to Modern, and back Greek theorectical finacial equations that may or may not save an individual from ruin. However, finally the author delineates three specific recommendations with the potential of steering post pre and post Baby Boomers and Generation X'ers; toward a continual climb of between 5% and 6% climb each year - basically enough to keep incomes at a level consistent with the rate of inflation. Here they are:

1. Invest in a fixed income, guaranteed type portfolio, e.g., government bills and bonds, fixed annuities, CDs, etc. and hope that inflation won’t be too rough on you, or plan to have your lifestyle degrade as you age in direct proportion to any inflation we may have.

2. Invest in a diversified equity-driven portfolio (made up of several different asset classes, i.e., asset allocation) and hope that there won’t be any serious, protracted, Bear markets or that there won’t be any at all.

3. Invest in a diversified, equity-driven portfolio of several different asset classes and manage the risk in each asset class. What does manage the risk mean? My definition is, watching each asset class every day and when the risk of staying invested is not worth the perceived reward AND the asset class starts to deteriorate (not after it has hit rock bottom), exit a portion or all the asset class depending on the circumstances and don’t return until it starts to improve. While you are waiting, that portion of your portfolio that’s not in the asset class is in cash (money market).

Lastly he purports that if a person needs to deduct money from an investment portfolio to augment his or her lifestyle, [he or she] 'absolutely, positively cannot afford to lose money in a protracted Bear Market'.

Therefore, in presenting an argument outline of determining the potential of spending the loong leisurely days preparing toasts for caviar appetizers or dunking crackers in a cans of Cat Chow. Somehow, I don't think I could have put it in better words. I will add, however, to get hip to the financial terminology, system and features to at least attempt to protect your livelihood for the future. Still, you never know, though...
source:Bruno A. Giordano is a contributing author of the book, Wealth: Enhancement and Preservation, and is President of Dorset Financial Services Corp. in Devon, PA.

Be kind to animals,

Marcia