Tag Archives: Retirement Investment Choices

Is 401k Nationalization a Possibility?

Runaway debt and an unfunded pension system make 401K nationalization not only a possibility but a very real likelihood

According to USDebtClock.org the U.S. federal government is more than $19 trillion in the red. That’s more than $59,143 of debt for every man, woman and child.

Within the runaway government spending that got us to where we are today, Social Security is the second largest cost at $894 billion only less than the annual cost of Medicare/Medicaid at $1.0 trillion. Both of these programs are seriously underfunded and will cost the government trillions of dollars.

Once thought an impossibility, 401K nationalization is looking more likely as a tool for both the Federal government and corporations to cover wasteful spending and rampant corruption.

Is 401K nationalization coming and what can you do to protect your retirement investments?

The Government Moves Closer to 401K Nationalization

To cover the insurmountable debt, the government has passed a 22% increase in premiums to be paid by employers to the Pension Benefit Guaranty Corporation (PBGC) through 2019. The PBGC was designed to take over bankrupt pension plans and make payments, though payments are normally renegotiated well below what was originally promised by the employer. The new hike costs businesses an extra $14 per employee beyond the 236% increase in per employee costs added by the PBGC since 2005.

Even on the increased premiums to the PBGC, the fund admitted that it was 90% likely to run out of money by 2025.

The combination of building national debt and underfunded needs at both the federal and corporate level means lawmakers and corporate management are going to be scrambling to find money to fill the coming gap.

And that is when 401K nationalization will become a reality.

There are currently about $3.7 trillion saved in 401k plans and other employer-sponsored retirement accounts. Yes, the government knows that we are saving that money to use during retirement, but that didn’t stop them from raiding the Social Security coffers. How long will it be before the government mandates that a certain portion of 401k accounts be invested in government-backed investments like Treasury bonds? After all, just last year the government announced the creation of MyRA plans that are nothing more than bond-based IRAs.

In fact, the Pension Protection Act of 2006 might actually make it easier for 401K nationalizations to become a reality. The law was the beginning of a long list of investor protections that were wiped from the rules, allowing employers to automatically enroll employees and protecting 401K plan sponsors from liability in the event of loss.

What Can Investors do to Protect Themselves from 401K Nationalization?

Protecting your investments from a 401K nationalization or from corporate malfeasance raiding the funds means taking control of your own assets. An investor’s best course is to take control of their retirement investments through the 401K rollover process. A 401K rollover is a relatively easy process where you transfer the assets within your corporate 401K into an Individual Retirement Account (IRA). The IRA benefits from all the same deferred-tax advantages of a 401K and you can make tax deductible contributions every year.

It’s your name on the IRA account and neither the government or an employer has access to it. Learn the differences between 401K vs IRA and critical questions you need to ask. 401K rollover specialists can answer your questions and can help you understand the rollover process to protect your money.

Like and Share this post if you want the government to let you decide how to manage your retirement account funds.

Best alternatives for an orphan 401k plan

Take advantage of a self-directed IRA for more investment options with your orphaned 401k

Job security isn’t what it used to be and few workers stay with one employer for their entire careers. When you leave your employer, what should you do with your orphaned 401k plan (or 403b plan if the employer is a non-profit or governmental entity)? You basically have four options:

Transfer the account into a managed IRA (Individual Retirement Account)
Transfer the account into a self-directed IRA
Roll the account into another employer-sponsored 401k, if one is available
Cash out the account

Cashing out your orphaned 401k accounts is not an option, even if you’d like to use the money. Cashing out a 401k will mean a 10% withdrawal penalty plus paying income taxes on the full amount. Setting the precedent that it’s acceptable to withdraw money from your retirement accounts is going to leave you penniless in retirement.

Rollover orphan 401k Accounts

Rolling your orphaned 401k accounts into those run by a current employer may not be the best decision either. Most employer-sponsored 401k plans offer extremely limited investment options in funds where the manager happens to be offering the biggest fee kickback to the plan administrator. It’s still a good idea to get the full company match on contributions but putting more money to overpriced funds with high commissions won’t help you reach your financial goals.

For most people, rolling their 401k plan into a self-directed IRA is the best alternative. According to Cerulli Associates, a Boston-based research firm, around three million American workers rolled approximately $289 billion from employer plans in 2012. The bulk of this money, or almost $204 billion, was rolled into IRA accounts controlled by financial advisors. Another $85 billion was rolled into self-directed IRA accounts. The company also estimates that by 2017, Americans will roll $451 billion into self-directed IRAs, making this an $8 trillion market place.

Advantages of an IRA vs orphan 401k plans

There are quite a few benefits to an IRA. If you have several orphaned 401k accounts, you can consolidate all of them into one account for ease of management and tracking. Most 401k plans have limited investment options and can charge high management fees to its participants. By rolling orphaned 401k accounts into a self-directed IRA, you gain better control of your retirement investments and the associated expenses. It may also be wise to sever ties with former employers depending upon how you left your job and the financial stability of their retirement plan. With the pension system crumbling, corporate sponsored 401k plans may be an easy target for corporate malfeasance.

There are specific rules governing a 401k rollover which must be followed to avoid withdrawal penalties and taxes. The funds will go into either a Traditional IRA or a Roth IRA depending on when you want to incur the inevitable tax impact. Managed or self-directed IRA accounts also offer different benefits depending on your needs and financial goals.

A managed IRA can offer many more retirement investment options than an orphaned 401k. Alternatives may include stocks, bonds, ETFs, CDs and mutual funds, but this type of account will also be controlled by a financial advisor. This advisor will charge fees and/or commissions for his services.

A self-directed IRA allows for a greater variety of investments such as physical gold, real estate, foreign businesses, horse farms, etc. The options are limited only by the investor’s imagination, risk tolerance and IRS rules and tax laws. This form of IRA truly gives the investor freedom to use his money how he sees fit to best serve his needs. A self-directed IRA also allows for greater financial diversification – for example in physical metals like gold and silver which is very appealing to many US investors today.

Before deciding if a self-directed IRA is best for you, consider how you want your hard-earned money to work for you, the benefits and restrictions of each type of account, and of course the tax implications you may face. Of course you can always contact the orphaned 401k experts at 401krollover.com. Our experts can help you select the best IRA options for your unique needs.

How to Avoid 5 Worst Retirement Mistakes Everyone Makes

Learn the worst retirement mistakes that cost people money and keep your retirement planning on track

As retirement approaches, we all look for simple ways to plan and save. Many people are confused or even misled by some common misconceptions which could lead them astray. A few simple rules of thumb can help avoid the worst retirement mistakes and provide for security.

For example, the 4% retirement spending rule suggests that you can safely spend four percent of your stocks and bonds each year in retirement, with adjustments for inflation. The “100 minus your age” rule addresses the percentage of savings recommended for stock investments. These over-generalizations and myths can lead to huge retirement mistakes.

Many planners unknowingly rely on retirement myths which could result in future financial woes. Here are five of the worst retirement mistakes:

Social Security will provide enough to cover your expenses.
Current inflation is low, so there is no need to worry about it.
You may receive an inheritance to supplement your retirement.
The Stock Market will provide additional income down the road.
You can always return to work if you need to.

Let’s look at each of these retirement mistakes in some detail.

Retirement Mistake #1: Social Security will Provide Enough

The average Social Security benefit is $1,328 per month. That’s only $15,936 per year, which is barely above the poverty line for a couple. Full retirement age is now 66 and the maximum possible benefit is $2,663 per month. If you wait until age 70 to retire, the maximum would be $3,501, or $42,000 per year.

The maximum benefits only apply to those workers who were earning more than $100,000 per year for most of their careers. Keep in mind, these are today’s figures. Social Security continues to push the full retirement age back and there is no guarantee that today’s benefits will be available when you reach the required age. In fact, as of March 19, 2015, the Social Security liability is $13,784,756,000,000 and rising rapidly.

Retirement Mistake #2: Inflation won’t be a Problem

Some advisors think inflation is dead and deflation is headed our way. Despite massive stimulus programs by the Federal Reserve, inflation has slowed to about 1.7% annually. We also have had years in the past, specifically 1980, where it went up more than 13 percent so super-low inflation over the last few years may be the exception rather than the rule.

Since 2000, inflation has been averaging 3% so the $100 you earned in 2000 is only worth about $72 today. In fact, it takes just 22 years to halve the value of a dollar on 3% inflation.

Retirement Mistake #3: Depending on Relatives for Retirement

Even if you come from a wealthy family, beware. Some of the most affluent people are enjoying longer, better lives and actually outliving their assets. This is especially true if they don’t have long-term care insurance and wind up in nursing homes which can cost thousands of dollars per month. Depending on relatives may be a retirement mistake because everyone may be in the same boat at the same time, trying to pay for higher retirement costs and coming up short.

Retirement Mistake #4: The Stock Market will Provide all I Need

The market has been doing well since 2009 and has provided a good return for those wisely invested in the stock market and mutual funds. However, we can’t forget 2008 when U.S. workers lost an average 24.3% in their 401k accounts, according to a study from the Employee Benefits Research Institute and the Investment Company Institute. After retirement, use the stock market for solid, long-term investments, but don’t use stocks for any money you might need in the next five years.

In fact, legendary investor Jack Bogle recently forecast returns of just 6% on stocks and under 3% for bonds over the next decade. This is before inflation so real returns on your money will be much lower and may not cover expenses in retirement if your relying on just stocks and bonds.

Retirement Mistake #5: I’ll just find another job

If you have worked hard and planned wisely for retirement, why would you want to return to the workforce? Many baby boomers claim they would be willing to work after retirement age or try work from home options, probably because most believe they won’t be able to afford their monthly obligations with investments alone. Also, even though many retirees may want to continue working in retirement, the number of people actually returning to work is significantly smaller. According to the Bureau of Labor Statistics, in 2014 only 19% of the over-65 population was considered part of the labor force, and only 17.7% of those workers were employed.

The Government Accountability Office reported that Americans over the age of 55 are the least likely to find another job and the most likely to take a significant pay cut for the next position. Even when older people find new work, the new wage is typically only 85 percent of the old salary.

Experts told the GAO that employers are reluctant to hire older workers because they “expect providing health benefits to older workers would be costly.” Others said computer skills often hold back the elderly, especially when the job application is all online. More than 1 million older Americans have been looking for work unsuccessfully for more than six months, while hundreds of thousands of other older workers have stopped searching.

Steps to Avoid the Worst Retirement Mistakes

Rather than depending on outside forces to provide a comfortable retirement, you can take control of your retirement and carefully plan for your own future. Diversification is key. Consider not only stocks and mutual funds, but also tangible assets such as gold and silver or real estate which may be beyond the reach of the government and not tied to stock and bond market volatility.

Start now by reviewing your retirement accounts and understanding your IRA investment options. . If you have more than one account, it is probably best to consolidate numerous plans into a comprehensive IRA. Consider investing in assets such as precious metals, like gold and silver, real estate, foreign currencies or even businesses. Go to www.401krollover.com for more information. Our experts can help you select the best options for your unique retirement needs and avoid the worst retirement mistakes that cost people money and their financial security.

Debunking the Rules of Retirement Spending: How the 4% Retirement Spending Rule Could Leave You Broke

After years of hard work, saving and planning, you have finally reached retirement. Now the most important question on your mind is, “Will my money last for the rest of my life?” In 1994, a financial planner named William Bengen developed one of the most popular rules of retirement spending. The 4% rule of retirement spending caught on quickly and has been quoted by nearly every advisor. The rule has become a safety net for many advisors and their clients and is based upon the following parameters:

Your retirement portfolio is comprised of one-half stocks and one-half bonds.
In the first year of retirement, you calculate 4% of the total account balance. This is the amount of money you can spend within that first year. For example an account balance of $1 million would allow for $40,000 based on the rules of retirement spending.
Every year thereafter, you adjust for inflation and add that adjustment to the original 4% amount. For example a 3% inflation rate would allow for an additional $1,200 of spending in the second year, or a total spend of $41,200.
If you do not spend more than 4%, adjusted for inflation each year, your account will provide a steady stream of funds while also keeping a balance well past your 125th birthday.

A Little History about the Rules of Retirement Spending

How did Bengen settle on 4% rule of retirement spending as the appropriate annual withdrawal amount? It starts with the unrealistic assumption that stocks and bonds can produce an annualized rate of return of 7%. This figure was based upon information gathered twenty years ago. Since Warren Buffet had predicted that the US stock market will experience a 7% long-term annualized return for the next few decades, we’ll play along, for now.

Next, the rule assumes that inflation will erode the dollar value at the rate of 3% per year. Reducing the 7% annualized rate of return by the 3% rate of inflation leads to an annualized real return of 4%. Bengen then reviewed studies of stock and bond returns dating back to 1926. At that time his retirement spending rule worked in every historical 30-year period, as well as in most computer simulations based on the historical rate of return.

At first, the rule on retirement spending gave many retirees a sense of comfort and security. They just needed to set up a retirement account, save as much money as possible and then set up the 4% rule and forget about it. However, based upon the changing nature of our economy over the past 20 years, the 4% retirement spending rule just doesn’t fit as well anymore and it can’t provide the return most investors crave in today’s economic environment.

What has Changed Since the Rules of Retirement Spending were Suggested

Financial advisors are concerned about multiple factors which have changed in the 20 years since Bengen’s rules of retirement spending were proposed.

Interest rates are so low now, they will almost certainly increase, which will negatively affect stocks and bonds
In 2014 the true rate of inflation, per ShadowStats.org, was 9.4%
The stock market has crashed and rebounded several times making one average forecast inappropriate
Global central banks’ money printing programs could have serious consequences on the rate of inflation going forward
Age-related healthcare costs are skyrocketing according to the U.S. Department of Health & Human Services.
People are living longer on average

The fact is that the stock market has missed Bengen’s estimated return by a long-shot and multiple market crashes make even the long-term return unlikely. The future return on stocks and bonds is likely to fall well short of expectations, turning the rules of retirement spending upside-down.

So Does the Retirement Spending rule Still Fit Today?

The key to the 4% retirement spending rule is the expected rate of return on stocks and bonds which is required to replace the amount being spent each year. Wade Pfau, professor of retirement income at the American College for Financial Services, argues that asset prices have less room to rise in the future and the long-run outlook calls for lower returns ahead. For example, the 10 year Treasury bond is currently yielding 2.1% as opposed to its historic average yield of 3.5%. Today’s 10-year yield will generally predict the total return expected for the next decade.

Pfau also raises concerns about stock values. According to Robert Shiller, a noted Yale economist, the large companies which are included in the S&P 500 index are currently priced at 25 times their averaged earnings over the past decade. These prices are significantly above the overall historic average of 16 times earnings. When the price to earnings ratio is high, you can expect lower returns over the next 10 years.

As a result, Pfau is predicting that a portfolio consisting of half stocks and half bonds will realize a annual return, after inflation, of only 2.2% over at least the next decade. If Pfau is correct, a retiree following the 4% rules of retirement spending, with an adjustment for inflation, will run out of money 57% of the time.

So what does this mean for the average retiree? It really depends upon your investment and spending strategies. There’s really two options for investors and new rules of retirement spending. You can decrease your spending rate to 3% which will spread your retirement funds out. For a lot of retirees, this isn’t really an option because of low retirement savings. You can also look for higher returns in alternative assets like precious metals. While gold and silver prices have languished for several years, key factors are coming together that may increase demand just as supply is shrinking. Investing just 20% of your retirement accounts in precious metals could increase your long-term return by several percentage points.

Because of the changes we have seen in the past 20 years, most advisors agree that the 4% retirement spending rule should be nothing more than a starting point for discussions about spending after retirement, and preservation of assets during retirement, to ensure continued financial freedom.

Steps to Take Beyond the Simple 4% Rule of Retirement Spending

Here are some better retirement suggestions to follow:

Save more money before retirement. This sounds obvious, but for many reasons, it is not always possible. With high unemployment rates, increasing medical expenses, and increased costs of living, today’s U.S. citizens are just not able to set aside as much as they want for retirement. More Americans are expecting to work longer than their parents did before they will be able to retire. Save more money by saving on taxes, taking advantage of deductions for retirement accounts and 401k tax breaks.

Be flexible during retirement – both in investing and spending. Reevaluate your financial situation frequently throughout your retirement years. Adjust spending annually, if necessary. Pay attention to the markets when deciding if you can afford that new car this year, or if you would be better served to wait a while. Match your spending and life experiences with your investment performance.

Diversify. Do not just invest in large-cap stocks and bonds. If you invest in assets other than stocks and bonds, you can realize a greater spending potential since your withdrawals are not solely dependent upon market fluctuations and inflation or interest rates. Understand your IRA investment options and the flexibility you have for investing with an IRA transfer from old 401k accounts.

According to John Halloran of Certified Gold Exchange, “Even though interest rates are almost zero today, they are poised to rise for the next 20 years. With government liabilities increasing, you can bet Uncle Sam will try to spend its way out of debt. This uncontrolled spending will really affect the purchase power of many hard-working Americans. Investing in safe havens like gold and silver really debunk the 50% stock 50% bond recommendation which is the basis of the outdated 4% retirement spending rule.”

The best rule today may be to not follow rules of retirement spending at all. Retirees need to be active participants in the management of their retirement savings and adjust spending where needed. Consider a 4% spending cap, but remain open to modification and diversification in order to ensure the comfortable retirement you have worked so hard to enjoy. Let our experts at 401krollover.com help you make the best decisions for your particular needs. Contact us through our website at www.401krollover.com for your own personalized plan.

Drop your Pension Plan Before it Drops YOU

Pension plans are about to get too expensive for Corporate America. What comes next will shock you.

Corporate pension plans have been slowly bleeding out for 30 years but the new federal budget has just fired the final shot that will kill the system. New premiums make the costs of offering pension benefits to employees unmanageable and the fallout could start as early as next year.

The problem is that it’s all going to happen just as the government’s own guarantor of pension benefits approaches insolvency. Anyone with retirement assets left in the system could suffer massive losses in promised benefits.

Pension Premiums Skyrocket 310% and Become Unmanageable

The government’s newly passed budget calls for a 22% hike in employer premiums paid to the Pension Benefit Guaranty Corporation (PBGC) through 2019. That adds another $14 in cost for every employee on top of the 236% increase in per employee costs added since 2005. Put it all together and pension costs will have risen 310% over just 14 years.

Alan Glickstein, senior retirement consultant at Towers Watson, calls it ironic that the increase meant to shore up the PBGC could end up weakening it through companies cutting head count in pension plans.

Ironic? I call it catastrophic.

The PBGC admitted last year in a report that it was “more likely than not” to run out of funds by 2022 and was 90% likely to run out by 2025. The government entity provides insurance guarantees to more than 44 million people in private defined-benefit pension plans.

Companies are already looking for ways to cut employees from their pensions including lump sum payouts that could lead to a huge tax bill and a 10% penalty if the funds are not rolled over quickly. New premium increases could lead to more companies simply terminating their plans with the burden falling on the PBGC. Employers do not even need to file for bankruptcy protection to pass pension responsibilities off to the PBGC under a distressed termination.

When that happens, the amount of benefits employees receive from the PBGC varies but no worker will receive more than 82% of their promised benefit and most receive much less. PBGC benefits for multi-employer plans are capped at $12,870 per year for new retirees with 30 years of service and will almost surely be reduced if the government fund gets into trouble.

Take Control of Your Money and Protect Your Assets

The 2006 Pension Protection Act (PPA) rolled back a lot of investor protection in employer 401k programs. The PPA repealed the ban on affiliated advisor fees as well as a giving employers the right to automatically enroll employees and protection against any liability of losses.

While the new premium increases put defined-benefit plans in serious jeopardy of failure, the PPA gives employers an incentive to manipulate defined-contribution plans for their own gain.

The only solution is to take control of your own money. Retirement assets held in a former employer’s plan must be rolled over into an individual retirement account to avoid the potential collapse in pension benefits. Putting assets into an account you control is the only way to be certain those assets will be there when you retire.

Rolling over your 401k plan to an individual account not only gives you control of your assets but you get greater freedom through more investment choices like real estate and precious metals besides traditional stocks, bonds and CDs.

Social Security Is Going Broke And It Could Happen Sooner Than You Think

Some Benefits May Disappear Within The Next 2 Years

The Congressional Budget Office (CBO) has issued its review of the United State’s Social Security programs and the report is nothing short of a “Doomsday Prophecy.” The so-called “trust fund,” which is basically just a federal line item, is consuming an ever-growing piece of the federal budget pie, while costing far more than the country can afford, according to J.D. Tuccille, the managing editor of Reason.com.

How Does Social Security Work?

The two entitlement branches of Social Security are Disability Insurance (DI) and Old Age and Survivors Insurance (OASI). These branches are funded through tax revenues. The CBO analysis projects that under current regulations, the DI trust fund will be exhausted in fiscal year 2017, and the OASI trust fund will run out by 2032. Once a trust fund’s balance reaches zero, if current tax revenues are insufficient to cover the amount of benefits owed to the citizens, the Social Security Administration has no legal authority to pay out full benefits when they come due.

The downward slide has already started. According to the Social Security and Medicare Board of Trustees, Social Security payments began exceeding tax revenues for the program in 2010. The CBO report also warned, “As more members of the baby-boom generation retire, outlays will increase relative to the size of the economy, whereas tax revenues will remain at an almost constant share of the economy. As a result, the gap will grow larger in the 2020s…”

Are These New Concerns?

This is not the first time Social Security has faced funding concerns. These programs have been in a dire condition for many years. According to the CBO, legislation was passed in 1994 to take revenues from the OASI trust fund and transfer them into the DI trust fund to keep the DI fund from going belly up. Since then, the DI and OASI trust funds are commonly considered a combined fund. As a result, the CBO analysis cautions that if future legislation shifts resources back from OASI to the DI fund, the combined OASDI trust funds will be exhausted in 2030.

How Does This Affect the National Debt?

Cato Institute senior fellow Michael Tanner, who heads research for Reason.com with a particular emphasis on Social Security, reports that earlier this year the national debt officially topped $18 trillion, which is roughly 101 percent of GDP. This means that we now have more debt than the combined value of all goods and services produced in this country in a year. The CBO predicts the debt will climb to almost $27.3 trillion within the next 10 years.

If you think these numbers sound bad, well brace yourself, they don’t even tell the whole story. These overall debt figures don’t include the unfunded liabilities of programs like Social Security and Medicare. Keep in mind that even though these liabilities don’t show up on the country’s official balance sheet, they are still legal obligations of the US government. If we include the expected shortfall from these programs in the nation debt, the true debt jumps to an astronomical $90.6 trillion.

How can we address these shortfalls?

Politicians either ignore the issue, or suggest it will go away if the wealthy pay more taxes. However, it is simply impossible to increase taxes enough to close the budget gap. More specifically, raising taxes on the wealthy falls far short of what would be required to pay for our current and future obligations.

“The simple truth is that there is no way to address America’s debt problem without reforming entitlements, notably Social Security, Medicare, Medicaid, and our newest entitlement program, Obamacare. Social Security, Medicare, and Medicaid alone account for 47 percent of federal spending today, a portion that will only grow larger in the future. And although the spending for Obamacare has just begun, it, too, will soon consume an ever larger portion of the federal budget,” according to Mr. Tanner.

Social Security is expected to run a $69 billion cash-flow deficit in 2015. That’s the good news. In every year after, that shortfall will worsen. Altogether, Social Security is facing future shortfalls of more than $24.9 trillion. The frustrating part is that Social Security and Medicare seem immune to reform, in large part because seniors, who tend to vote, receive the benefits, while young people, who don’t vote, get to pay the bill.

What Steps Should You Take Now?

Jason Pye of FreedomWorks.org summarizes, “Absent meaningful reforms that encourage economic growth and private ownership of retirement accounts, as more Americans retire and become eligible for Social Security benefits and Medicare (the other elephant in the room), there will be less for Congress to spend on other areas of the budget.”

Taxpayers who hope to retire someday can’t depend on governmental reforms, new legislation or some sort of miracle to occur. We need real answers. We need to take control of our own retirement through private ownership of retirement accounts by establishing self-directed IRAs, which give us the freedom to invest in a variety of options the government cannot destroy. Talk to one of our friendly experts at (whichever website this article is posted) today to learn how you can stop relying on the government and start realizing your true retirement potential.

It Just Got Cheaper To Retire… Somewhere Else

The value of the dollar has surged against other currencies, making your retirement portfolio go further on those sandy beaches.

While economists and politicians argue over debt ceilings, real people are worrying about real problems like how can anyone retire on an underfunded social security system and rising healthcare costs.

The good news is that it might have just gotten a little cheaper to retire…just not here in the United States. The value of the dollar has been surging since July of last year, up more than 20% against a group of ten major currencies. For retirees, or anyone visiting another country, that means your greenbacks buy much more when converted into the weaker local money.

There are several reasons for the dollar’s surge, some possibly passing while others that could help keep the dollar strong for some time. Economic growth has rebounded since the financial crisis, especially against other developed economies. Interest rates are higher and the central bank is much closer to raising rates than monetary authorities in Japan or Europe.

This has all made the U.S. dollar very attractive to foreign investors and the rush of money from overseas has made its value more precious.

Spending Less to Get More in Retirement

Unfortunately, several of the top retirement destinations use the dollar or peg their currency’s value to the dollar through manipulation of money flows. You won’t get much benefit from dollar strength in places like Ecuador, Panama, Belize, Uruguay, Bermuda, Bahamas, Costa Rica, El Salvador, British Virgin Islands or the Turks and Caicos Islands.

The European Union has yet to really rebound from the financial crisis of 2008 and unemployment is still into the double-digits in most countries. The European Central Bank (ECB) just recently joined the monetary printing party started in the United States and Japan several years ago. This has driven the value of the euro down to nearly even with the dollar. Your retirement savings may go 24% further in popular E.U. retirement countries like Spain and Italy but prices are still expensive compared to other hotspots.

I could talk for hours about how much further the dollar goes in Colombia because I live there myself. Besides the stronger dollar, the country’s two major exports of oil and coal are both facing drastically lower prices. Neither of the two fossil fuels is likely to rebound quickly which should mean that the peso stays weak against the greenback even if other currencies strengthen.

Mexico and Malaysia, the third and fourth on International Living’s 2015 List of Retirement Destinations, have also seen their currencies depreciation against the dollar but to a smaller extent.

Check out the table below to see how much further your dollar goes in popular retirement destinations.

Not quite ready to retire yet but want to take advantage of dollar strength? Those dollars will buy more investments denominated in foreign currencies as well. Buying investments overseas is a good way to diversify your investments and your dollar-denominated return will get a boost if the dollar reverses its course to continue the decades-long path of weakening.

New Retirement Account Option for 2015

Retirement savers have a new retirement account option in 2015. The Treasury will offer a new type of retirement account, the myRA, which is not tied to your job and is portable if you change jobs. Savers with an annual income of less than $129,000 for individuals and $191,000 for couples will be eligible to participate.

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Majority of Elderly Rely on Social Security to Survive: Study

The Social Security program has been underfunded for decades after being raided repeatedly for funds going to other programs, but a surprising number of Americans still rely on Social Security in their later years. According to a recent health and retirement study by the Social Security Administration, 60% of individuals aged 65 and older rely on Social Security benefits for retirement funding. What’s more, one-third of retirees are completely dependent on Social Security to survive. If you trust your own ability to save more than that of the Social Security Administration, Like and Share this post.

Study Finds Majority of Workers Unsure about Retirement

A survey by the Employee Benefit Research Institute has found that 56% of American workers have no idea how much money they would need to retire comfortably. What’s more, only 14% of those surveyed believe they will be able to retire comfortably.

If you had the foresight to plan and save in order to retire comfortably, Like and Share this post.