More than a decade into the longest-running bull market in history, there’s an uncomfortable truth most people would rather not face: historically, the longest bull markets “have ended with a bang, not a whimper,” Pamela says.
“The critical question is: How much does your retirement depend on the stock market, a beast that you can’t predict or control?” she asks in her new book, “Rescue Your Retirement: Five Wealth-Killing Traps of 401(k)s, IRAs and Roth Plans — and How to Avoid Them.” “If your funds are in a conventional retirement plan, the answer is usually ‘nearly 100 percent.”
- The Wall Street casino: “We’ve been told again and again that to get our money to ‘work’ for us, to build a sizable nest egg and get a rate of return that will outpace inflation, we must invest in the stock market and be willing to accept its inherent risks.” Pamela explains why this is “a myth that Wall Street has brainwashed us to believe.
- History of huge losses: “In the two market crashes we’ve had so far since 2000, many people lost 50 percent or more of their retirement funds. Most people don’t realize or remember how long it can take the stock market to recover after a crash,” Pamela says. “Since 1929 we’ve had three market crashes where the Dow took between 16 and 25 years to return to pre-crash levels.”
- People underestimate or ignore risks: Pamela has surveyed thousands of people, and most say they would not risk their retirement funds in the stock market for a 5 percent return. Yet the 2019 DALBAR report finds the typical equity mutual fund investor has earned only 3.88 percent annually for the past 20 years, beating inflation for that period by only 1.7 percent a year.
“So, if most people wouldn’t put up with the stomach-churning unpredictability of the stock market for an annual return of 5 percent, how come so many people are accepting a real annual return of less than 2 percent,” she asks.
Because of our society’s reliance on conventional retirement plans, many people don’t understand the critical difference between “saving” and “investing,” she says.
“Saving is what you do with money you can’t afford to lose, so you know for sure that the money will be there when you need it. Investing is what you can do with money you can afford to lose,” she explains.
Which leads to a final uncomfortable truth we should be asking: “Is the money in your retirement accounts money you can afford to lose? Probably not.”
As a consultant to more than 40,000 financial advisors over more than 20 years, Pamela investigated more than 450 financial products and strategies. Her research led her to a little-known method that prudent, fiscally savvy Americans have used to secure their savings in every period of boom or bust for over 160 years. This specialized savings strategy is covered in her new book as well as her previous New York Times best-seller, “The Bank On Yourself Revolution: Fire Your Banker, Bypass Wall Street, and Take Control of Your Own Financial Future.”
Pamela feels strongly that Americans’ dreams of a secure retirement could turn into retirement nightmares, and knowledge is power, so for a limited time, she is offering complimentary free copies of her new book. These are available for a small shipping and handling fee at www.FreeRetirementPlanRescueBook.com.