Dan White’s advice for Philly Inquirer readers: Watch out for the fiscal cliff

29 Oct

A recent article in the Philadelphia Inquirer lays out the potential implications of the upcoming “Fiscal Cliff”, particularly with respect to what such an event might mean for investors and retirees looking to shore up their long-term financial security. The cliff is the upcoming January 1st, 2013 deadline which, barring a legislative compromise, will result in a combination of tax increases and spending cuts: austerity measures that would almost certainly have a serious negative effect on the national economy. Uncertainty and concern about such a possibility, as well as lingering financial hangover from an extended recessionary cycle, have had an impact on the way that seniors are thinking and planning for retirement.

I’m quoted in the article, pointing out that the U.S. is in a similar position to Greece four years ago—and we all know how well that is turning out. That said, even if the Fiscal Cliff comes to pass, we still have plenty of time to prepare and protect our future retirement savings. Retirees (and really anyone approaching retirement age) cannot afford to lose money in the market, and it might make sense to stick with index annuities in the near term. Above all else, be thoughtful and strategic; even some traditionally “safe” investment options are not what they once were.

As a number of financial professionals point out in the article, the historically low yields on treasuries mean that the rate of return isn’t even keeping up with inflation. The result is that investors in treasuries are actually losing money over time. The key is to stay informed and engaged, making sure that you, and especially your adviser, keep up with political developments. Investors who do so will be able to take the right steps to ensure that their retirement nest egg is safe and secure.


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