awareness magazine october september 2014 pam grout
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Awareness Magazine
5753-G Santa Ana Canyon Rd. #582
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Secrets to a Financially Stress-Free Life

How Baby Boomers and Seniors Can Still Boost Retirement Savings

By Pamela Yellen


Many Baby Boomers are headed into retirement with inadequate savings. The reason is they have blindly followed conventional wisdom on investing and retirement planning advice.

Nearly half of boomers aren’t expected to have enough money in retirement to cover even basic living expenses, like food and medical care, according to the Center for Retirement Research at Boston College. The same study points out that the typical pre-retiree’s 401(k) and IRA will only provide $575/month, and for most, it’s likely to be their only source of retirement income other than Social Security.

Meanwhile, it seems that financial stress has become the new normal for most of us. In 2012, 19 percent of participants in one survey said they had an outstanding loan against their 401(k) plans, and many were using those funds to pay their mortgages, credit card debt, or other bills.

Despite such statistics, it is still possible to live financially stress-free and retire with a substantial nest egg. It starts with understanding some time-tested keys for achieving peace of mind:


Many people don’t understand the difference. To save means to place money you can not afford to lose in a vehicle that is safe and has guaranteed growth. You can be certain your money will be there when you need it. In contrast, to invest means to place money in a financial vehicle or an asset that has a certain amount of risk. You hope to make a gain, but it’s not guaranteed. You might even lose your original investment money.

The only money you should invest is money you can afford to lose. Unfortunately, over the past 30 years or so, we’ve been seduced by Wall Street into believing we must risk our money in order to achieve growth of any significance. We take risks. And we do this with our emergency funds, our children’s college fund, our retirement nest egg — the very money we absolutely cannot afford to lose.


Many people invest before they save. The result? Only half of workers and retirees say they could definitely come up with $2,000 within thirty days to cover an unexpected expense. And two-thirds of employees say they would have trouble meeting their current financial obligations if their paycheck were delayed for one week! Without a sizeable liquid rainy day fund, you may be forced into selling or liquidating your nest egg assets prematurely — the investments you planned on keeping over the long haul. When this happens, the timing is often terrible. You’re at the mercy of current market conditions and forced to sell at the worst possible time. A key secret of living a financially stress-free life is to have a sizeable sum, ideally equal to two years household income, in safe and liquid cash reserves.


One of the most powerful pieces of financial wisdom I’ve ever heard is what I call the 10/10/10 Savings Formula. People in the 1940s and 1950s commonly used this formula. They would set aside 10 percent of their gross income for short-term needs (vacations, gift-giving), 10 percent for anticipated mid-term needs and potential emergencies (a new car, replacement of major appliances, a new roof, and college tuition), and 10 percent for long-term retirement planning. Using this formula can allow you to avoid all conventional bank and credit card debt, and save tons in interest and fees. My husband and I have used it in our own lives for decades, and we’ve taught it to all our children and grandchildren.


Do you know what your retirement account will be worth on the day you plan to tap into it? Most people don’t have a clue. But it doesn’t have to be that way. More than 500,000 Americans are using a savings method I call Bank On Yourself to build real wealth, safely, and predictably. This method uses specially-designed, dividend-paying whole life policies that grow by a guaranteed and pre-set amount every year. Using this method, you can know with certainty the minimum guaranteed value of your plan in any given year and on the day you retire.

There’s also another type of dividend-paying whole life insurance policy designed for people between the ages of 60 and 85. It’s still a dividend-paying whole life policy but you only pay a single one-time premium for it. I call it a Bank On Yourself for Seniors Plan.

As with a Bank On Yourself plan, both your principal and growth are locked in, so your policy will not go backwards when the markets crash. Such policies can enable you to withdraw 5-6% of the amount you put in every year for life, and still leave a legacy to your loved ones. And because you put in a lump sum, rather than making periodic premium payments, that money will go to work for you immediately.

If you’re between the ages of 60 and 85, such a plan may be right for you. It gives you safety for your money, and a guaranteed growth — more than what you get with today’s CDs, savings, or money market accounts, which have been losing value every year to inflation. These plans are also designed to perform better every year. And no skill, luck, or guesswork is required to make that happen.

Financial security expert Pamela Yellen is author of the New York Times best-selling book, The Bank on Yourself Revolution: Fire Your Banker, Bypass Wall Street, and Take Control of Your Own Financial Future, and Editor-in-Chief of The Women’s Financial Edge ( Pamela investigated more than 450 financial strategies seeking an alternative to the risk and volatility of stocks and other investments, which led her to a time-tested, predictable method of growing wealth now used by more than 500,000 Americans. Visit: