Retirement Savings Advice: The One Critical Question You Need to Be Able to Answer About Your Retirement Plan by Pamela Yellen

New legislation intended to increase Americans’ financial security may have the opposite effect for beneficiaries of individual retirement accounts (IRAs). The most critical question people need to be able to answer about their retirement plans is the one that almost no one can answer:

“What will my retirement account(s) be worth on the day I plan to tap into them?”

The answer to that question will determine whether you live out your golden years in financial security, or find yourself constantly scrimping to make ends meet. Yet most people could not answer it if their life depended on it – and your life really does depend on it.

The American Psychological Association consistently finds that money is a significant source of stress for a majority of Americans, with financial stress closely linked to anxiety, depression, insomnia and cardiovascular disease. Studies show that even relatively small stock market declines are linked to early death, illness and fatal car accidents.

Meanwhile, a survey by Northwestern Mutual states that financial security is “the most important attribute of a positive outlook on life. An overwhelming nine in 10 Americans (87 percent) agree that nothing makes them happier or more confident than feeling like their finances are in order.”

Despite that finding, Americans continue to risk much of their retirement savings in the stock market, giving them no control over how much money they will end up with, and the prospect of major losses if another recession hits as they retire. The longest bull markets have ended with a bang, not a whimper. The last two crashes wiped out 50 percent or more of the typical investor’s life savings, just since the year 2000.

While conventional retirement plans such as IRAs and 401(k)s offer no guarantees, there are strategies that allow people to know the minimum guaranteed value of their savings on the day they retire, and at any point along the way. My research investigating more than 450 financial products and strategies led me to a savings method she calls Bank On Yourself that provides guaranteed, predictable growth even when markets tumble.

Are you prepared or planning for your retirement? Share your thoughts or ask your questions below.

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