Monday, August 10, 2009

PBS presents Ric Edelman and "Rescuing Your Retirement"

Ric Edelman presented “Rescuing Your Retirement” on WETA PBS Monday Aug. 11. The link is here .

It requires “cognitive thinking” and understanding the difference between “effectiveness” and “efficiency.” He presents many riddles and puzzles where people ask the wrong question. Future wealth is the object of the chess endgame here.

Make the maximum contribution to your IRA at work, and don’t convert to Roth, he says. Think long term (Suze Orman says that, too). Even if the stock market falls by half, you will break even.

He tends to ignore the value of real estate that you live in even if you’re not upside down.

He is wary of employers who encourage employees to invest too much in their own stock (“proud papa bias” or “optimism bias”).

He defines "endowment bias" or the "herd mentality" which means "misery loves company". Too many employees "buy high and sell low".

He says that 83% of employers leave their 401K contributions in employers when they leave or get laid off. That's wrong because a company might not be around. It's possible even for a previous employer in which you were vested (5 years or more) to have money that you have forgotten about; it may pay to check the owning company today and try to track it down!

He says keep your return expectations reasonable, to keep your risk within bounds.

Ric Edelman has a website here. There is an Elder Financial Care Free Report.

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