Along with about 50 million others, I’m a product of Generation X. I had a Dorothy Hamill haircut, spent my weekends at the roller-skating rink, and grew up watching Madonna on MTV (back when she was more controversial and they actually aired videos). And while there are plenty of characteristics—not all of them positive—broadly attributed to the “slackers” and “latchkey kids” of my generation, we’re generally turning out OK.
Many of my fellow bloggers have written about the recent turmoil in the markets. Rather than add my two cents to what has already been very well articulated, I’d like to take a different angle.
Have you noticed anything different about the ads on the radio, on television, or in the papers lately? Not long ago, I heard a radio ad inviting listeners to attend a seminar sponsored by the author of a best-selling “how to” investment book. The ad promised that attendees would be able to “forget about diversification, avoid mutual funds, and eliminate 401(k) contributions.” Another ad played on fears by leading with a “Worried about America?” theme and encouraging readers to send for a report promising to identify the “one sure thing for the second half of 2011.”
I have to admit, I can’t live without my smart phone. The ability to be constantly connected to my friends, take care of e-mails in between other tasks, or check the news from anywhere is an incredible convenience. It’s also led me to open random apps almost compulsively throughout the day.
I mean, clearly, everyone needs to know the weather in five random locations each hour, right? And I’m not alone. My generation is addicted to our devices.
In my January 5 post, I wrote about big developments shaping retirement in 2011. In this and an upcoming post, we’ll look at simple retirement planning tactics individual investors may want to consider.
1. Savings rates. There’s a widespread myth that you can somehow reach a secure retirement by tinkering with your portfolio. Portfolio management is important, of course, but it’s priority number 2 or 3. Above all, the key to financial security in retirement is adequate savings.
I’ve mentioned in several previous posts that the anxiety about 401(k) balances has been largely overstated, in part because of the beneficial effects of ongoing contributions and diversified portfolios. This point has come across as Pollyanna-ish to some of you, a point that I can sympathize with, even though I largely disagree with it.
However, I am no Pollyanna about retirement risks, and want to spend a moment discussing what I view as the most important real risk embedded in your retirement savings account: the possible toxic combination of unemployment and market losses.
