Saving Money Won’t Get You to Retirement

Crumpled Dollar

You read it all of the time.  Pop Culture Financial Advice states that all you have to do is save a certain percentage of your income and you will have a great retirement.

Suze Orman who could be the queen of Pop Culture Financial Advice says we’ve been asking the wrong question all along.  “‘How much do I need to retire?’ is a stupid question!” she told TODAY. “The real question is, ‘What is the best way I can save for my retirement?'”

By the way, I respectively submit that none of your questions are stupid.

I am on a mission to save you from Pop Culture Financial Advice.  Saving the right percentage and the method of saving are all important. However, that in itself will not get you to retirement.

Although Pop Culture Financial Advice wants to make everything seem like an easy 2 step process, the reality is that you have to work at anything that you expect success and that includes your retirement.

Achieving your retirement goals is a 4 step process.

Yes Step 1 starts with saving.  However, saving alone will not get you to your goals.

Step 2 involves having an effective investment plan that mirrors your appetite for risk.  That is crucial and often overlooked.

Step 3 is management of those investments.  You need a plan A when the market is going up and a Plan B when it doesn’t go up.

Finally, step 4, you need an intentional plan set up that shows you the amount that you need invested for retirement at the end of each year.  You need to know annually if you are on track or not.

It is a 4 step process that is going to get you to a successful retirement and not a 1 step process.

Unfortunately, Pop Culture Financial Advice has you focused on the wrong things.

For more information on a more balanced approach, check out my financial services and planning site –

Be Careful Listening to Pop Culture Financial Advice

There is a lot of what I call pop culture financial advice being given these days.  What is Pop Culture Financial Advice?  It is advice preached to the masses from the financial services industry to calm fears and reassure investors so they won’t change their investments.  After all, if investors sell mutual funds, mutual fund companies don’t make money.

Most of the time it comes from three sources.  First, it is advice given by financial media with no experience investing or managing money.  Second, it is advice given by people who have no choice but to follow pop culture advice. Finally, the worst is advice given because of a financial agenda.

Here are some popular examples:

You are a long-term investor.  Most of the advice is to reassure you that you are a long-term investor as if being a long-term investor is a strategy for risk.

Never time the market because you will always be wrong.  I would agree that it is tough to pick the lows and the highs of markets.  However, the industry confuses timing with risk management and decision making. You can also be wrong as a long-term investor.  It doesn’t work all of the time for everyone as marketed.

If you are young, take maximum risk because you have time on your side.  In theory it makes sense with one slight change. You take risk to be rewarded.  There is a ratio between risk and reward.  Why would you take risk if the probability was low that you get rewarded?  Why not wait until the ratio is a little more in your favor rather than acting like it is 100% of the time?  Age is not a substitute for thought concerning risk.

Finally, my favorite is the invention of Target Date funds as a way to invest for a life-time. Target date funds are based on your age.  You pick the target date fund that is closest to your retirement date and as you age the allocation of stocks and bonds (in theory) gets more conservative.  There are numerous flaws in this theory of letting age dictate your risk level.  (don’t forget the whole risk and reward ratio)  The more concerning one is that at retirement in a lot of these funds you are still taking a great deal or risk!

Take for instance the 2015 American Airlines Target Date Fund found in their 401 K plan.   It has 52% invested in stocks and 48% invested in bonds.  That allocation in itself seems a little risky to me given someone in retirement.  If that is not bad enough, the types of stocks and bonds are a little concerning.  Of that allocation I found these investments

19% of the portfolio is in international stocks.

4% of the portfolio is in an emerging markets stock index

Said another way, 23% of the portfolio is in some of the most risky stocks you can invest.

9% of the portfolio is in a high yield bond

High yield means low quality bonds.  Once again, high risk for the retiree.

26% of the portfolio is in an inflation protection fund

Inflation?  We are in a deflationary cycle.  That one really left me scratching my head

Following Pop Culture Financial Advice can be dangerous to your financial health. Know your own financial DNA and risk level.  Be comfortable with that and stay true to yourself rather than blindly follow pop culture finance.  If this is a bear market we are dealing with, that pop culture finance will be a recipe for disaster!

If you would like to know a little more about your financial DNA, take the risk analysis and receive a risk analysis at no cost.  Just click here!

One Reliable Indicator that Concerns Me about the Stock Market


In my Shemitah video , I talked about current market patterns and how they are sounding a warning.  Further, the longer that we stay in these patterns, the tougher it will be to get out of them.  These patterns have resulted in large bear market declines.  The question concerning the current stock market is whether we are in a correction (where we end back in the bull market) or we have started a new bear market cycle like 2007 – 2009.

I like to look at long-term indicators for clues as to where we are right now.  There is one long-term indicator that started to turn negative back in November 2014.  Typically this indicator turns negative way before the market does.  It has been a reliable indicator in the past.  Since it is a long-term indicator, it takes a while to develop and once it starts falling (indicating the market is falling) it takes a while to turn it around.  Also, once it starts falling over a long period of time, it is signaling that the market has a ways to go down signaling a bear market could be upon us.

That indicator has really started falling and is exhibiting the characteristics of a bear market.  Grant it, it is still early.  However, it is a huge warning sign.  Let’s take a look at the MACD.  It isn’t as important to understand the mechanics as much as it is to understand what it is saying about the direction of the market.1111



The stock market is at the top of the chart and the MACD is larger and at the bottom.  You can see what it looked like at the beginning of the 2000 and 2007 bear markets.  The MACD stopped going up and reversed direction going down.

Now take a look at today – it is the steep curve and shape of the indicator that is concerning.   If you look at the chart of the stock market, you can see how it responded when the MACD started going down two previous times.  In 2000 the MACD turning down proceeded a -50% loss and in 2007 the MACD turning down proceeded a -57% loss.

So what is the take away?

Are we seeing a correction or the start of a bear market?  The MACD would suggest the latter.  However, it is too early to declare the bull market dead.  I am waiting for one other indicator to confirm the change in direction.  Next week I will write about that one.

If you are concerned about the risk you are taking, take my risk survey.  If you want to talk in more detail about your investments, feel free to call me at 972-386-0384 or email me at  Remember it is only bad news if you are invested the wrong way.

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