This Retirement Strategy can be Hazardous to your Cash Flow

I was out of town late last week and was at a function Saturday. A friend of mine had retired in 2000. She had diligently saved for retirement by investing in American Funds. The strategy was one that every investment advisor in America has been told was Great for our clients. The client saves and then when retirement comes they take out about 3-5% every year for a wonderful, prosperous, retirement. Meanwhile your principal continues to grow and Steve Mertz will be running in the Olympic Games! 🙂 Sorry to put this myth to rest-this strategy can blow up in your face! Fortunately, my friend also had a monthly pension to draw upon. She realized that her funds were only making about 1% per annum, remember the bear market of 2000 and on? Meanwhile, she was taking out 5%-the math did not add up and she stopped distributions. I don’t blame American Funds-it could be Vanguard or Fidelity. This strategy has the potential to cause you great harm and I would urge you to focus on Cash Flow if your portfolio is under $2 Million dollars. Build your base first then we can talk about those Hedge Fund strategies. Have a great week!

Leave a Reply