Retirement (I.R.A.) Deadline Looms

I.R.A. and Retirement Plan deadlines in two weeks !

At this time, it's probably a good bet that you're working away at your income taxes. Every year, it seems like an increasing chore to get all the papers in order, then decide if you can get-r-done yourself, or hire a tax preparer to make the numbers "dance" - while hoping for a nice refund.

In all this paper-shuffling, let's not forget the "free lunch" (well-almost) that the tax code offers us; contributing to or establishing a retirement account to lessen our taxable income. This year's deadline for the 2011 tax year IRA contribution is April 17th*, fast approaching. A prior blog covered some of the account growth you could achieve by regularly contributing  to your retirement account every year. You can view that at: http://moneyruminations.blogspot.com/2008_03_23_archive.html The IRA contribution limits are $5,000 per year, and $6,000 for those over age 50.

A few additional actionable points on this topic that may help you:

* Run your tax return with and without the IRA contribution to see how much you will save in taxes, then determine if it is worthwhile to contribute to 2011, or to designate 2012 for the pay-in. You can contribute to both years from January 1st thru April 17th) If your income was low (out of work, etc.) in 2011, you may wish to split your contribution into 2011 and 2012, depending on your income forecast for 2012.

Markets Hit Speed Bump - Retirement Planning Study

Retirement Income Planning - Market Linked CDs
(Risks you face in funding your retirement income)

The financial markets hit a rather nasty speed bump yesterday, as the overnight (Monday) sell-off in the Asian markets moved West into Europe and then onto our shores. Foreign markets fell about twice what we experinced (Dow off 1.4%, SP500 down 1.6% and Nasdaq off 1.4%). Financial stocks, which led the market's rather robust 2012 start, suffered 1.5% to 2% lower. Still one day's action does not dictate a trend, but it bears watching closer. Commodities followed stocks down moreso, but bonds gained some steam as interest rates fell. We are busy watching the charts and allocating to cash or stronger market areas. Your portfolio positioning is ever important now, since you no doubt have some gains to crow about this year, and you may need a strategy to hold onto a few of them. Today prices are back up 1/2% or so. Gold and silver up also.

Stock Market Doubles since 2009.

The stock market hit the level of 13,000 last week, and that marks a double in price from the bear market lows registered March 6, 2009 around Dow 6,500. With such rapid movements and swings in stocks prices, this causes people to overeact and emotionally make decisions that are harmful to their finances. Question: what were your thoughts back in late 2008-early 2009?  Did you sell, buy, allocate money to cash, reballance to a pre-determined allocation across stocks, bonds and cash? Or did you have the nerve and fortitude to just stay put and not worry about it? I reported last blog that bonds and cash do deserve a portion of your investments, especially if your are nearing retirement age. The "safe money" strategies that I've written about should be considered seriously: we never know when the next 30% - 40% - 50% decline in stocks will start, and it would be VERY ill-timed to start your retirement income plan at the depths of a nasty market bottom. Being married to your spouse is great, but being "married" to the stock market with too much risk could result in a nasty financial divorce.

Market Update; A Good Start to 2012

Hello and happy belated New Year investors and savers:

The last quarter of 2011 provided some relief from the drubbing of about 15% in the stock market’s third quarter, as share prices rebounded about 11%-12%. That still left prices basically unchanged dating back to the early August level before the USA’s credit ratings’ downgrade.The main market-related, but non-economic story in my opinion was the off-the-charts volatility of stocks and bonds. I reported on the crazy swing in stock prices during the third quarter in my blog post of mid-November.

Our stock market here in the USA strengthened its engagement and ties to the European mess playing out on the world stage daily; let’s pray a marriage proposal isn’t imminent. In 2011, foreign bourses fared much worse than their North American counterparts. The scoreboard: USA: +2.11% on the S&P 500 Index, Canada, -11%, Latin America, -22%, European region, -15% (the best performing markets there were Ireland, -1% and the U.K., off 6%). Asia and the Pacific region pretty much followed along on the downside: Pacific region, -18% (Indonesia and the Philippines were leaders here, up 3% and 4% respectively); Japan and China down 17-20%). The fear in Asia: they export big time to Europe and the U.S. so our slowly recovering demand-based economy has hurt their pocketbooks also. Does any of this make you feel any better? What worked best, in hindsight here on U.S. soil, was to shun stocks and pile into bonds.
 
Consumer prices (inflation) headed higher in 2011; the final tally was +3.0% up sharply from +1.6% for 2010 – hurting or at least hampering domestic spending, not to mention your dollars worth less even if you spend nothing. “Invest in inflation, it’s the only thing going up", Will Rogers once said. Employment, the chief driver of happiness and consumer confidence now-a-days, remains stubborn at 13.3 million folks jobless, or 8.5% (luckily 141 million still punch in for their daily grind).