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The Numbers Don’t Lie

By Bill Spetrino   |   Friday, 06 May 2011 07:03 AM

Unlike most folks who read financial news and have little to no understanding of it, I have reached financial independence.

I didn't inherit any money, win the lottery or earn large sums of money by working.

I did, however, build a Dividend Machine, which is why Newsmax CEO Christopher Ruddy hired me to write a newsletter.

What I find amusing is that many people who write about investing aren't financially independent themselves — and worse yet, many have either a weak strategy for reaching it or no plan at all.

Editor’s Note:
Warren Buffett's Obscure Strategy to ‘Retirement Prosperity’ — Click Here

Recently, I came across the following information from a Wells Fargo survey.

• Respondents predict they will need a nest egg of $300,000, but have saved just $20,000 of that amount for retirement (figures throughout are medians, the midpoint of responses). They expect to live on retirement savings for nearly two decades (19 years), while planning to spend 10 percent of their nest egg every year.

• The survey found that 72 percent of middle-class Americans between the ages of 25 and 69 expect to work through their retirement years.

• Three in four middle-class Americans expect to work through their retirement years – and nearly four in 10 (39 percent) will need to work in retirement for monetary reasons.

• Roughly one in 10 Americans (8 percent) say they never plan to retire. The survey found that 40-somethings are dramatically less likely to have pensions than older workers, and economic strains are most likely to be causing tension in their households. A total of 80 percent of them expect to work through retirement.

• The survey also found that only 33 percent have a detailed written retirement plan.

• A similar number (37 percent) don’t know how much they’ll need and/or can’t estimate how long they’ll be able to live on what they have saved.

• Yet more than half (58 percent) are confident that they’ll be able to retire comfortably.

• Almost two-thirds (62 percent) say they have not changed their retirement savings rates in the two years since the recession began and only 16 percent have increased their savings rates.

In plain English, most people don’t have a detailed retirement plan.

What’s stopping them?

Most say they don’t know how to pick someone they trust. That is valid. It’s actually simple. Find someone who has actually done it.

Competence and transparency are important. How do you know for sure? You need to ask the prospective financial adviser how much their annual dividend income is from their investments and also their age.

Someone 75 years old with only $15,000 of annual dividend income isn't better than someone who has $85,000 of dividend income and is 45 years old.

Dividends are the first sign of safe, high-yield value investing. Those who have built a Dividend Machine that more than pays their living expenses before age 55 has a very good idea on how to beat the stock market and, no doubt, practices value investing.

Dividends are the sure sign of someone who actually practices value investing and just doesn’t talk about it.

If you adviser isn’t willing to show you his or her tax return, there is probably a reason why.

Please e-mail us at dividendfeedback@newsmax.com with your comments.
 
About the Author: Bill Spetrino
Bill Spetrino is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of the Dividend Machine. Discover more by Clicking Here Now.

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BillSpetrino
Unlike most folks who read financial news and have little to no understanding of it, I have reached financial independence. I didn't inherit any money, win the lottery or earn large sums of money by working. I did, however, build a Dividend Machine, which is why Newsmax...
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2011-03-06
 

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