Both Gold and Silver ended the week up with the majority of the moves coming in the last half of the week. From a low of $411.15 on 2/9/05 Gold fought its way up to close at $420.40 for the week. Silver showed real strength by starting from $6.48 on 2/8/05 to close at $7.17. A 10% move to the upside in 4 days of trading. I can well imagine the size of each drop of sweat dripping off the noses of the short sellers this week. One day, they will learn the very real truth about supply and demand.
One of my customers e-mailed me an article this morning that I'm going to attach to this posting which is very powerful. I still haven't figured out how by cutting the funding going into SS is "fixing" it. It seems to me to be very short sighted entrusting those funds to the Wall Street crowd. A juicy stream of revenue just as the market rolls over to the down side for the balance of the year. So not only do the youngsters lose money in the value of the stocks, additionally they will lose the value of the US Dollars at the same time. The daily double. Ouch.
Please take a moment to let this article soak in........... especially #5.
Motley Fool
Wretched Retirement RealitiesThursday February 10, 11:27 am ET By Robert Brokamp
Ah, retirement. A time for travel, hobbies, family, and the "stick sports" (golf, fishing, shuffleboard, and walking along the beach with a metal detector).
Also, $1.25 million. That's how much you'd need if you wanted your savings to provide $50,000 of inflation-adjusted retirement income every year, with a good chance that you wouldn't outlive your money.
We don't mean to tarnish your visions of unfettered free time and leisure activities. In fact, we have written before of
successful retirees -- from people who have retired at age 38 to people who have semi-retired but continue to do work they enjoy part-time. I firmly believe you should keep your dream retirement forefront in your mind -- it'll motivate you to work for that day when you no longer have to work.
But like so much in life, being able to kiss the boss goodbye is a numbers game. Here are some of the numbers to consider as you work for that full-figured retirement.
1. 4% to 6% Let's start with that $1.25 million mentioned earlier. Most studies indicate that if you want your savings to last, you shouldn't withdraw more than 4% to 6% each year (4% of $1.25 million is $50,000). The exact amount depends on many factors, including how long you plan to live. OK, so you can't "plan" your life expectancy, but someone who retires at age 60 and is in good health should withdraw a smaller percentage of assets than should a veteran of World War I (of which there are fewer than 1,000 still alive, though Alfred Pugh, the last wounded veteran of the war, died just last year).
Your withdrawal rate also depends on your other sources of retirement income (Social Security, pension, part-time work). If your other sources are significant, you can look at your withdrawal rate in two ways: (1) You won't need much from savings, so you just take out a little at a time, leaving the rest for emergencies and/or your heirs; or (2) you have other sources of income to fall back on if you outlive your savings, so you can bump up your withdrawal rate.
If you don't expect a huge chunk of income to come from sources other than your savings, then you need to be more conservative with your withdrawal rate -- and more aggressive with your savings rate, if you're not yet retired.
2. $4,400 to $6,600 Given a withdrawal rate, you can apply it to your own savings to see how much retirement income your current savings could provide. This offers a quick snapshot of where you are -- and how far you might have to go. As an example, let's look at a hypothetical saver, using some real-life stats.
The median balance in a 401(k) is approximately $70,000, depending on whom you ask. The median balance in a traditional IRA is $30,000, and the median balance in a Roth IRA is $10,000.
So, let's assume our hypothetical saver has one of each of these accounts, along with the median balances, resulting in a total retirement savings of $110,000. Applying our 4% to 6% withdrawal rate, we get annual retirement income of $4,400 to $6,600. Not a whole lot, is it?
3. $3,300 So, as a nation, we're not saving enough. There are lots of reasons for this, one of which is our unwillingness to forgo current consumption in order to save for a goal that is years -- even decades -- down the road.
However, not saving has a real cost today, at least when it comes to using retirement accounts. The less that is contributed to a 401(k), 403(b), or similar account, the more taxes are paid, since contributions are essentially tax-deductible. Plus, workers who don't participate miss out on the employer match (if there is one).
Again, let's look at an example. If a worker earns $60,000 a year and contributes $6,000 (10% of salary, a good target) to her 401(k), she'll save $1,500 in federal income taxes, assuming she's in the 25% tax bracket (as most taxpayers are). Plus, if her employer matches 50 cents on every dollar contributed to the plan up to 6% of her salary (the most common matching formula), then her employer will deposit $1,800 a year in her account.
Add it together, and you get $3,300 worth of missed tax savings and free money from the boss -- the price today of not saving for tomorrow.
4. 2019 According to the report released yesterday by the Medicare trustees -- folks such as Treasury Secretary John Snow, Health and Human Services Secretary Tommy Thompson, and an economist with the ironic last name of "Saving" -- Medicare's trust fund is now projected to be depleted in 2019. That's seven years sooner than last year's projection, due in part to increased health-care costs, lower tax receipts, and the new prescription-drug benefit (which we were told would cost $400 billion over 10 years during the debate, but will cost well more than $500 billion now that it is law).
According to the report, Medicare represents 2.6% of U.S. domestic gross product. However, since the growth of Medicare costs will outpace economic growth, the program is projected to represent 3.7% of GDP by 2010 and 7.7% by 2035.
What this means is, health care and retirement are linked at the prosthetic hip -- becoming big-ticket, national issues. Comfortable golden years are no longer based just on savings, Social Security, and a pension. Retirement planning now also necessitates health-care planning.
5. $11,448 We're hearing a lot about Social Security these days. Whatever happens to the program, folks will not -- nor never could -- rely on Social Security to fund the retirement of their dreams. The average monthly benefit for December 2004 was $954. That's just $11,448 a year.
Here are some more stats for you, which are even scarier in light of that average benefit: According to the Social Security Administration, approximately two-thirds of seniors get 50% or more of their income from Social Security and about one-fifth rely solely on Social Security.
The stats that matter Here are the most important numbers: the balances in your retirement accounts, how much you're contributing to them or withdrawing from them, and how you've invested them. To see if it's enough, do a dance with our
retirement calculators for a rough estimate. And visit our
Retirement area for more on the best ways to plan for those sunny days.
Robert Brokamp is the editor of the Rule Your Retirement newsletter service.
