Streetwise: Invest wisely if you want to retire

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Unfortunately, many of you have been tempted to fold your investment tent, a desire brought about in part by Wall Street's seemingly unending lack of forthright behavior. Before doing so, remember that the Street's antics do not directly affect corporate performance.

Too often the specter of the unknown can be a driving force that strips away logic and lowers expectations, thereby creating bargains for those astute enough to see through the emotional hysteria that so often envelops the Street.

Therefore, it is no real wonder that so many people are caught up in a variety of financial difficulties, whether it is falling victim to a Ponzi scheme, investing in techniques beyond their skill level, or simply following poor financial advice.

Surveys have shown that a third of all adults have no nonretirement savings. And a quarter of all adults have no savings for retirement. One in 5 people have said they can never afford to retire. If you really want to put off retirement until you can "call in dead," then forego an intelligent investment strategy.

One of the great retirement myths, assuming you can retire, is that upon retirement you no longer have to pay taxes. Sorry, but the Uncle's tax collection department never sleeps, much less retires. Add in the Pollyanna expectation that just having a portfolio, even if it is unattended to, will save your bacon and there is trouble in the Land of Oz.

Compounding is indeed a powerful force if you let it work in your favor. However, failing to account for and accept market volatility has taught many would-be investors a bitter lesson. Volatility is not a reason to abandon your portfolio or engage in high turnover of your investments.

Intelligent investing will always do well against the symptoms of "I will never be able to retire," while greed will restrict even the best of intentions. Moreover, there is the belief that Wall Street is the answer to the symptoms of below-average income and above-average spending. That lack of foresight lends itself well to the work-until-you-die lifestyle.

Oh, while you are deciding about the need for starting or adding to an investment program, keep in mind that the upper range estimate of out-of-pocket medical expenses in retirement for a 65-year-old couple is between $235,000 and $376,000. Those figures double for a couple with above-average prescription needs and only Medicare and Medicare supplements. You might want to consider a larger piggy bank.

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Lauren Rudd is a financial writer and columnist. Write to him at LVERudd@aol.com


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