Retirement Planning

History of Pensions

May 26, 2015
Ahh…retirement. On a personal level, we save for it, plan for it, and dream about it. But did you ever wonder how the whole notion of retirement and funding it came about? How it has changed over time? This essay was originally published in Muhlenkamp Memorandum, Issue 105 as the first essay of the series, "The "FRIDAY FOCUS" on Retirement, by Susen Friday

Pension Plans —Types and Characteristics

May 26, 2015
In these times, when we are living longer, healthcare costs are rising, and the future of Social Security is uncertain, it is imperative that people are aware of retirement plan options—defined benefit plans, defined contribution plans, and cash balance plans. This essay was originally published in Muhlenkamp Memorandum, Issue 106 as the second essay of the series, The “FRIDAY FOCUS” on Retirement, by Susen Friday.

A Primer on IRAs

May 26, 2015
Individual Retirement Accounts (IRAs) were originally known as Individual Retirement Arrangements. The concept was launched in 1974 with the passage of the Employee Retirement Income Security Act (ERISA). The idea was to make some sort of retirement savings vehicle available to those workers not covered by a qualified pension plan. This essay was originally published in Muhlenkamp Memorandum, Issue 107 as the third essay of the series, The “FRIDAY FOCUS” on Retirement, by Susen Friday.

Participant and Sponsor Challenges

May 26, 2015
Believe it or not, one of the biggest hurdles that employers have is encouraging employees to save by participating in the plan! Some employees feel they cannot afford to participate because of other financial demands. This essay was originally published in Muhlenkamp Memorandum, Issue 108 as the fourth essay of the series, The “FRIDAY FOCUS” on Retirement, by Susen Friday.

Planning for a Successful Retirement

May 26, 2015
"How do you see yourself in retirement?" is a question similar to "What do you want to be when you grow up?" In essence, retirement is like a new beginning, so the question must be answered. This essay was originally published in Muhlenkamp Memorandum, Issue 109 as the fifth (and final) essay of the series, The “FRIDAY FOCUS” on Retirement, by Susen Friday.

Social Security Revisited: A Plan to Fix It

January 20, 2001
This essay is a follow-up to Social Security by the Numbers. “How much did I pay into it?” and “What can I expect to get out of it?” In order to address these questions, we need to review Social Security in the aggregate—that is, what does the whole program look like?

Ron’s Reading List

January 5, 1998
Ron's reading list for life and investment fundamentals includes recommended books on the topics: the way things work; why you’ll never understand the other sex; values; the evolution of moral standards; why global warming is unlikely; the difference between modern liberals and conservatives; how the best and the brightest can be totally wrong.  Recommended authors include: McCaulay, Wanniski, Tannen, Pirsig, Browning, Sowell, and Halberstam.

Problems With Investing for Income

October 20, 1996
In “Estate Planning for Generations,” we began a discussion on the effective integration of good investing and good estate planning.  In this essay, Ron shows how investing for “income” is flawed. What investors should do is invest to grow their assets. Though it may seem like semantics to some, it is a fundamentally different approach to investing and will lead to better investments and lower taxes.

The Fundamentals of Life Insurance

January 2, 1996
As professional investors our perspective and conclusions differ from the conventional wisdom in several areas. One important area of difference is life insurance, which plays an important part in many financial plans. The following is a discussion of life insurance from an investment perspective.

Estate Planning for Generations

July 1, 1995
We wrote an essay titled, “Fund Your IRA Every Year, or How to Retire Wealthy by Driving Used Cars.” We could have called it “How to Get Started on the Road to Wealth.” Once started on that road, there is an ongoing need for intelligent investment management, which is a topic we address in most of our essays. But there is also a need for an intelligent finish, and for the management of assets you have accumulated but are not likely to spend during your lifetime. This endeavor is called estate planning...

Fund Your IRA or How to Retire Wealthy by Driving Used Cars

April 2, 1995
Recently, I commented to a friend that most investors buy stocks the way teenagers buy clothes. He responded, “How should they buy stocks?” Being a slow thinker, I didn’t have a ready answer then, but I do now. Buy stocks the way you would buy used cars. The truly amazing fact is, if you also buy used cars, you can get rich on these two actions alone. It is not hard to save $2,000 per year by driving a used car.

Beware of Good Yields

April 20, 1993
This essay, written in April 1993, was published as investors had just come through a period when many of the risks of fixed-income securities had become apparent, but this did not stop them from continuing to look for high yields in fixed-income securities. This essay explains the yields and risks of fixed-income securities so that investors can know what to expect and what to watch out for. Remember, if it seems too good to be true, it probably is. Look for the hidden risks.

Social Security by the Numbers

October 20, 1992
As with all government programs, the numbers are much more understandable when viewed on a per-person or per-family basis.  The numbers in this essay are from 2004. The Social Security Web site states that a single person retiring in 2004 at age 66, who had always paid in the maximum, would receive $21,924 per year. A married couple with a nonworking spouse (“Family”) would receive $32,880.

Mom: The Squeeze On Your Income Will Continue

January 20, 1992
Mom: since November 1990, you’ve seen the interest rate paid on one-year bank CDs fall. Many of your friends are waiting (hoping) for these rates to go back up, but it isn’t going to happen. To understand why, you really need to look no further than the actions of your children. Today your children are paying down their debts and refinancing their mortgages, often for a shorter term.

Basic Financial Maxims I Want My Kids to Know

July 1, 1991
“There is No Free Lunch.”—Milton Friedman...There’s no free income either....The essentials of life are cheap. Only the luxuries are expensive....A bad product is always a bad deal. Don’t buy a car or appliance with a poor service record. Don’t buy a house with a cracked foundation....A good product can be a bad deal if the price is wrong. How do you know a good price? Shop around and be willing to walk away from any “deal.”

Wake Up America – Houses Don’t Make You Money!

January 1, 1987
In the 1970s (when inflation rates were higher than mortgage rates), one of the best investment strategies was to borrow money. The easy way for people to borrow money was on real estate. It worked in housing, in farmland, and in commercial real estate (which was also an effective tax shelter). People continued to believe in the strategy through the 1980s, even though the economic climate had reversed in roughly 1981. Ron wrote “Wake Up, America—Houses Don’t Make You Money!,” in July 1987, to point out that change.

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