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The Palm Beaches' News & Talk
 
 

Brian Mudd

How to produce retirement income, If you disagree with the direction of the country you're in the majority, Cuban nails it on Sterling & more:

 

Cheat Sheet Q&A:

 

Today’s topic:  Producing enough income in retirement to live on

 

Here’s today question:

Brian,  I’m a 66 year old male (widowed) with some money in a SEP IRA and some in a
Roth.  I get a monthly payment from S.S. that is not enough to live on.  My question is if I should take money from Roth first or SEP?

 

Bottom Line:  Ok so first let’s compare and SEP, or a Simplified Employee Pension, to the Roth IRA account…

 

For the purposes of the IRS, your SEP and Roth IRA are both accessible to you without penalty as you’re over 59.5 years of age.  That being said there can be a subtle difference in which you would prefer to draw from based on the taxable nature of the returns in your SEP vs. your Roth IRA. 

 

Roth IRA gains are non-taxable meaning that you can draw down on that account without creating a tax event.  In an SEP, investment gains earned are taxable in the year in which you make withdrawals.  You may also want to weigh the performance of the investments you have in each account.  If your investment gains have been underperforming in one account as compared to the other perhaps you’d want to remove funds from the underperforming account.  But there’s a bigger picture approach I’d like to suggest. 

 

I don’t like retirement plans that rely on principal reduction unless you’re of great wealth.  Here’s an exercise:

 

Add up the principal balance in both of your retirement accounts.  Multiply that amount by 5% ( 0.05).  Divide that number by 12.  If that number plus your Social Security income would be enough for you to live on, you should be able to construct a plan based on using your principal to produce ongoing income.  This is a much better method to pursue.  Plans based on principal reduction are races against the clock in which you almost have to hope you die before your money runs out.  That is not a pleasant thought or a plan built for success.  I’ll make a personal recommendation in who can assist in using your principal to hopefully create the income stream you’ll need for retirement.  But if you can help it – try not to rely on principal reduction as a primary strategy. 

 

If you have a topic or question you’d like me to address email me:  brianmudd@clearchannel.com

 

Audio Report:  

 


Target is going to take the plunge into the smartcard arena:

 

Bottom Line:  This is crisis management 101.  First stop the bleeding.  Second take the crisis and turn into a positive if you can. 

 

While many retailers have turned their customers into victims by having personal information and/or credit and debit card information stolen from them, none has compared with the Target fiasco. 

 

By the time the dust settled on the Target card theft that occurred in November and December last year, more than 40 million Americans were affected and in hard cost alone Target has paid out more than $1 billion to make consumers and credit card companies whole (and provide additional ID protection service to victims).  There’s no telling how much damage was done from a marketing perspective.  So having accomplished step one in crisis management, Target has announced their plan to address the second. 

 

Target announced that in early 2015 they will move to smart cards (chip and pin encrypted cards) that have caught on in Europe and virtually ensure that your card number can’t be swiped and used illegally.  It’s an extremely expensive technology to implement which is why it’s been a slow go in the US but with Target already having lost so much it makes perfect sense.  Target will go from the poster child for what can go wrong to the leader in card security. 

 

Audio Report: /span>

 

 

Mark Cuban nails it - on the Donald Sterling Situation:

 

Bottom Line:  The NBA jury (the commissioner) has spoken and Donald Sterling, the Las Angeles Clippers owner, will be banned for life from anything that has to do with the NBA, fined $2.5 million and will be pressured into selling his team.  As I’ve outlined in previous entries, Donald Sterling has a lifetime track record of engaging in bigoted and racist conduct.  He’s not a good person.  But the implications of what just happened are chilling for the principal of what was just established.  After the punishment was announced yesterday all that anyone who commented on the situation could say was how terrific it was…  Save one… 

Quotes from Mark Cuban yesterday in an interview with the AP:

 

"Again, there's no excuse for his positions. There's no excuse for what he said. There's no excuse for anybody to support racism. There's no place for it in our league, but there's a very, very, very slippery slope."

 

“Regardless of your background, regardless of the history they have, if we're taking something somebody said in their home and we're trying to turn it into something that leads to you being forced to divest property in any way, shape or form, that's not the United States of America. I don't want to be part of that."

 

Amen.  Donald Sterling is a piece of you know what.  If the owners want to vote him out of ownership that’s fine (but as an aside why did they wait until this situation rather than acting a long time ago since his racist tendencies have been well documented since 1983?).  What’s troubling though is precedent.  Private speech, whether the message is noble or not, can be used to force you out of access to assets you legally own and to divest them altogether.  As Cuban pointed out…  It’s a very slippery slope. 

 

Audio Report:

 

 

Sell in May and go away, right?:

 

Bottom Line:  So with May nearly upon us it’s time for the obligatory “should you sell in May and go away” stories from the lazy media.  As is so often the case, the conventional wisdom isn’t wise. 

 

I went back to 1950 and found the following: 

 

  • Number of years in which May resulted in a positive stock market:  36
  • Number of year in which May resulted in a negative stock market:  28

 

In other words the stock market has been higher 56% of the time in May.  Now that’s no clear indication of how this May will go but it should serve as a reminder that investment decisions should be made on principal rather than fear, emotion or other non-analytic based considerations. 

 

Audio Report:

 

 

Times really have changed...  If you don't agree with how this country is being run - remember you're in the majority:

 

Bottom Line:  It’s easy to feel as though you’re helpless and this country is headed down a path of no return etc.  Especially if you’re more conservative than most.  With that in mind here are some numbers that will likely make you feel a little better.  If you’re not happy with our direction as a country, you’re part of the majority – even if the media doesn’t seem to reflect that reality.  Here is the current polling data based on an average of all major polls:

 

  • President Obama’s overall approval:  43%  overall disapproval:  53%
  • The President’s handling of the economy:  41% overall approval  overall disapproval:  55%
  • The President’s handling of foreign policy:  39% overall approval  overall disapproval:  53%

 

It’s clear that if an election were held today the results would be different.  Clearly your next

 chance to impact the direction of our country is this fall but know that all is not lost if you’re not happy.  More people are with you than not.  


Audio Report:

 

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