Financial Planner: Another 2008-style Economic Disaster
Could Happen Again, Suggests New Kind of Diversity

While the world is still feeling the long ripples of the economic meltdown that began six years ago, our economic institutions remain "too big to fail" - at least in the minds of  millions of retired Americans and those soon to join their ranks, says veteran financial advisor Curt Whipple.

"That's what we see when we review their retirement portfolios," says Whipple, a Certified Wealth Strategist, Certified Estate Planner and CEO of C. Curtis Financial Group. He recently published "Retiree Lifeline! How to Get Government Out of Your Pocket," (ccurtisfinancial.com), a retirement planning guide.

"I see it all the time: a new client comes in with what they believe to be a 'diverse' portfolio. While it may be diverse in terms of Wall Street holdings, a solid retirement plan also requires diversity outside of a system that's 'too big to fail,' which could fail yet again."

When Wall Street falls, it shouldn't mean that Main Street must as well. Whipple outlines the three kinds of money retirees should have available for enjoying the golden years with peace of mind.

• Red money ... can be defined as that which is tied to Wall Street, by far the most popular kind of investment, including stocks, bonds and mutual funds. "I've been looking at the accounts of new clients for nearly three decades, and on average, 92 percent of their retirement plan is based in these investments," he says. "That's risky, especially as you get closer to retirement age or once you retire. You don't want 92 percent of your retirement premised on that kind of potential volatility."

• Blue money ... is often referred to as "alternative investments," which typically include Real Estate Trusts (REITS), equipment leasing programs, precious metals such as gold and silver, high grade rare coins and collectibles. "This 'color' of money has been an important portion of the pie for success in my clients' investments; they were essentially unaffected by our recent economic collapse because they were so well diversified." This is a highly advantageous part of a portfolio because it historically creates good income with a low correlation to the stock market.

• Green money ... is accounts that come with a guarantee of some sort. They are either backed by the FDIC, the Legal Reserve System, which is supported by the insurance industry, or insurance companies themselves. "Not all wealth is created equally, and this is the safest kind of money you can have in your retirement plan," he says. Green money includes investments in one's portfolio that have guarantees to not lose one's principal and, sometimes, one's earnings.

"Investment in Wall Street should be much lower for those who are either retired or are about to be retired," Whipple says. "Depending on a person's age, a good investment portfolio could include about 36 percent red money, 32 percent blue money and 32 percent green money."

About Curt Whipple, CWS, CEP

Curt Whipple, Certified Wealth Strategist (CWS) and Certified Estate Planner (CEP), is Chief Managing Partner at the C. Curtis Financial Group, which he formed in 1986. Since then, Curtis Financial Group has counseled and advised individuals and corporations on their financial goals and decisions. Whipple is a nationally recognized speaker.

Extension cleared Senate procedural hurdle earlier today

Washington, D.C. - Congressman Dave Loebsack released the following statement after the Senate cleared a procedural hurdle and is set to vote on extending unemployment benefits that expired last month. Loebsack joined a number of his colleagues in calling on the Speaker of the House, John Boehner, to address the expiration of the benefits.

"At a time when many Iowans are still struggling to find work, I am pleased the Senate took this action to extend unemployment benefits. Now it is time for House leadership to do the same and bring this bipartisan legislation to the floor. It is beyond irresponsible that these working families have had to face the possibility of not being able to feed their families or keep the heat on this winter. These benefits provide a critical lifeline to individuals and families who have been hit hard by these difficult economic times. As someone who was raised in poverty, I know what it is like to sit around the table each month and wonder how my family would make ends meet. The House needs to act now."

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Floor Statement of Senator Chuck Grassley

Nomination of Janet Yellen to be Fed Chairman

Delivered Monday, Jan. 6, 2014

Over the past five years the Federal Reserve has pursued unconventional and unprecedented monetary policy.  As vice chair of the Fed, Janet Yellen has been a strong proponent of these policies.  As chair, she is likely to continue these same easy money policies with the same, if not more, vigor than her predecessor.

I have deep concerns about the long-term effects of pursuing these policies.  Historical evidence suggests that failing to rein in easy money policies on a timely basis risks fueling an economic bubble or even hyperinflation.

It is true that one of the lessons learned from the Great Depression was that an overly tight monetary policy in a recession risks economically debilitating deflation.  Thus, understandably, when the recession hit in 2008 the Fed sought to avoid the mistakes of the past by lowering interest rates to encourage investment.  However, this expansionary monetary policy cannot continue into perpetuity without causing real and lasting damage to our economy.

Just as we should not repeat the mistakes of the Great Depression, we need to be careful not to repeat the mistakes that fueled our recent recession.  Let us not forget that our current economic stagnation began with the bursting of the housing bubble in late 2007.  A housing bubble fueled by rampant speculation that was driven, in part, by historically low interest rates maintained by the Fed between 2001 and 2004.

Yet, once again we see the Fed embarking on a policy of sustained historically low interest rates.  The Fed has now maintained the Federal Funds rate essentially at zero for over five years.  What may be the future consequences of this policy?  What new bubble will arise?  At this point, I do not think anyone can answer these questions definitively.  But no one can deny that the risks are real and could be devastating.

The Fed though has not just sought to maintain record low interest rates.  With its traditional monetary tool tapped out, the Fed has turned to a less conventional and more aggressive program in an attempt to jumpstart our economy and lower unemployment.

The Fed is now engaged in an open-ended policy it has termed quantitative easing.  Essentially, this is a fancy way to say the Fed is flooding the economy with trillions of dollars through large purchases of mortgage-backed securities and longer-term Treasury securities.  As a result of this program, the Fed has seen its balance sheet more than quadruple from around $800 billion to nearly $4 trillion.  Vice Chairman Yellen has not presented a plan to Congress on how the Fed plans to deal with this issue.

While I welcome the news from the Feds' December meeting that it intends to reduce the monthly purchases, I fear it may already be in too deep.  It remains unclear how the Fed will be able to go about unwinding its nearly $4 trillion balance sheet without spooking investors.

The stock market has become addicted to the Fed's easy money policies.  This has led one notable investment advisor to question whether the Fed will ever be able to end the quantitative easing program.

While the stock market has become addicted to easy money, the benefit to Main Street has been questionable at best. Unemployment remains high, bank lending remains tight, and savers discouraged.

While the benefits to Main Street remain unnoticeable, Main Street most certainly will feel the pain should the Fed carry on its easy money policy for too long.

For an example of what Main Street could be in store for, one need look no further than the late 1970s and early 1980s.  The easy money policies of the 1970s intended to spur employment resulted in stagflation, a period of hyperinflation and high unemployment.  During this period unemployment topped 10 percent while inflation exceeded 14 percent.

The experience of the late 1970s and early 1980s made it clear that once you let the inflation genie out of the bottle it is very difficult to stamp it out.   After suffering years of stagflation, Americans were then subject to the pain of unprecedented interest rates as high as 20 percent just to get hyperinflation back under control.

Statements by Ms. Yellen indicate she would be open to inflation exceeding the fed target of 2 percent as a means to achieve full employment.   While achieving full employment may be a noble goal, the Fed has a dismal record at being able to produce sustainable job creation through expansionary monetary policy.

While inflation may aid employment in the very short term, our experience with stagflation in the 1970s shows this tradeoff falls apart quickly as people's expectations change.  Sustainable job growth comes not from inflation, but price stability that promotes long-run economic growth.  We need a chairman focused on a strong dollar and low inflation.

My concerns about the Fed's easy money policies and inflation led me to vote against Chairman Bernanke for his second term at the Fed.   Because it appears that Ms. Yellen will continue to pursue these misguided policies, I cannot in good conscience vote in favor of her confirmation.

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Financial Advisor Shares Steps Everyone Should Take in 2014

For many baby boomers looking to retire in the next few years, the biggest worry is not whether or not they can retire, but if they'll outlive their savings.

It's a valid concern: One of every four people turning 65 today can expect to live past their 90th birthday, and one in 10 will live past 95, according to the Social Security Administration.

For a married couple, there's a 58 percent chance that one of them will live to 90.

With 10,000 boomers turning 65 every day, according to the Pew Research Center, it's something on the minds of many Americans.

"I went into this business because I hated seeing people who'd followed the rules - saved money in a 401k, put their kids through college, gave to charity - get to retirement and find they didn't have enough to sustain them for more than a few years," says Andrew McNair, founder and CEO of SWAN Capital, (SWAN-Capital.com), and author of "Don't be Penny Wise & Dollar Foolish."

"It's not enough to have a certain amount of money in your portfolio; you want to have a guaranteed check coming in, in addition to your investments."

Whether you're years from retirement or planning for it now, McNair says these three New Year's resolutions will be the best you ever made:

• Resolve to plan for expenses in retirement to equal or exceed your expenses today. Many people assume their expenses will decline once they retire - they forget that they're going to have a lot more free time to do what they love, McNair says. "What are your dreams? Will you want to travel? Take up a new hobby? Meet friends for golf two or three times a week? Those likely are going to be expenses you don't have now," he says. Also, once you retire, things don't magically last forever. The rug in the dining room, the fridge in the kitchen - eventually they'll need to be replaced or repaired. Also, as you age, medical expenses either appear or increase. Sit down and think about what your ideal retirement looks like, and presume that it will be for at least 30 years. Make a list and take a guess at what those activities cost - even if your retirement is years away. How much money will you need coming in each month or year?

• Resolve to get most of your investments out of tax-deferred plans. If you're working for a company that provides a match for 401k contributions, by all means, contribute up to the maximum match. "That's free money - you'd be crazy not to take advantage," McNair says. But investments that can be more strategic in terms of taxes should also be considered: Roth IRA, municipal bonds, life insurance or real estate. No one expects taxes will go down - they'll be going up. Uncle Sam already has a lien on your IRA or 401(k); don't let his lien, the taxes you'll owe, continue to grow. Go ahead and pay now, and your future retired self will be glad you did.

• Resolve to have a portfolio that generates a steady or guaranteed paycheck. The ideal financial security for retirement is having a guaranteed income that increases with inflation, McNair says. "I suggest planning for an income that meets or exceeds your annual income now so, for example, if you'll be getting $1,000 a month from Social Security at age 62 and your current income is $4,000 a month, you need to have a plan to guarantee $3,000 a month to cover that gap." Annuities and life insurance are investments that may provide an income you cannot outlive, so consider them for at least part of your portfolio. "You don't want them to make up 100 percent of your portfolio, but they should provide the foundation," McNair says.

It's important to start thinking now about where you want to be in retirement and what combination of investments will ensure you have the lifestyle you want for as long as you live, he says.

"At 65, you don't want to be making risky investments because you're panicking about not having enough money."

About Andrew McNair

Andrew McNair is founder and CEO of SWAN Capital, specializing in Wealth Management and Retirement Income. After earning a degree in business administration/finance, and with two books on his financial strategies already published, McNair launched SWAN later that year. At 22, he was hosting a radio show, What Your Money Would Say, which provides financial guidance to retirees. McNair is also the founder and CEO of the Veteran Benefit Project, which works with veterans and their families at no charge to ensure they receive all of the benefits they're entitled to.