Corporate bailouts. Higher taxes, Stock market losses, Record inflation, Political revolutions, Real estate crisis, High unemployment, and Soaring commodity prices. These are just a few of the topics that have swarmed headlines already this year. In today’s financial marketplace, whenever the news changes, the economy is right behind. With the economy surging and falling so quickly, it’s hard to know what to think. It’s even harder to determine how these changes will affect you.

It is easy to just not really examine this but its very beneficial to do so.

For instance, you may wonder why I included inflation. Isn’t inflation low? Well yes and no. The numbers reported to us seem low. However, the scale has been changed, with gasoline prices and home prices being removed. Food and clothing is not included in the CPI. Put them into the formula and the CPI is not 3%, but rather it is at record levels. So if you don’t buy gasoline, diesel, food, clothing or own a home, inflation is low. Otherwise, its at record levels.

What does this have to do with your retirement? Perception may make things seem okay, but it takes examining it to really come to a reasoned conclusion.

This is what I encourage you to to. I help people with this. If you have a retirement plan, either one you personally manage or one that is managed for you – give me a call and let me give you my two cents. It won’t cost you anything but a little time, but the payback to you could be significant.

I can be reached at 209-390-1163 or toll-free at 855-MPMYERS. Or, if you’d prefer, send me an email by clicking on the email button to your right.

Michael Myers

The Medicare Advantage Annual Election Period starts November 15th and runs through December 31st.

During this time, Medicare beneficiaries may change prescription drug plans, change Medicare Advantage plans, return to original Medicare, or enroll in a Medicare Advantage plan for the first time.

I am again urging my clients (and potential clients) to return to original Medicare and secure a good Medicare Supplement Policy. Why should a person do this – especially if Medicare Advantage seems cheaper?

There are FIVE very good reasons:

1) The Medicare Advantage Program came into existence when George Bush was president. Although well conceived and intended, Congress has made so many changes to the program that it barely resembles the original intent.

2) Under Medicare Advantage plans, physicians may accept you one week and refuse you the next. Or they could accept your neighbor, but choose not to accept you. This is referred to as “deeming”. This is not a slam on doctors, as a person does not work for free – and they may decide that is exactly what they are being asked to do. So whereas they might do that for someone they have a close relationship with, they may reason that they cannot do this for most people, as they would quickly go out of business.

3) Medicare Advantage Programs are being tweaked every single year, and I have yet to see the changes improve the program. Rather, the changes weaken it and take away. Where this is going should be obvious to anyone. Why stay with a program that one has to constantly evaluate?

4) Original Medicare has worked fairly well since its inception in the mid-60′s. Are their problems? Assuredly there are. But from my viewpoint, much less than with the Medicare Advantage Program or even that which is experienced in the under-65 health programs.

4a) Original Medicare is, in my opinion, still the most stable of all health insurance programs available to a large group of individuals today. The only programs I (might) view as more stable are only available to a select few.

5) By adding the right Medicare Supplement to Original Medicare – a person has absolute control over how they spend their health care dollars. A person can accept some of the risk or have 100% coverage, their choice!

5a) And the best part is … in the long run I still think that a person spends less with Original Medicare and a Good Supplement.

I’m here to help. Call me or email me with any questions you may have.

Michael Myers
209-390-1163

I have talked some about becoming your own banker. This is called The Infinite Banking Concept. This concept requires a shift in mindset. This is because we have all been conditioned to borrowing money. But think about the advantages, 1) no debt, 2) money for retirement, 3) an automatic (and growing) estate, 4) a real retirement without the higher taxes we all expect and 5) and a person saves a LOT of money.

So the concept goes like this: a person has paid off personal debt using this concept. They now purchase their automobiles/trucks using this concept, and yet the money continues to grow. What now?

Now they are in position to take it to the next level. Many things they could do, but one idea is to lease equipment to their own corporation. The equipment is in their personal name, and they reap a profit from their corporation from the interest built into the lease.

There a lots of scenarios like this. But the first step is learning how to get started. That’s what I am here for.

Call me and let me show you how this concept can work for you.

Michael P Myers
209-390-1163

Do you know what the potential difference is in spendable income during one’s retirement depending on whether a person has used a bank CD, a 401K, an annuity from an insurance company or even life insurance?

What about the difference between paying taxes now on a small amount saved and not paying later on a large amount saved, or not paying taxes now on a small amount saved and paying ever higher taxes on the larger amount that one ends up with?

Let me be succinct: it’s huge! May I encourage you to take a few minutes and allow me to show you how a little planning now can reap huge rewards later?

Is your retirement money in the hands of your stock broker or otherwise dependent on the stock market? I’d like you to consider this …

The amount of risk the stock market poses is not static. When you select a portfolio that represents a certain amount of risk which should be in line with your risk tolerance, you must be very careful. Why? Because the external forces that move the market are constantly changing, resulting in less or more pressure on the market to move either up or down.

Currently, the pressure that is mounting like a volcanic eruption waiting to happen is putting great downward pressure on the U.S. stock market. One may say, “Well, I’m quite risk tolerant; and if the market goes down like it did in 2007, I can ride it out and I’ll be okay.” This position would have to assume that the market would recover to the previous levels of today in a reasonable timeframe of, let’s say, a few years.

Let me show you why I believe people in the market today are taking on a lot more risk than they realize.

First, remember that back in October 2007 prior to the most recent market meltdown, the Dow was at 14,000 points. If today, the summer of 2010, represents the near pinnacle of the current recovery, then you still would have nowhere near the amount of investable assets your accounts represented in 2007 — for several reasons, the most obvious being that the Dow is not at 14,000 points but at 10,000.

Second, when the market drops by 50% on your $100,000, taking it to $50,000, you need not a 50% gain, but a 100% gain just to break even. For both of these reasons you are not at your 2007 levels now; but let’s consider another phenomenon that you may not have thought of.

When bubbles burst like the real estate market and stock markets did in 2007, they don’t re-inflate to their previous levels for a long period of time, typically 20 years or longer. Consider Japan, whose own stock index, the Nikkei, sat at 38,000 points in 1990 and today, 20 years later, is still at 10,000 points. Do you think risk-tolerant Japanese investors who said, “I can stand large corrections should they occur; and I can even wait a long time to recover” had in mind that 20 years later they may still be worth only one-third of their 1990 account values?

Bill Gross, CEO of PIMCO, one of the world’s largest bond fund managers, has said history was made in October 2007 when the stock market fell because we may never again in our lifetimes see a Dow of 14,000 points. Why? Bubbles burst for a reason and don’t re-inflate for a very long time. The stock market bubble burst in 1929, ushering in the Great Depression; and investors were not made whole as a result of the market’s losses until 1954, 25 years later. I’m sure that when risk tolerance was explained to investors in 1928 they had no idea of the level of risk they were exposing their life savings to at the time, which was also true in Japan in 1989.

Mr. Gross has gone on to say that we are now living in the beginnings of a “new normal” – an extended period where prices are falling in a process of deleveraging and will not recover to previous levels. Instead, they will find a new normal that is supportable by a slower aging economy.

Remember that the Dow was at 14,000 points just 3½ years ago. Today it’s at 10,000. As we continue to adjust to the new normal, there are additional bubbles that have not yet burst that upon doing so will cause the market to drop further – not just drop lower but also stay lower for many years to come. I believe if you are in your 50’s or older you cannot afford to ride the market down this time because it’s not coming back for many years.

In my opinion, the bubbles that have yet to burst are the following: Bond bubble, dollar bubble, U.S. Government debt bubble and, eventually, a gold bubble.

If (or should I say when?) these bubbles burst, the Dow will fall to a new normal. That new sustainable level may be between 5,000 and 7,000. Famed economist Harry Dent believes the Dow could fall to 3,500. When the market has greater downward pressure than up and our country’s financial woes and demographics will keep it down, then the most critical strategy quickly becomes to protect what you already have while our nation and economy deleverages (defaults or pays down debt) and adjusts to the new normal.

We’ve been taught that over periods of ten years or more the market always goes up. Well, if that were ever true, it no longer is. Consider the Dow which stood at 7,487 on November 13, 1997 and then was again at 7,486 on March 18, 2009, almost 12 years later.

One of the reasons the stock market bubble will not re-inflate to 14,000 is to consider what pushed it there to begin with. The 77-million-strong baby boomers were in their prime spending years in the 1990s, on a spending spree the likes our country had never before experienced. All that demand created a supply shortage in housing and allowed companies of all types to raise prices, thus, driving our markets higher. Seventy percent of our GDP is made up of consumer spending. Now, here we are in 2010; and the baby boomers are 20 years older than in 1990. They are past their peak spending years. They are downsizing empty nesters that are fearful about the future and saving like never before.

When you recognize we are now in the new normal – which is still adjusting to new lower pricing – then you will realize the next time the market declines it’s not only not coming back to its current levels quickly, it may not come back in our lifetime. That adds up to risk that many do not realize they are taking.

My clients do not expose themselves to this type or risk. Lack of risk makes people happy. That’s why I have happy clients! (And what they earn on their retirement dollars, make them pretty happy too!)

You may think you can do better by taking on the risk of the market. Remember two things: First, what my clients earn each year is theirs. They don’t have to waste years making up for losses that can’t happen to begin with. Second, the Dow stood at 66 points in 1900 and at 11,497 by the year 2,000 – 100 years of performance that resulted in a 5.3% annual compounded return – not 10% or greater as some would think.