PREMIUM: KIM LANKFORD & MARY BETH FRANKLIN

The New Retirement Conversation

What is the next big thing in investing?  Think baby boomers and their retirement: 71 million Americans born between 1946 and 1954 will switch gears from the accumulation phase of their investing lives to the distribution phase to fund their retirement.  What is their biggest need? Income to last a lifetime. With the demise of the defined benefit plan or old fashioned pension fund, where are they going to find that holy grail?  This week’s WEALTHTRACK guests have an answer that might surprise you.  They say think insurance products! Mary Beth Franklin is Contributing Editor of InvestmentNews, a leading publication for financial advisors. For many years she was a senior editor at Kiplinger’s Personal Finance magazine. She is a familiar face on WEALTHTRACK because of her expertise on retirement income and social security. Kimberly Lankford is a Contributing Editor and Columnist of the “Ask Kim” column for Kiplinger’s and author of several books including The Insurance Maze: How You Can Save Money on Insurance-and Still Get the Coverage You Need.

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WEALTHTRACK Episode #1005; Originally Broadcast on July 26, 2013

Listen to the audio only version here: Kim Lankford & Mary Beth Franklin

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[/wptabcontent] [wptabtitle] Newsletter[/wptabtitle] [wptabcontent]A pall has descended upon Wall Street trading floors with this week’s federal indictment of SAC Capital Advisors LP. The giant hedge-fund firm, founded by now legendary manager Steven A. Cohen 21 years ago, is estimated by some to account for up to 2% of overall stock market trading in the U.S. on a given day. In addition the firm is estimated to have generated billions of dollars in revenues for Wall Street brokerage firms over the years.

According to a recent New York Times article, SAC has used leverage to deliver it’s nearly 30% annualized returns over the past two decades, leverage which has benefited Wall Street.  

“To juice its investment returns, SAC borrows heavily from banks, which earn big fees on the loans. The fund borrows, on average, about $3 for every dollar in the fund. At $15 billion managed, SAC had a staggering $45 billion in buying power… SAC’s billions of dollars in buying power, combined with the fund’s aggressive trading style, have made it one of the top commission payers on Wall Street. Several executives said that the firm is a top trading client at most of the large banks, including Goldman Sachs and Morgan Stanley, paying out several hundred million dollars a year in stock trading commissions annually. The fund is also a highly profitable and important customer for the banks because it is among the most active buyers of the lucrative initial public offerings and secondary offerings that they underwrite.”

Evidently civil and criminal investigators have spent a decade looking into trading patterns at SAC resulting in this week’s indictment. In announcing the charges, U.S. Attorney Preet Bharara alleged the firm engaged in “rampant insider trading” that was “substantial, pervasive and on a scale without known precedent.”

SAC denies the charges and Cohen, who owns the firm, has not been charged personally with any wrongdoing in this criminal indictment, although U.S. Attorney Bharara said the investigation is ongoing. Cohen faces civil charges from the SEC however, for failing to supervise SAC employees accused of insider trading. 

On WEALTHTRACK this week, we are focusing on you and your retirement and what our guests say is going to be the next big investment trend for baby boom retirees.

Mary Beth Franklin is contributing editor of InvestmentNews, a leading publication for financial advisors. For many years she was a senior editor at Kiplinger’s Personal Finance magazine. She is a familiar face on WEALTHTRACK because of her expertise on retirement income and social security. Kimberly Lankford is a contributing editor and columnist of the “Ask Kim” column for Kiplinger’s and author of several books including The Insurance Maze: How You Can Save Money on Insurance and Still Get the Coverage You Need. 

Next week look for a special podcast on our website in our EXTRA feature with one of WEALTHTRACK’s favorite guests. We’ll announce who it is next week! Be sure to check our Facebook page and our Twitter feed for updates.

In the meantime, have a great weekend and make the week ahead a profitable and a productive one.

Best regards,  

Consuelo[/wptabcontent] [wptabtitle]Action Point[/wptabtitle] [wptabcontent]

CALCULATE HOW MUCH MONEY YOU NEED TO RETIRE COMFORTABLY

• Review assumptions using new approaches
• Maximize your social security benefits
• Consider impact of insurance products:
  • immediate annuities
  • longevity insurance
  • long term care insurance

RETIREMENT CALCULATORS

T. Rowe Price
Fidelity

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LANKFORD: REVIEW YOUR ANNUITIES

www.annuityreview.com

“For $199, they will review up to three annuity products, and they will let you know what you need to do.  They’ll help you figure out kind of the most efficient investments to have to match with those guarantees. And also some of the best ways to take out that money so you don’t jeopardize some of those guarantees, but you also really make the most of what you’ve been paying for for years.”

– Kimberly Lankford

FRANKLIN: OPTIMIZE SOCIAL SECURITY BENEFITS

www.socialsecuritysolutions.com

“It is a fee for site. There’s a range of about $50 to maybe $150 where you will get a personalized recommendation for you and your spouse if you’re married, or even if you’re divorced or widowed, of what your optimum strategy is, when you should claim benefits, how much you’ll get.”

– Mary Beth Franklin

[/wptabcontent] [wptabtitle]Transcript[/wptabtitle] [wptabcontent]This transcript will be available soon. Other WEALTHTRACK transcripts are now included in WEALTHTRACK PREMIUM subscriptions. You can also purchase and download the transcript separately safely and securely with your credit card or PayPal account. You will need the free Adobe Acrobat Reader (Mac/Win) or Preview (Mac) to view and print the transcript. WEALTHTRACK transcripts are available individually for $4.99. [/wptabcontent] [wptabtitle]Bookshelf[/wptabtitle] [wptabcontent][/wptabcontent] [wptabtitle]Archive[/wptabtitle] [wptabcontent] MARY BETH FRANKLIN

March 23, 2012: Increasing Your Social Security Benefits

July 5, 2013: Women, Investing And Retirement, Part Two

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WEB EXTRA: Maxing Out  Retirement Savings