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Expectational Bankruptcy
In 2008, the world’s financial markets experienced the worst crisis since the Great Depression. The S&P 500 went down by 38% and the average 401k was down over 24%. 70 million Baby Boomers watched as their retirement accounts and dreams were decimated. Is the damage permanent? Has the dream of a happy retirement been obliterated? Or is there a plan for Baby Boomers to utilize to navigate these treacherous new waters. Find out in the book Expectational Bankruptcy, written by Frank T. Troise.
Baby Boomers' Game Plan for Retirement
Baby Boomers are “exhausted and emotionally frustrated with Wall Street.” As a result, "they are scared and not doing anything, therefore they are assuring themselves that they will not be able to retire,” Frank Troise from the company SoHo Asset Management told CNBC today.
Boomers were initially advised by Wall Street that a conservative return assumption was 8% per annum. During the bull market no one questioned the viability of this assumption. So, retail and institutional investors built this expectation for the long term.
When the financial crisis hit, investors were devastated by the crushing blows to their investment accounts—the average loss to 401k’s was 24.3 percent.
In order for Boomers to get back to their assumed target goal of 8 percent and still be able to retire by age 65, the investor needs to recover the money that was lost. For example: An investor who is 50 years old and lost 30 percent of their 401k will now need an annual rate of return of 10.60 percent (per year) until they reach 65 years old.
Ironically, today’s investor now needs a higher return than assumed before, in a market that shows no sign of providing it at all. Expectational Bankruptcy is the first step to understanding this reality and identifying the choices the Boomer still has. Learn how retirement is still realistic. Get your free e-book today!