Title:
Retirement Savings Rule 1: Reduce Investment Risk as
the Day Nears
Description: This is
a VOA Special English Economics Report.
See text below
Text:
Today, retirement can mean different things. For
many Americans, it means the end of the
money-earning part of their life and the beginning
of a period of enjoyment. But retirement calls for
planning and savings.In many countries, employers
may offer some kind of retirement savings plan. The
plan could be linked to the company's stock or to a
managed investment service. Almost any financial
planner will say workers should use these plans to
save money easily: often directly from their wages.
But an employer plan should not be your only way to
save for retirement.Pete D'Arruda heads his own
financial planning company and gives retirement
advice on radio shows and television. He tells
people to save whenever possible. But he says as
retirement nears, you must take fewer financial
risks. "There's three stages of life there when we
look at it. There's the part where you're earning
money. And when you're earning money, if you have a
salary, it makes it easier to take risk because you
know that if you lose the money you can go back and
earn some more." By risks, Pete D'Arruda means
investing in stocks and other financial instruments
that can lose value quickly. He says people should
move money away from riskier investments as they age
even if there is a possibility of a higher rate of
return. Instead, investors nearing retirement should
seek more secure investments for their savings. "But
then we get to the transition phase when we're
within five years or so of retirement. I call it the
financial red zone because now is the time when you
need to protect what you have, you need to start
transitioning away from the risk of Wall Street and
into safe places that guarantee lifetime income."
Pete D'Arruda has a simple way of deciding how much
of your retirement savings should be at risk. He
says take your age and put a percentage after it.
That is the percentage of your retirement savings
that should be fully protected from losing value.
So, for a sixty-five-year-old, "sixty-five percent
of the money must be in a place that can't lose it.
The reason why is when you're in retirement it's
impossible to get the money back that you lost
because you don't have a salary coming in."One
recent survey by the Charles Schwab company found
that forty-four percent of baby boomers feel secure
in their readiness for retirement. Baby boomers are
the generation of Americans born after World War
Two. For VOA Special English, I'm Alex Villarreal.
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Hi. I
personally reviewed this video and found it appropriate for
the news section of English Global Group. This
is a Voice of America video which covers an interesting
topic in Special English. I would appreciate some feedback from both
students and teachers about this video. You can comment in
the window below using any of a number of different services
including Facebook, Yahoo, AOL, and Hotmail.
