Why Stocks Make Sense Now

Investing in the under-the-radar recovery

By John F. Wasik (Reuters)

Two main theories about the global economy dominate these days: 1) We’re headed for a double-dip recession, and 2) things are getting better at a thick, syrupy pace.

I subscribe to the slow-as-molasses rebound view. While I don’t rule out another European debt crisis, the worsening of the U.S. home market and unemployment or any other calamity, things are slowly getting better. It’s time to start investing in stocks again.

When there’s so much conflicting news in the business headlines, I tend to listen to influential institutional investors like Dan Farley, who manages more than $190 billion for Boston-based State Street Global Investors.

I heard Farley run through some relatively optimistic numbers last week at the Morningstar ETF conference in Chicago. Although Farley admits there are still a bunch of wild cards in the economy, he’s somewhat upbeat.

“Right now, we’re in a stable but shallow recovery mode,” Farley said. “Corporate cash is at a record high of 50 years, and equities have room to grow.”

“Banks are no longer tightening loan requirements and starting to lend; companies are starting to borrow. Hiring plans, inflation and durable goods orders are likely to pick up until (factory) capacity utilization picks up.”

Why look for a silver lining when the U.S. is staring at a $13 trillion national debt, some European countries are still in trouble and the jobs picture remains dark? Farley uses words like “anemic” to describe the nascent recovery and he’s certainly not sanguine about employment, which he doesn’t think will fully rebound until 2015.

Corporations now have a “cash horde” that they can spend on hiring, dividends, stock buybacks or acquisitions, Farley notes.

Naturally, with billions flowing into bonds and gold, this hardly seems like the time to be talking about investing in stocks. For millions, the market psychology is still a “blood in the streets” mentality. But if Farley is right, it’s a good time to position your portfolio for future gains.

Patience is critical now. We’ll eventually exit this trough of the business cycle; companies will have the money to rebuild.

All of this prognostication is for naught if you take a narrow-minded approach to recovery investing. The U.S. may take a long time to fully bounce back, but that shouldn’t stop you from looking at a number of sectors, countries and opportunities. Here are some mistakes to avoid:

Don’t Make Concentrated Bets: That means avoiding trying to pick winners in individual stocks. Your risk is much higher that way. It’s better to pick a basket of stocks like an index fund.

Only focusing on the U.S: Most of the valuation of the world’s stocks is outside America. A better approach is a broadly-diversified world stock fund like the Vanguard Total World Stock Index exchange-traded fund (VT). You get 2,900 holdings in 47 countries in this index fund for a management fee of 0.30% per year (compared to about 1.4% for the average global fund).

Ignoring Dividends: As noted above, big, established corporations have lots of cash for dividends. The SPDR Dividend ETF (SDY) is a good vehicle for capturing these payments.

Ignoring the Little Guys: Not all of the growth will come from the blue chips. The little guys — small and medium-sized companies — tend to bounce back faster during a recovery. The iShares Russell 2000 Index ETF (IWM) owns a broad basket of these stocks.

Ignoring the Developing Countries: You never know where the more robust growth will occur. Will it be China, Indonesia, Brazil, Chile or India? Why even make a bet on a single country? The iShares MSCI Emerging Markets ETF (EEM) does the picking for you.

Another temptation that overly confident investors try to make is to guess exactly when the market is going to turn around. Nobody knows that date and few bet correctly.

You can ease back into the market gradually. If your investment reflexes are like molasses (mine sure are), this is a low-risk approach of getting a piece of the recovery.

John F. Wasik is the author of The Audacity of Help: Obama's Economic Plan and the Remaking of America (www.audacityofhelp.net)

Corporate Dollars and Campaigns a Toxic Brew

The quickest way to bruise your brand

By John F. Wasik

Corporate dollars and political campaigns are like oil and water for well-established retail brands.

Despite the troubling flexibility provided by the Supreme Court case Citizens United, which allowed more direct corporate and union contributions to political campaigns, this freedom can be perilous.

Target learned first-hand how political donations could damage its brand. A public relations disaster followed its contribution to a group backing Tom Emmer, a Republican candidate for Governor in Minnesota, where Target Corp. is based.

According to a study by Brandweek, a trade publication, Target’s reputation was hurt in early August when the donation was revealed — and still hasn’t recovered. The publication’s BrandIndex report showed the company lost one-third of its “buzz” score in 10 days last month, recovered modestly, then fell again during a media backlash. Target’s stock price fell to under $51 a share by Aug. 30, but has since recovered to close above $53 recently.

Not only did the contribution result in a blizzard of op-eds, blogs and negative publicity, it seeded a boycott campaign from the well-funded progressive organization MoveOn PAC.

Brand damage can be severe when corporations muddy their image by backing campaigns.

In Target’s case, shoppers who liked their clean, well-lit discount stores generally expected Target’s image to be apolitical. You don’t have to wander far from a Target checkout to see how the company supports a wide variety of community non-profits. Overt political leanings alienated an untold number of customers.

Direct political funding is bad for business because high-profile retail brands are expected to project this welcoming, multi-cultural image devoid of any agenda outside of free enterprise. They want your business, but they need to do it without a partisan message.

While we wouldn’t be surprised to see a gun manufacturer supporting a pro-second amendment politico, we would be appalled to see a fast-food chain back a pro-life or pro-choice candidate. It’s a horrible fit and sullies a company’s marketing message.

That’s not to say corporations can’t deliver their political dollars in other opaque ways. There are still more than 10,000 lobbyists on Capitol Hill and thousands more in state capitols. They can cloak their donations through trade groups, “527″ organizations or “Astroturf” groups that appear to be grassroots, but are seeded and organized by corporate dollars.

Jane Mayer’s recent New Yorker piece shed light on the Koch family’s various political groups and libertarian promotions.

Have consumers of Koch Industries’ Georgia-Pacific products such as Quilted Northern bath tissue and Brawny paper towels resented the Koch family’s funding of anti-Obama campaigns? Their right-wing bankrolling has largely flown under the radar of mainstream media, yet is constantly monitored by groups such as Sourcewatch.org.

No matter how many watchdog groups there are, corporations have far more money and ways to evade an ever-dimming media spotlight. Corporate-funded “Super PACs” are raising hundreds of millions for mid-term Congressional races.

Super PACs feature groups like American Crossroads, run by former George W. Bush adviser Karl Rove. The group has raised more than $17 million and includes donors like Dixie Rice Agricultural Corp.

Meanwhile, money keeps pouring into campaigns like a breach in an old dam. Political fundraising — now exceeding $2 billion in this cycle — according to the Associated Press, will probably break records this year.

In addition to unions such as AFSCME, IBEW, Laborers and SEIU, the “heavy hitters” in political contributions are AT&T, National Association of Realtors and Goldman Sachs. These groups represent more than $355 million in political donations, based on data through August 22, according to OpenSecrets.org.

As it stands now, it’s unlikely Congress will do anything to dampen the impact of the Citizens United ruling before the November election. Yet open disclosure of direct and indirect special-interest funding is essential, something the proposed Disclose Act attempts to mandate.

No matter what brand of politics you subscribe to, you should know which corporations are backing candidates and why. Corporations already have more than enough lobbying muscle – and those efforts should be fully exposed.

John Wasik is also the author of “The Cul-de-Sac Syndrome: Turning Around the Unsustainable American Dream.”

Get a Good Deal on Closing Costs

How to get a good deal on closing costs

By John F. Wasik

Getting a Good Deal on Closing Costs

Reading the Fine Print is Essential

By John F. Wasik

Although you can get a great deal on mortgage rates, you can easily pay too much on closing costs.

The necessary expenses of appraisals, title insurance, credit checks and other fees can add up to thousands of dollars. You can reduce those costs by getting multiple quotes and negotiating.

With 30-year loan rates averaging around 4.3 percent and 15-year rates at 3.8 percent nationally, according to Freddie Mac, now’s a great time to refinance or buy.

Shopping multiple sources pays off. With closing costs up 37% — that’s an average $3,741 on a $200,000 loan according to bankrate.com, you can put a lot more money in your pocket while getting some of the best rates in a generation.

When I refinanced late last year, I started the process knowing that getting a decent rate was only part of my mission. I wanted to get closing costs under $2,000, which was challenging considering I was seeing most quotes above $3,000.

Not only are closing costs numerous, they can get onerous. In addition to making money on the loan, many lenders will slap on “junk” fees like processing or underwriting. You can avoid these fees by going to another lender or negotiating.

The best financing strategy involves first detailing the fees and your total cost.

“Are you getting the best rate possible for the lowest fees,” says Sam Tamkin, Chicago-based attorney who handles real estate closings. “And if you’re getting an adjustable-rate loan, do you understand how they adjust?”

It’s not unusual for buyers and refinancers to pay from 3% to 5% of the total cost of the home in closing costs. The total expenses are largely a factor of where you live. Large metropolitan areas tend to be most expensive. Here’s a strategy that will help you reduce costs:

• Always sample a variety of lenders and brokers. Consider Internet services, local banks and credit unions. You may be able to apply online for basic quotes, but make sure you get a good faith estimate of all costs. You may need to make some phone calls to get closing estimates.

• Compare all fees. Some lenders charge underwriting and processing while others don’t. If you find a lender with a desirable rate — and their fees are high relative to other lenders — ask them to trim their closing costs. Do this before you sign up for a credit check and send in your Social Security number.

• Title Insurance is costly, yet required. It can range in price from $150 to $1,000 or more. Some states regulate the price. A good mortgage broker may be able to get you the best price.

• Read your HUD-1 statement carefully. This is the form that lists all closing costs before you close and is available at least one day prior to closing. Keep in mind that you can walk away if previously undisclosed fees were added.

While I’ve found that the best rates are often obtained through mortgage brokers — they do the searching for you — there is no such thing as a “no cost loan.” They make their money through a “yield spread premium.” So their profit would be charging you 4.4% on a 4.3% loan — a “spread” of 1 percentage point — for example.

Although there have been several efforts to streamline the closing process, it still can be confusing and you will need to review a mountain of forms. Fully understand what you are signing.

Got any perplexing financial concerns? Let me know. johnwasik@gmail.com

John F. Wasik is author of “The Cul-de-Sac Syndrome: Turning Around the Unsustainable American Dream (www.culdesacsyndrome.com).”

Although you can get a great deal on mortgage rates, you can easily pay too much on closing costs.

The necessary expenses of appraisals, title insurance, credit checks and other fees can add up to thousands of dollars. You can reduce those costs by getting multiple quotes and negotiating.

With 30-year loan rates averaging around 4.3 percent and 15-year rates at 3.8 percent nationally, according to Freddie Mac, now’s a great time to refinance or buy.

Shopping multiple sources pays off. With closing costs up 37 percent — that’s an average $3,741 on a $200,000 loan according to Bankrate.com — you can put a lot more money in your pocket while getting some of the best rates in a generation.

When I refinanced late last year, I started the process knowing that getting a decent rate was only part of my mission. I wanted to get closing costs under $2,000, which was challenging considering I was seeing most quotes above $3,000.

Not only are closing costs numerous, they can get onerous. In addition to making money on the loan, many lenders will slap on “junk” fees like processing or underwriting. You can avoid these fees by going to another lender or negotiating.

The best financing strategy involves first detailing the fees and your total cost.

“Are you getting the best rate possible for the lowest fees?” asks Sam Tamkin, Chicago-based attorney who handles real estate closings. “And if you’re getting an adjustable-rate loan, do you understand how they adjust?”

It’s not unusual for buyers and refinancers to pay from 3 percent to 5 percent of the total cost of the home in closing costs. The total expenses are largely a factor of where you live. Large metropolitan areas tend to be most expensive.

Here’s a strategy that will help you reduce costs:

• Always sample a variety of lenders and brokers. Consider Internet services, local banks and credit unions. You may be able to apply online for basic quotes, but make sure you get a good faith estimate of all costs. You may need to make some phone calls to get closing estimates.

• Compare all fees. Some lenders charge underwriting and processing fees while others don’t. If you find a lender with a desirable rate — and its fees are high relative to other lenders — ask to trim the closing costs. Do this before you sign up for a credit check and send in your Social Security number.

• Title Insurance is costly, yet required. It can range in price from $150 to $1,000 or more. Some states regulate the price. A good mortgage broker may be able to get you the best price.

• Read your HUD-1 statement carefully. This is the form that lists all closing costs before you close and is available at least one day prior to closing. Keep in mind that you can walk away if previously undisclosed fees were added.

While I’ve found that the best rates are often obtained through mortgage brokers — they do the searching for you — there is no such thing as a “no cost loan.” They make their money through a “yield spread premium.” So their profit would be charging you 4.4 percent on a 4.3 percent loan — a “spread” of 1 percentage point — for example.

Although there have been several efforts to streamline the closing process, it still can be confusing and you will need to review a mountain of forms. Fully understand what you’re signing.

John F. Wasik is author of The Cul-de-Sac Syndrome: Turning Around the Unsustainable American Dream and a Reuters columnist.

Photo: Home for sale in Los Angeles REUTERS/Mario Anzuoni

Cut Your Property Tax Bill

By John F. Wasik

This may sound crazy, but you need to lower your home’s value.

I’m not suggesting you damage it in any way. Just challenge what your local assessor is saying it’s worth so that you might be able to lower your property taxes. I try and do this every year with some success.

With property values still down across the board in most places, now is the best time to appeal your home’s value. We’re entering the season in which assessors release valuations of how much your home is worth for tax purposes. Their valuation is one part of the basis for your property tax bill. The valuation times local tax rates (for schools, fire protection, etc.) equals your real-estate bill after exemptions and other local factors are applied.

Most counties give you a limited window in which to appeal your valuation – typically about a month. After that, you’ll have to wait until next year to do an appeal. Don’t wait. You’ll need to do a lot of homework to win a successful appeal. Because only 30% of all homeowners appeal their assessment, you have a good chance of getting a hearing on how to lower your valuation.

You will be appealing last’s year valuation – not this year’s – since property taxes apply only to the previous year. So what’s happening in your market now isn’t relevant to your assessor. Also don’t confuse an assessed valuation with a market value. They are not the same thing. A market value goes through a real estate appraisal process for purposes of selling a home. Your local assessor makes a much more basic calculation based on your neighborhood, type of home and improvements.

Here’s what you need to know:

• Is Your Property Record Correct? It’s public information as to how many bedrooms and bathrooms you and your neighbors have. Check your assessment record. If they have you incorrectly listed for an extra bath or finished basement, go right to the assessor to fix that. It could easily lower your tax bill.

• Are comparable homes valued less than yours? Assessors are concerned about consistent valuations. Compare your home with similar houses of equal footage, improvements, lot size and other characteristics. If you file an appeal, you will need “comparable” home examples. Present recent professional appraisals.

• Is your home new? You will need a sales contract to show what you paid. If it declined in value, then make a case with recent sales figures. Any factor that may have caused your home to drop in price should be presented.

Most simple errors can be corrected with your assessor. If that doesn’t work, you can appeal on the county and state levels with real estate boards of appeals.

Keep in mind that most appeals fail because homeowners don’t present the facts logically and succinctly. Most county appeals hearings only give you a few minutes to state your case. If you’re emotional and try to argue based on your gut feeling, you will lose.

You can hire lawyers and appraisers to help in your appeal. If you take them on, make sure you pay them based on contingency or a flat fee. Lawyers will take one-third of your tax savings. Avoid those who bill on an hourly basis.

If you win your appeal, you could save from a few hundred to a thousand dollars on your tax bill.

To most homeowners, lower tax bills are much more alluring than granite counter tops. Your homework is worth the effort, won’t impact your market value and will make your home more appealing when you go to sell.

John F. Wasik is the author of The Cul-de-Sac Syndrome.

Photo: Home for sale in San Francisco. REUTERS/ROBERT GALBRAITH

From reuters.com

Labor Day, Not Groundhog Day

By John F. Wasik

On Labor Day, I think about sacrifice.

I think of my mother, who passed on Labor Day two years ago after a long struggle with leukemia. She was well educated, yet left school to marry my Dad and raise my three brothers and I. When she became engaged, she was at Mundelein College (now Loyola University Chicago). She could have done anything in the workforce, although at the time, women were mostly teachers and secretaries (she was one at the time). I always wonder what my Mom would've done if she hadn't gone the 1950s route and ended up in tract home in suburbia with squat lawns and squashed ideals.

Without a doubt, I think my Mom could've been a private investigator with the moxie of Lizbeth Salander in the Stieg Larsson series. While I hated "The Girl wit the Dragon Tattoo" -- I thought it was unrealistic -- readers around the world have been captivated by her character.

I also think about my friend Tom Geoghegan, who just wrote "Were You on the Wrong Continent?" (New Press, 2010). I've known Tom for more than 30 years. We met while he was defending a group of steelworkers from the Southeast Side of Chicago who had lost everything when the phony shell company that owned their mill went bankrupt and couldn't pay a single benefit owed them. Tom sued the company and it's sneaky previous owner -- then International Harvester (now Navistar) -- and won them a modest settlement. Not too far from that mill, thousands of workers had won and lost their jobs. Some even lost their lives fighting for their rights such as the 10 workers who were shot by police at nearby Republic Steel on May 30, 1937, the "Memorial Day Massacre."

For the Wisconsin Steelworkers, who were the subject of more than 200 pieces I wrote for (the long-defunct newspaper) Daily Calumet, the settlement was more than about breach of contract. It was the clear dissolution of the great American social contract. Remember that? It was the unwritten deal that a corporate employer would pay for your health care, retirement and attempt to ensure your well being during a working career. That meant freedom from fear, to paraphrase Franklin D. Roosevelt. It was the New Deal writ large and labor unions were the guarantors.

As a Harvard-educated labor lawyer, Geoghegan is acutely aware of how frayed and tattered the social contract has become. Companies close down factories and wreck communities. The workers are left with little to nothing. Globalization forces the business to find cheaper labor in Mexico, China or Viet Nam. It's a constant race to the bottom if you are in a high-wage country. Well, maybe not, and that's the strange interplay of sacrifice and hope when we look at the future of American labor.

Geoghegan sees the European Model of Social Democracy as a beacon in the Western World. Germany offers a prime example. Once ridiculed for its rigid model of union-management partnerships, huge social safety net and six-week vacations, Germany seems to have evaded the ugliest aftershock of globalism.

In the European "worker-first" system, both mothers and fathers get paid leave after the birth of a child; work weeks are shorter; there's lots of vacation time (three times as much as the US); nursing home benefits, national health care and workers who are not only allowed to work with management -- but sit as active members in boardroom decisions.

Is this the horrible socialist peril that ravaged the Soviet Union? Hardly. Social democracy thrives. The Germans have an export surplus, high productivity, a vibrant manufacturing base and low debt. They didn't suffer from a housing meltdown and their banks didn't need bailing out. Of course, German unemployment is still a problem (although it's a few points lower than the US) and taxes are high, yet look what they get for their public-sector dollars.

In the US, even after health and financial reform, we are still hostage to the private insurance industry (with a lot more consumer safeguards) while the biggest banks have grown bigger still to corner even more investment capital.

What about those big, evil European Unions? In Germany, the unions have protected benefits instead of bargaining them away just to survive. Germans have high savings rates and pension plans not tied to the stock market. "Most Germans have big supplements from collective bargaining," writes Geoghegan. In the US, unionized workers are clinging to mostly government sector jobs. The white collar workforce has to deal with endless work without pay, shrinking benefits and uncertain pensions, which are underfunded to the tune of $260 billion.

If Americans can somehow get around the dual dogma that we must be the world's supercop, suppress unions at all cost and assume that corporate interests have primacy, we might be able to see the light that social capitalism -- profits generated in the public welfare -- could work. Obama has certainly tried, only to run into the relentless buzzsaw of corporate-funded propaganda and misplaced Tea Party rants. So I doubt if Geoghegan will change any minds, but his way of illuminating the disparities between corporate capitalism and social capitalism is nothing less than brilliant.

What of labor in this time of dislocation and torment? Can we hope for a rebound on the heels of a technology boom -- think railroads, telegraph, electricity, internal combustion engines and computers? Is there one great wave of innovation that will efficiently employ capital and demand labor? After all, some seven million jobs were lost during the last decade as capital was funneled into financial and real estate speculation.

Capital is more like water than heat. It will accumulate in the lowest point eventually -- whether that represents the cost of labor, materials or both. Here are a few startling possibilities in the Great Reckoning:


* Maybe the social contract was torn up a long time ago and few of us noticed. I have friends facing lay-offs in once-steady jobs in government and places like IBM (I once thought I would have a steady job with Big Blue). It could be that globalism is forcing more of us to be independent contractors and find specialized niches for our products and services (see Tim Ferris's "The Four-Hour Workweek.")

* We will need to use the part of our minds that thinks spatially, non-sequentially, creatively (in language and numbers) and in images and designs. Do we need new homes, medicines, transportation and factories? Very much so. But what they teach in schools with rote learning and old formulas isn't going to cut it. Labor should be infused with imagination not endless meetings and spreadsheets. Enlightened labor rebuilds assembly lines that are more productive.

* Emotional Intelligence Will be Key. It's not about us anymore. It's about competing with the brightest minds in China, India, Taiwan, New York, San Francisco and Sydney. We will need to transcend our skills and backgrounds to create personalities than can deal with change, not routine. Labor has to be smart and savvy, not repetitive and un-inventive.

* Networking will have to be less about the Internet and texting. We will need to understand how people best function in different situations, cultures, work and education environments. Facebook isn't enough. Google isn't enough. An iPhone and iPad won't make us any smarter if we don't learn from others and build on our mistakes.

* We will need to rebuild our view on capital. There's tremendous value in infrastructure such as clean air/water/food, rail lines, broadband, electrical grids and a hundred other things we ascribe to civilization. None of these things are free and if we don't invest in them, we regress in a social sense. As Richard Florida observes in his essential "The Great Reset," it's "important to spend money on the right kinds of infrastructure." In my way of thinking, all public schools and secondary education are essential infrastructure. As we should have modern airports, we need more funding for education on every level. A tax on speculation and carbon could fund this goal.

We've come to a groundhog day as we evaluate how to best employ our labors and capital. We can either put both in a productive mode of social progress or keep squandering it on financial engineering and debt creation. If we are truly to recognize the exchange of labor for money, it's time to stop looking for magical rodents in holes and start digging in for the next century.

John F. Wasik is the author of "The Cul-de-Sac Syndrome: Turning Around the Unsustainable American Dream."

A New Way to Figure Out How to Retire

By John F. Wasik


Could you read another report that shows how little Americans have saved for retirement in these troubled times? I know it’s difficult, so I came up with a simple formula for figuring out how much you need.

Pencil in how much money it would take for you to live comfortably for 25 years. Include items that are not covered by insurance – deductibles, travel, home maintenance, taxes. Then project how much Social Security and retirement income you will have by the age in which you cast that not-so-longing last glance at your office door.

The difference between your comfort zone amount and your retirement kitty is the worry gap. That’s the amount you need to make up by working longer, saving aggressively or downsizing your lifestyle.
For millions, the worry gap is a pretty deep crevasse. It’s hard to fill it up with money when your 401(k) is underfunded and the bills keep arriving. In a job-losing, no-raise economy, it looks like a bottomless pit.

A recent survey – one that I always take note of – showed that some two-thirds of those polled in the two lowest pre-retirement income levels will be running short only 10 years into retirement. These folks, as monitored by the annual Employee Benefit Research Institute’s (www.ebri.org) “Retirement Readiness” study, are saving the least for retirement.

Yet even those in the highest-income groups are still going to be facing problems paying for basic expenses and uninsured medical bills. Remember that Medicare has co-pays for hospital and medical services and is in severe fiscal trouble.

The EBRI study also broke down who was most at risk. “Early” boomers (those aged 56-62) had a 47 percent chance of running out of retirement funds. Their younger peers (ages 46-55) and “Generation Xers” (ages 36-45) are about 44 percent at risk.

Where do you stand? If you are going to come up short, there are myriad ways of conquering the worry gap. Here are some options:

• Downsize. Do you expect to live in the same space when you’re older? Can you live in half the square footage? A smaller home or apartment lowers your living costs. A move from a single-family home to a condo, co-op or townhouse can mean lower property taxes, maintenance and financing costs. This makes most sense for empty nesters. The key theme is that the American Dream shouldn’t be tied into the size of your shelter — it should revolve around what you can afford and how much you save.

• Rethink Retirement. For many, completely retreating from the workforce completely is a bad idea. It may lead to poorer health, early death and annoying one’s spouse/partner full time. Being in the workforce longer means continued benefits and the ability to save. You may also get a free match in an employer savings plan. If you suffer from a disabling condition or chronic illness, this is not an option, so look at how you will cover medical expenses.

• Automate Savings. If you’re in a 401(k), sign up for automatic enrollment and increases. If you don’t have to think about contributions, you’ll save more. Even if you don’t have an employer plan, you can set up auto-debits into Individual Retirement Accounts.

• Fund Your Roth. Roth IRAs and 401(k)s are looking good right now. While your contributions are taxed, your withdrawals are not (subject to a few rules). Most retirement plan withdrawals are taxed at full marginal rates. I think income taxes are going up to cover Medicare’s shortfalls, so Roths rule.
The best thing you can do is survey yourself, your family/spouse/partner and take a hard look at your comfort zone. You may have to throw out some preconceptions about retirement, but don’t ignore the possibility that some adjustments may be needed.


John F. Wasik is the author of The Cul-de-Sac Syndrome: Turning Around the Unsustainable American Dream (www.culdesacsyndrome.com. From my column on reuters.com)