Known as the “sandwich generation,” they are squeezed by obligations to almost-grown kids and aging parents. Combined with the fact that they are staring down the barrel of retirement within the next decade or so, it becomes necessary to:
- Reassess their financial situation and determine if they’ll meet their retirement goals
- Look to combine retirement accounts and re-balance their portfolio depending
- on their situation
- Remember that the IRS has catch-up retirement savings provisions for people age 50 and up
- Consider at purchasing long-term care insurance
Lopez recommends this group invest in “municipal bonds, as they secure future payments and let you readjust a portfolio without relinquishing control.” Investors should investigate state municipal bonds since interest payments are usually federal and state tax free.
Lopez advised a couple in this age group to readjust their asset allocation from 90% stock and 10% cash to 60% stock and 40% cash instruments. The reason, he says: “If the market retreats, their portfolio has less time to recover.” He also asked the couple to consider purchasing fixed annuities (financial insurance contracts that earn interest).
Lopez favors company stock such as Microsoft Corp., which had a record $21 billion in earnings for the second fiscal quarter of 2012 and is scheduled to launch Windows 8. Another is Chandler, Arizona-based Microchip Technology Inc. (MCHP), which provides microcontroller and analog semiconductors. It has growth potential and since 2007 has paid a total of $6.26 per share in dividends. Lopez also likes Sirius XM Radio Inc. (SIRI), because it has 22 million subscribers. He says nearly half of new car owners extend their subscription.
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