You’ve probably heard enough about the woes of Social Security not to be counting on it as a major source of retirement income. And even if the beleaguered system stays solvent, the few thousand dollars a month a couple can expect isn’t likely to account for a large fraction of what you need to live on. Yet as meager as Social Security’s potential contribution may seem, it would take hundreds of thousands of dollars in additional savings to replace it.
In the years ahead, the Social Security system will be under increasingly intense pressure-particularly after 2011, when the first of the baby boom generation enters retirement. Already, sweeping changes in life expectancy and demographics have transformed the program’s original financial formula, which counted on large numbers of workers paying into a system that supported a relatively small, short-lived group of retirees. Consider the impact of the following facts:
• During the past three decades, the average U.S. life expectancy has risen from just over 70 years to almost 78, according to the National Center for Health Statistics. Today’s average 65-year-old can expect to live to 83, and someone now 70 may survive until 85.
• In 1945 almost 42 workers paid into the system for every person receiving benefits, according to the Social Security Administration, while by 1995 that ratio had fallen to 3.3 to one.
• By 2020, when the bulk of baby boomers have retired, there will be just 2.4 employees per beneficiary, Social Security data indicate.
Congress has already tweaked the system. It’s has raised the minimum age at which beneficiaries will be eligible for full Social Security benefits. Today, only those born before 1938 can receive full benefits at age 65. If you were born between 1943 and 1954, the official Social Security retirement age is now 66, and it increases two months a year for those born in 1955 through 1959. If you were born in 1960 or later, you won’t be eligible for full benefits until age 67. More changes could be in the offing, including a retirement age as high as 72; a means test for beneficiaries, who would have to fall below a specified income level to qualify for full benefits; or increased taxation of Social Security payments.
But what if that doesn’t fix the problem? What if Social Security benefits are severely curtailed, or disappear altogether? What would such changes mean for your retirement? With the system in dire straits, it is only prudent to ask these tough questions and do some planning for this possibility.
Suppose you and your spouse, both 65, together earn $100,000 a year before taxes. You’d like to retire now on 80% of your pre-retirement income. That’s $58,682 a year on an after-tax basis. Under current rules, Social Security will provide $32,405 annually. That leaves $26,277 a year you need to generate from other sources. To come up with $26,277 in annual income for your life expectancy through age 83, you and your spouse need a nest egg worth something on the order of $415,000 according to figures provided by Money Tree Software, makers of financial planning software for professionals. This calculation assumes a 2% inflation rate, a hypothetical 4% after-tax return and that you’ll both live 19 years during retirement-from your 65th birthday to the eve of your 84th birthday. It also assumes Social Security benefit will rise 2% each year.
But if Social Security is cut back, your savings will have to work harder. If you receive only 50% of today’s $32,405 annual benefit, you’ll need a nest egg of $668,500 at retirement-an additional $253,500. With no Social Security at all, you’d need $923,000 at age 65 in order to pull down $58,682 a year for 19 years. That’s $508,000 more than you’d need if you are able to receive your full Social Security benefits.
Of course, it is unlikely that the government will slash so drastically benefits to current retirees. But it is prudent to expect that over the next decade, a cut of such magnitude could occur. So consider what would happen if you and your spouse are 45 now and want to retire in 20 years.
Starting at age 45, and assuming a 2% rate of inflation, you’d need to save $530,000 by retirement to have the same purchasing power as today’s $415,000 in the previous example. Then, assuming a hypothetical 4% annual after-tax return on assets during retirement, you’d exhaust your nest egg during the 19 years of retirement, according to Money Tree Software’s analysis. And that assumes you receive full Social Security benefits. In these Social Security cuts would put you in an even deeper hole.
The higher your retirement income goals, the smaller the proportion that will come from Social Security. But whatever your income in retirement, you’ll notice something missing if the program changes. For years the insolvency of Social Security has been discussed, but now the reality is nearly upon us. Planning for it can help ease the pain.


1. Constructing a Competitive Edge
2. Cultivating Your Market for Planning Candidates
3. Communicating With the Candidates Who Need You Most
4. Engaging Candidates in the Financial Planning Process
5. Understanding the Maze of Financial Problems
6. Cash and Debt Management Solutions
7. Income Tax Solutions
8. Stock and Bond Solutions
9. Managed Money, Mutual Fund and Annuity Solutions
10. Will and Trust Solutions
11. Insurance and Employee Benefit Solutions

Constructing a Competitive Edge
The financial planning process involves the coordination of efforts among a team of financial advisors. The result of this effort is a set of recommendations consistent with all of the client’s needs, attitudes, goals, and resources. When delivering financial planning services, your primary value as a lead advisor is not based on the level of your technical proficiency in all the financial specialties, but rather on your ability to manage and coordinate the efforts of your client’s Team of Advisors. To do this effectively, you must have a global understanding of what each type of advisor’s licensing and education allows them to do, how they are typically compensated and how the form of compensation affects their advice, and the level of continuing education required to maintain their expertise. To prepare you to take on the lead role on a client’s team of advisors, this session will help you evaluate your own strengths and limitations as well as those of each member of your team.

Cultivating Your Market for Planning Candidates
There are two core requirements to successfully delivering financial planning services: the client must trust the advisor and be emotionally committed to the financial planning process. There are no shortcuts to building this level of trust and commitment–no one-liners, sales scripts, or secret tips. Relationship- and trust-building requires a time commitment from both you and the client. Without trust and emotional commitment, the planning process typically breaks down because the client is not motivated to provide complete financial disclosure or does not take action on the recommendations. Your challenge is to streamline and focus the trust-building process. This session provides you with the foundation to quickly and ethically build trust and credibility with prime planning candidates in your target markets by using the “Eight Steps for Market Penetration.”
Communicating With the Candidates Who Need You Most
Every target market has ideal candidates for financial planning services: business owners, including self-employed professionals; executives; high-income sales professionals; women; and ageing baby boomers. This session shows you the best ways to interact with planning candidates in your target markets and how to pre-assess the most probable “emotional needs” for these candidates based on their age, gender, and occupation.

Engaging Candidates in the Financial Planning Process
Here, the “art” of facilitating the planning process is contrasted with the “science” of creating financial plans. You’ll cover the methodology and scripting that you need to efficiently facilitate the “Nine-Step Financial Planning Process” for your clients, and will view a video role-play depicting the process. Not only do you learn how to profile and collect data from clients of all wealth classes, but you also learn how to manage expectations and keep clients on track when life events alter their circumstances.
Understanding the Maze of Financial Problems
Problems that are commonly identified in financial plans are examined in this session. Without presenting solutions or planning strategies, this session lets you explore these problems and the consequences of not correcting them. Additionally, you’ll discover that financial decisions are interconnected–one decision almost always affects another–and that, for the client, the primary value of a comprehensive financial plan is its role in the overall strategic coordination of their financial affairs.

Cash and Debt Management Solutions
Cash and debt management problems are often the most critical financial planning issues for most clients. Many advisors and clients make the mistake of equating financial planning only with investing, retirement planning, estate planning or college funding. These are all examples of planning strategies–strategies that will not be implemented unless the client can find the money to save and invest. The conclusion is that successful implementation of a financial plan begins with cash and debt management. This session presents ways for you to identify possible funding sources for the recommendations in your client’s financial plans. A financial advisor who suggests funding sources will have a higher implementation rate than one who does not. By becoming more of a “financial architect,” you can differentiate yourself from the competition.

Income Tax Solutions
In this session, you’ll discover that income tax is the single largest expense of most of your clients, and that “mistakes, errors, and omissions” when preparing annual tax returns is the number-one reason why clients pay too much income tax. You’ll learn how to identify possible tax planning strategies that can be discussed with the CPA on the client’s Team of Advisors. By working effectively with a CPA to formulate strategies that may lower the client’s income tax liability, you’ll also help your clients create funding sources for the recommendations outlined in their financial plans.

Stock and Bond Solutions
Stocks and bonds are the core securities that underlie most managed investment products such as mutual funds, managed accounts, and annuities. By gaining a thorough understanding of the stock and bond markets and the economic factors that influence the value of these securities, you are better equipped to analyze, compare, and contrast various managed products to determine which most appropriately meets the investment strategies identified in your clients’ financial plans. If you are not currently a licensed Stockbroker or RIA, this session helps you communicate effectively with the investment specialist on your client’s Team of Advisors.
Managed Money, Mutual Fund and Annuity Solutions
This session deals with managed money–essentially, portfolios of stock and bond investments. You’ll explore the similarities and differences among the three types of professionally managed investment alternatives: mutual funds, money management services, and annuities. You’ll learn to analyze, compare, and contrast various products within each group to determine which most appropriately meets the strategic objectives defined in your clients’ financial plans. Additionally, you’ll find effective methods of communicating the inherent value of problem-solving capabilities provided by these investment alternatives. If you are not currently a licensed Stockbroker or RIA, this session helps you communicate effectively with the investment specialist on your client’s Team of Advisors.

Will and Trust Solutions
Here you’ll explore the primary tools used to implement estate-planning recommendations — wills and trusts. You will discover the three reasons why everyone needs a well-constructed estate plan, and that the key to estate planning is how clients choose to own their assets. You will learn what a will can and cannot do, and the characteristics of 22 trusts. Finally, you’ll discover how life insurance is used in estate planning. If you are not currently licensed and trained in estate law or insurance, this session will help you communicate effectively with the estate attorney and insurance specialist on your client’s Team of Advisors.

Insurance and Employee Benefit Solutions
The final session deals with solutions offered by insurance and employee benefits. Since many corporations offer benefits such as insurance, retirement plans and employee stock options, clients often seek help in either choosing or designing a suitable benefits package. In this session, you’ll become familiar with the general issues involved with life, health, disability, and long-term care insurance, and will learn the differences between group and individual policies. In addition, you’ll explore various types of employer-sponsored retirement and deferred compensation plans. Annual contributions to these plans are limited, which can make it difficult for clients to accumulate sufficient retirement savings. Since additional retirement programs may be necessary, several types of IRAs are addressed in detail. Lastly, you will learn about the new minimum required distribution (MRD) rules and the nuances of employee stock options.


We use both daily and weekly screens to provide members with possible investment opportunities. While they may seem equal in weight, the weekly screen is the most important feature on the website. Daily screens look at the current day’s action and screen out stocks that are making new 52-week highs, building solid patterns or are breaking out from a pivot point. Stock that have already broken out or have made past daily and weekly screens can continue to make the daily screen even if it sits above the pivot point. We must continue to track quality stocks as they pass crucial buy points because many members decided to place positions in these stocks. Daily screens have the tendency to present many different stocks but only the best of these stocks will go on to make a weekly screen.

Our weekly screens serve as a filter to the “noise” that daily screens may and can produce. As noted in many places on this site, the strongest buy candidates are the stocks that make continuous weekly screens. Below, we have outlined the details process that goes into our buying strategy and our daily and weekly screens. First we will outline the process that we use to make both a daily and weekly screen. Further down the page, we explain how the buying strategy works, based on the information that we extract using the screens. We advise all members to use our process as a guideline to develop your own system that compliments your trading style, whether that be short term, longer term or a combination of both.

Daily and Weekly Screen Details:
One big secret goes into our screening methods: There is no secret and anyone can succeed to build a profitable system. In today’s world, the internet is overloaded with financial information related to companies and their stocks. The toughest part of researching the stock market is weeding through pages of unnecessary data offered by multiple people, blogs, investors, firms and institutions. Open a browser and type the words “stock market” into Google and you will get approximately 34,000,000 results. Now type in the words “stock analysis” and you will get over 14 million responses. Where is one to begin?

All investors must start their search by looking for stocks with superior fundamentals. After fundamentals are established, look to see if this particular stock is in good company and by this I mean a strong industry group. Similar stocks historically move in the same direction (this is fact not opinion). This is not to say that every stock in the industry group will move higher or lower because a sister stock is going in that direction (a generalization rule of course). After the industry group has been confirmed strong or weak, determine if the overall market is in a specific trend (up, down or sideways).

To complete the steps above, we start by using the custom screen wizard offered through Daily Graphs (an affiliate company of IBD). Using this screen, we narrow down our first list using relative strength (RS) and earnings per share (EPS) ratings. In poor or down trending markets, we cut out all stocks that have an RS and EPS rating lower than 70 (based on the IBD scale of 1-99). In up-trending or bull markets, we raise the minimum criteria to 75 and then to 80 for both RS and EPS ratings. Our next step is to eliminate all stocks that are not within 5% of their 52 week highs. We don’t like to invest in stocks that contain great amount of possible overhead resistance. After this list is developed, we run another screen that gives us the stocks with superior RS and EPS ratings that are making new 52-week highs. Finally, we use Investors Business Daily (the print newspaper) and/or our Daily Graphs subscription and locate the strongest industry groups and sectors for the day. Remember that the strongest stocks move in groups, not individually.

By performing the tasks above, we will get a list of about 50-150 stocks that meet the proper fundamental criteria during poor markets or sideways markets. During bull markets, these screens will return several hundred stocks to almost 1000 stocks per day. This is one of the most powerful indicators in the market today, a method that we have used since day one. When 1000 stocks are making these daily screens, we know we are in the midst of a strong bull market. On the other hand, when we see less than 100 stocks making this daily screens, we know that we are going sideways, in a correction or heading towards a bear market.

When we publish the daily screens Monday through Thursday, using the tools above is as far as we go with the initial fundamental criteria. When the week draws to a close and we start to produce a weekly screen, our most important screen, we take the fundamental analysis one step further by studying the raw numbers (key categories are listed at the bottom of this page).

We use some key statistical sites such as Vickers research reports to assess institutional holdings and insider buying. Daily Graphs can be used for these institutional numbers but we prefer Vickers because it allows us to see the exact money manager or mutual fund that owns the stock with the exact amount of shares owned, when they were purchased, the percentage of their total portfolio and more. We then browse over detailed fundamental reports that contain key ratios.

Net income
Past earnings
Future estimated earnings

Additional key numbers:
PEG ratio
EPS estimates
Revenues (cross referencing the numbers from Vickers)

Final Fundamental Analysis:
Shares outstanding
Current float
52-week ranges
Previous year highs and lows
Profit margins