Protecting Your Nest Egg

Written By Vince Paolucci and Mitchell R. Zachary

You’ve just lost half your net worth – you don’t know where the next time bomb is ticking in your portfolio and as you get older your time horizon for gaining it back is shrinking.  You never thought it would be quite this stressful!  Your bipartisan sleeping pattern must be similar to John McCain’s; when asked how he could sleep after his election defeat, he replied that he just slept like a baby – sleep two hours, wake up and cry, sleep two hours, wake up and cry.

You may be in that same situation – but all hope is not lost.  Stay positive and let’s examine ways that will alleviate some of those sleepless nights.

Be Properly Insured

This might be a strange inquiry when discussing financial health, but are you physically and mentally healthy?  Your balance sheet may be diminishing, but it could shrink even faster if you’re not adequately protected against health catastrophe.  You must make sure you have sufficient life insurance to help your loved ones when you go, but more important, what would happen if you became disabled?  Review your health insurance and disability policies with your trusted financial advisor to ensure that there are no holes in your coverage – including ones that could eat away at your assets.

If you’re a business owner, make sure you have business-interruption insurance to cover you if you’re unable to work.  Have you considered long-term care insurance?  The price of various levels of nursing care is rising rapidly; a stroke, or some other illness could be devastating.  Rather than being afraid of these scenarios, you should have these risks evaluated and implement a plan to address them.  You must give yourself some peace of mind that you have protected yourself and your family in the event of a prolonged illness.

What about your investments?  Chances are that any investments you have made in equities are now as low as you’ve ever seen them.  How are you ever going to get that money back?  Although selling off now would trigger the recognition of losses (which for tax purposes could be carried forward and used against future gains), you might want to consider reallocating those investments differently.  If you have absolutely no stomach for future losses or a flatlined stock market, you might consider investing your money in tax-exempt bonds; you can then stop worrying continuously about the stock market.

As you get older, more of your savings should be converted into conservative investment vehicles.  At the same time, you must accept living with the idea of lost opportunities – you will not capitalize on the rebound of the stock market, whenever that occurs.  If you are able to be aggressive and you want to recoup lost investments, you should consider investing in stocks that are paying good dividend yields.  There are many “safe” stocks that have been beaten down in price, but are still paying healthy dividends.  If you know that you’re getting a good dividend yield on a stock, you don’t have to be as concerned about its price fluctuation because you won’t be selling it in the short term.  Also, dividends currently receive favorable tax treatment and are taxed at less than half the rate of interest.  You should not attempt to pick these stocks out yourself; have your investment advisor provide you with a  list of possibilities, then make a choice based on the research and advice.  It is great to be a part of the process, but make sure an investment professional is overseeing the process to ensure greater success.

Safeguard Your Savings

In addition, it’s wise to make sure your savings are protected; since the FDIC will currently insure deposits up to $250,000 per depositor per bank insured under the government program, you may want to consider setting up accounts at different banks so your total balance in each institution does not exceed the insured limit.

There are many things in life that you can’t control.  There are ways that you can improve your quality of life.  Whether it’s exercising, leading a healthy lifestyle, or improving your home, you can control how these things are done.  When it comes to your investments and financial health, this is equally true.  If you can take control of your investments, insurance, and overall financial plan, you can survive a recession, keep yourself financially healthy, and sleep better at night.

Vincent Paolucci, CPA, MST is Tax Partner-in-Charge and Mitchell R. Zachary, CPA/PFS, CFP is a Tax Partner at Grassi & Co., CPAs (, a full-service accounting and business consulting firm based in Lake Success, NY.  They can be reached at (516) 256-3500 or via email at [email protected] or [email protected].


  • If you’re still working and eligible for Social Security, do the math and figure out whether you should collect it now or not.
  • Consider purchasing a life insurance policy to pay for any estate taxes.
  • If you’re retired and your cash flow is not sufficient to cover your home expenses, consider a reverse mortgage.

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4 months ago

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10 years ago

Great article on protecting your nest egg. There are really 2 concerns facing Americans financially today: Out living my income and how do I handle the rising costs of health care. Recently, there have been many new solutions coming to market that are simple & easy to understand, and the best part have a money-back guarantee if you don’t ever use them. Check out and you will see what i am talking about. enjoy.

Walt Weingart
10 years ago

Here is what you can do to the Federal Reserve (Which by the way is a Private Bank)…. go to Sue The Fed read what’s happening and the awesome plans for this group. Join the fight.Then pass this information to all your friends.

11 years ago

More articles on investing in tax free bonds….who, what, when, where and why’s of keeping what’s left of our retirement dollars safe.

8 years ago
Reply to  GeeMother

Go to read all the portfolio commentary and market commentary. Actually read everything on the website. Then if you are still interested pay the $360 for a year. Learn, learn and learn. Then start small, learn the ropes, ask questions (he will answer your questions so you and everyone else will see the answers) so we can all learn some more. I finally have peace since everything I own makes money every day. If you think that makes sense, I am with you. A freebie look up Commonwealth Reit (symbol) CWH pays a $2.00 dividend so dividend yield is 11%. If this is the kind of investments you are looking for he just might be your man. I am slowly converting my whole 401K over to his recommendations. Starting to sleep better all the time.

Ron Wood
11 years ago

We not only have to vote the existing leaders out of office but elect a new generation that has ethics. By this I mean leaders that cannot be bought out by taking federal money at all. We must keep the money in the state even if declaring sovereignty is the only way. You cannot keep paying the fox in the hen house.
If we are to regain this republic we cannot give them dollars to bribe more corrupt leaders.
This can be done if we use our Constitution that allows us to reclaim our government and redress back before this oppression began.
It began when we allowed the 16th Ammendment to take the money out of the state to support tyrant federalists!
We can petition without harm, to redress back beyond the 16th ammendment, which was illegally ratified in 1913 (without legal representation of the states) because of these grievances (tax oppression) and force congress to give up its tyrantcy. If we do not take this opportunity the Constitution allows in Article I , we do not have a chance.
If you would verify with each State, President Taft did not have the legal documents to ratify the 16th Amendment.
We cannot compete globally economically with our federal income tax!!!!
Only dictators use bribes paid by tax payers.
Our leaders have committed treason. Vote them out.

Ron Wood
11 years ago

There is more to do than vote them out of office!

Philip Gallant
11 years ago

I am always amazed that articles like these still advise seniors to own equities for income. The value of using fixed annuities which guarantee the investment and can provide an additional lifetime pension benefit should be part of every retirement strategy. Equities are mainly a growth instrument. While dividend yields may be treated favorably from a tax perspective, they are still much riskier than fixed investment instruments.

ray polidori
11 years ago

I would like to see articles related to the type of conservative investments that will protect our money in retirement.

Keep up the good work that you are doing and expose wath ARRP has not done for its members.

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