Posts

Showing posts from January, 2008

Encore! - Second Career Anyone?

As promised, we're moving over to the "life planning" side of "helping you get the best out of the rest of your life."

I've shared with you in the past the high percentage of boomers, 80% or so, who plan to "work" after retirement. In many cases, for the more financially secure, it may be volunteer work.

Tonight I found a great resource for volunteerism that will help you explore volunteer work. Especially valuable is the article on common myths about online volunteerism. After you familiarize yourself a little, you might check a couple of actual volunteerism sites. Here are two individual sites to give you the flavor of what's out there. The first is called the Experience Corps, which is in about fifteen cities, and the second is an agency called getinvolved.gov.

On the money making side, I'm pleased to find someone who sees the tremendous opportunity in Boomers' "encore careers," so despite the rather pessimistic title, I …

New Carnival of Personal Finance

I'm a little late in telling you, but the Carnival of Personal Finance is up at http://carnivalofpersonalfinance.com/

There are lots of articles this week. This week's host, "The Dividend Guy," is calling this "The Passion Edition" as most of the articles reflected the passion each writer has for his or her topic. My article was the one from January 25th, "What if we SAVED our Economic Stimulus Package Checks?"

So head on over and select from the eighty (!!!) or so articles.

Now, having said that, I should tell you that I think my excitement and interest in all of the personal finance blogs I've been finding has drawn me away from my core mission. Because although there definitely is a money component in "Helping You Get the Best out of The Rest of Your Life," I feel I've been ignoring the nonmonetary stuff lately.

So just to bring things into balance, we'll be doing some more "life planning" and less financial planning…

Quick Quiz
Was the DJIA Up or Down Last Week?

Just to follow up on yeaterday, and bring the topic back to financial news, here's a quick, one question quiz that may tell you if your financial news sources are, um, "fair and balanced."

Was the Dow Jones Average up or down last week?

Sure there was a lot of turmoil and volatility. But what was the overall direction? If the correct answer of up 108 points surprises you, you may be watching too much main stream media for your financial news as well.

As it happens, the other two major market index, the NASDAQ and S&P, were down. Which made for, I guess, a "mixed" week in the stock market. I was very proud of my clients' behavior during the serious downturn of Tuesday and early Wednesday. The only calls I got were wonderings about whether it was time to buy, which is exactly the kind of "straw hats in January" posture that I was encouraging in my "Overcoming Investment Fear" article.

Maybe I should poll them about where THEY get their…

"Click"
Why I Get My News from the Blogosphere

On January 23rd, I wrote an article on "Overcoming Investment Fear" in which I heavily criticized the mainstream media (MSM) for its fear mongering and general negativism. In case any of you need a little more proof, I just came across this Associated Press article of Top Ten News Stories of 2007. I had intended to blog on this in late December, but somehow didn't.

I would ask you first to notice the choices of what constitutes news. If it's negative of fear inducing, there it is. Try to find a POSITIVE item on the list. You won't. Even those things which could be termed positive, such as the successful troop surge in Iraq, are quickly "balanced" by the well known negatives. Anyway, I'm sorry this runs a little long, but I think it speaks for itself:

Here are 2007's top 10 stories, as voted by AP members:

1. VIRGINIA TECH KILLINGS: Seung-Hui Cho, 23, who had avoided court-ordered mental health treatment despite a history of psychiatric problems, ki…

Personal Finance Blogs - Practicing What They Preach

This month has been an eye opener for me. It’s one thing to read about the MILLIONS of blogs that have been created, and get used to terms like “the blogosphere,” but it’s entirely another to actually begin to experience the rich content that is out there in cyberspace just waiting to be found.

As I mentioned the other day, in my January 23rd rant about TV, I have been getting most of my news from the blogosphere for a few years now. If you would like a taste of how that might work, just visit my two favorite news/current event blogs, The Drudge Report, and Instapundit, which are both collections of links to news, information and opinion articles all over the web.

And while I knew there were millions of blogs, the few personal blogs I visited were not very interesting. Many, many blogs are just started by people to write down their daily thoughts, sort of like a diary. Some are exercises in self-importance, many are outlets for people who love to write and are seeking an outlet f…

What if We SAVED Our "Stimulus Package" Checks?

Yesterday, I gave you a little Self Scoring "Financial Discipline Quiz" about what to do with your potential "Stimulus Package" check. Today, I'm feeling a little unpatriotic for that post, even though I'm convinced that my not so subtle nudge towards reducing your debt is solid advice. But obviously, if everyone with consumer debt took that advice, there wouldn't be much "economic stimulus," now, would there?

Now I'm sure that if the President or members of Congress developed a scoring system for my quiz, the methodology would be the exact opposite, with credit going only to those who SPEND their checks. And realistically, I have no doubt that more Americans will follow their desires than my advice... but that doesn't make it right.

America as a country has a miniscule savings rate - by some measures negative - especially when compared to other countries. I recently read the following on the Business Week website:

"Americans loo…

Quick Self Scoring "Financial Discipline" Quiz

Here's a quick way to determine how financially disciplined you are. And you can score it yourself!

First, calculate your windfall from the Economic Stimulus package agreed on today by the leaders of both major political parties from the following paraqraph:

"Individuals who pay income taxes would get up to $600, working couples $1,200 and those with children an additional $300 per child under the agreement. Workers who make at least $3,000 but don't pay taxes would get $300 rebates."Second, answer this question:

"What will I do with this money?"OK, time to tally up your score:

If you have debts outstanding other than your mortgage, especially credit card debts, and you answered anything other than "Pay down my debts," give yourself a big fat zero.

If you have debts other than your mortgage and answered "Pay down my debts," give yourself one point for that answer.

If you have NO debt other than your mortgage, give yourself one point for wh…

Overcoming Investing Fear
(and Generally Feeling Better)

For the most part, my clients are excellent during times of market turbulence. We've been through it so many times, and those that do call when the market is collapsing are usually wondering what to buy. In the last two days, the market has moved, counting the intraday jiggles, about 2000 Dow points.

I did get one nervous call today, and one guy who was kind of depressed, and I can tell you that there is one common denominator for clients who are fearful or depressed, so there is one question I always ask:

"How much TV have you been watching?"
And the solution is very simple. In fact, there is a chapter in my book-in-process whose title sums up the solution:

"Click"
One night, several years ago, the platinum wife Melanie and I were watching our local 11 PM News, and the first five items in the news that night were, I believe, a fire, a murder, an armed robbery, and updates on a rape case and a political scandal... at which point, I turned to Melanie and said, &qu…

Fear vs. Greed

It was old time Wall Street mogul Bernard Baruch who said, when asked how to make money on Wall Street, "Buy straw hats in January."

Five or six years ago, in 2002 or early 2003, a local financial planner who hosts a call in radio show was getting a lot of fearful calls from investors, and basically said to his audience, "You only get 2-3 opportunities PER DECADE to buy stocks at bargain prices like this." Which of course proved to be right. In 2003, the market bottomed in March and launched an impressive advance which topped out just a few months ago, so almost any buying you did at that point probably proved quite profitable.

So what I'm really saying here is "buy low, sell high." Wow. Really profound stuff, huh?

But if you have ANY experience in investing, you know that in practice, it is much harder than that. It has been said that there are only two emotions that rule Wall Street, FEAR and GREED, and the two sides of our brain are in a constan…

They Get a Clean Slate, You Get the Shaft

(This is a follow up article to yesterday's "No One Can Predict the Market" article.)

Recently, I got a mailing from a commodity broker (let's call them "Commodity Wizards") touting their managed accounts, where you turn your money over to a commodities advisor to manage, or buy into the equivalent of a fund he or she is managing. The amazing thing was that each one of their five advisors had achieved AVERAGE annual returns of over 20% in the last 3 years. Wow! Where do I sign up?

Now if I prepared you correctly in yesterday's article, "No One can Predict the Market," all sorts of warning lights should flash when you read something like that. But assuming that their claim is not an outright lie, how could it be true? The answer is very simple, and it has implications that apply to MANY of the investment claims you hear or read.

You see, I'll bet you dollars to donuts that Commodity Wizards did not START with those five advisors. I'l…

No One Can Predict the Stock Market...

... Including me.

When I first became an investment advisor thirty years ago, I actually had a brochure with that slogan on the cover. I hadn't been in the business very long but I already knew it was true. I had become a believer in what is known as "the efficient market theory," which basically says that all publically known information is already reflected in the current price of every stock. Almost forty years in the business have, if anything, solidified that belief.

And yet millions of people search for the advisor, mutual fund manager, or newsletter that can consistently "beat the market." And there have been many "Wall Street Gurus" over those forty years who built track records that, at least for a season, seemed to indicate that they could "beat the market." Let me explain what I think causes this.

Imagine that there are 100 people sitting around a very large poker table, all of equal poker playing ability. If we play for one ni…

For a Fun Evening - Host a "Death Night"!

OK I was a little tongue in cheek in my last post, "Fun with Mortality Tables." But let me assure you I am being completely serious here. One of the best nights I've ever spent with my daughters and their husbands was an evening at our house which has come to be known as "Death Night." OK, the title is a little "tongue in cheek" but I'm not kidding, the evening was great. Let me explain.

The idea for "Death Night' actually came from one of my sons-in-law, the one who's a lawyer... does that surprise you? He correctly suggested that since we were likely both the subjects and objects of one another's wills, trusts, health care proxies, guardianships, that it would be good to get together and discuss all these things.

So platinum wife Melanie, who can make any event into a party, started shopping and cooking, and I started preparing financial statements, and before long, we were all sitting together, having had a congenial dinner, and …

More Fun with Mortality Tables

There’s an interesting, and I think, encouraging thing about mortality tables. No, seriously, I mean it. Here’s a table right from the social security website.

Actually, there’s a lot of good stuff on the social security site. I think I’ll add it as a Platinum Web Site …. There, that’s done.

Let’s start with my current status. I am a male, age 61. The table says that out of 100,000 of us born in 1946, there are 83,653 of us left. No that’s not the encouraging part, although it’s undeniably happier to be among the 83,653 than among the 16,347 … but I digress.

The table also says that my probability of death this year is .014617, or 1.4617% No that’s not the encouraging part, either, especially if you’re among the 1121 of us who will croak this year.

No, here’s the encouraging part. When I was born, my life expectancy was 74.40 years. Having reached my 61st birthday, my life expectancy is 80.24 years. On my 62nd birthday, my life expectancy will be 80.50. In other words, for every year you …

New Link - USA Today

Before I forget, I should mention that, based on the stellar article that got me going yesterday, “Boomers’ Eagerness to Retire Could Cost Them," and some other fine stuff, I’ve added USA Today’s Retirement Section as a “Platinum Web Site.” Now on to “new business” …

“Boomers’ Eagerness to Retire Could Cost Them”
... or "Fun With Mortality Tables"

I really didn’t intend to make this subject my personal crusade. I thought my “Benefits of Delaying Retirement” article would be my last on this topic for a while, but I’m all fired up again after reading this article on the USA Today website, which includes two very spiffy charts in the left hand margin. One has to do with life expectancy and the other shows an actual breakeven analysis of postponing taking social security for one year, from age 62 to age 63.

The life expectancy table is interesting in itself. Charts like this always pleasantly surprise me. For example, at age 62, which I will reach in November, the chart shows my life expectancy will still be 83.9. On average men my age will have a full 21.9 years left. Of course, Melanie, the platinum wife, is still calling for “fifteen good years left,” so I guess the last 6.9 will just be “average.”

The platinum wife herself will reach age 62 NEXT July (emphasis hers, she is much younger than I :-). For all of you ladies who reach …

And the Word to Replace "Retirement" is .... Life 2.0 ?

You had your chance. Ever since I first posted www.platinumyears.net, I've been trumpeting the idea that boomers would replace the word retirement. We've even had some suggestions, like "downshifting," which I kind of liked, and I've even taken to using "the life stage formerly known as retirement," sort of like "the artist formerly known as Prince."

I was never really satisfied with any of the suggestions, but I might have tried a little harder if I had known that SmartMoney Magazine was running a "Retire Retirement" contest, with a first prize of a $100,000 annuity. Who knew?

So instead of my few little suggestions, here is the winner selected from among thousands of entries... And the winner is ....
"Life 2.0" - From the SmartMoney website, the explanation is as follows:

"The submission was provided by D. Shawn Mulder Kitrell, a 43-year old cabinet designer from Vero Beach, FL. Kitrell previously worked in Informatio…

Medicare - Yet Another Reason to Delay Social Security

I don’t want to seem like a nag, but while I was setting up the new “Platinum Finances” section of www.platinumyears.net, I noticed an oversight in my January 3rd article on “The Benefits of Delaying Retirement.” I added the missing item, but I thought I’d also post it here, especially since that is the article that was included in Monday’s Carnival of Personal Finance.

The missing item is a biggie, and it’s one that is often overlooked by many of those who decide to take their social security before age 65 – Medicare! You see, no matter when you sign up for social security, you are NOT (apart from special circumstances) eligible to sign up for Medicare until age 65. And that leaves a three year period where there can be a significant Catch-22 attached to taking your benefits early.

That is, if you continue working enough to stay on your employer’s medical insurance plan, you will run afoul of earnings limits. And if you really plan to fully retire at age 62, there’s a three year wi…

The "Carnival of Personal Finance" is Up!
...and I'm in it!

A few days ago, I promised I'd tell you about carnivals. It's even more fun now, because I'm in one!

I've been gradually exposing myself to the MANY, MANY personal finance blogs out here in the "blogosphere." I'm developing a list of recommended links for you, but it isn't easy. There is just so much variety.

There are many, many blogs that are basically written by folks who are trying to get a handle on their own personal finances. Some like to talk about frugality, others favor investment topics (what works and what doesn't), and many open up their financial lives for all to see, chronicling their ups and downs in either building up their net worth or working down their debt. My hat is off to all of them for their sincerity and tenacity in pursuing their goals. I've met so many people who wouldn't spend ten minutes to try to improve their financial knowledge. It's good to know these folks are out there.

As you might expect, there…

"Platinum Finance" is Up!

It took longer than I thought, but the new "Platinum Finance" section at www.platinumyears.net is up and running.

I did a fair amount of rewriting, but mostly for organizational purposes, so I honestly don't think you'll miss anything if you don't rush right over there.

You might be interested in how a bunch of disjointed articles get massaged into something more coherent. That's one of the frustrations about blogging. Everything is chronological so if you build on a topic, you're always asking the reader to refer to other articles here and there.

Once you organize it, it;s easier. And now that we have a section, it will be much easier to add a topic next time. Any suggestions?

Four Great Retirement Links

While I'm working on a new "Platinum Finance" section of our sister website, www.platinum years.com (OK, and watching a little football - This is my favorite football watching weekend of the year, and so far, it hasn't disappointed), I thought I'd give you some links to some excellent financial websites with entire sections on Personal Finance and retirement:

http://www.marketwatch.com/personalfinance/retirement - MarketWatch was run by CBS until recently but is currrently labelled "from Dow Jones." It is my primary source for general stock market news during the trading day, but they also have many good articles on many financial topics, including retirement.

http://quote.yahoo.com/retirement - This is better known as Yahoo Finance. I actually use this more than Marketwatch because it is better for researching individual stocks. Again, they have a specific Retirement section with tons of valuable information.

http://www.fool.com/retirement.htm?sourc…

"Finance is OK if You've Got Money"

I knew at a pretty early age that I was interested in finance. I remember begging my father to let me take my lawn mowing money and buy a stock with it. The only one he would let me buy was A T & T, which proved to be a modest loser. But in my second job, as a dock boy at a local marina, I used to listen to some of the boat owners talk to their brokers over the pay phone in our office. One guy in particular convinced me of the merits of a stock called Lear Siegler. Founded by Learjet inventor William Lear, they had developed an automated system for landing planes in zero visibility situations (this was in the 1960s, mind you). I was convinced to buy, and since I already had the account from the A T & T, I called the broker myself and invested a summer’s worth of lawn mowing money, buying 100 shares of Lear at 12 5/8.

I remember the first few weeks of owning that stock. My pay as a dock boy was $1.25 per hour, so every 1/8 that Lear went up or down represented more than a day’s …

Internet Access - Another "Want" that has Become a "Need"

In my January 4 article entitled “Take the Money and Run,” I was outlining the exceptions to my general policy of not taking social security early. Exception #2 was “Real Financial Need.” I commented at the time that you had to be careful with that one, because our culture has made an art form (it’s called “advertising”) out of convincing us that our wants are really needs. Tonight, I came face to face with one of my own want/needs.

Upon coming home from an evening meeting, I wanted to check the news and write a quick blog entry, and discovered when I got to my desk that my internet connection was down. That’s when I realized that losing one’s internet connection has now taken on the gravity of having the electricity go off… It must be rectified immediately! And after about an hour on the phone with Verizon tech support, I’m pleased to report that I’m connected with civilization again. It felt just like that feeling when the lights come back on after a storm.

When did this happen? The i…

What if You Had "People"?

(This is the final of three exercises designed to help you identify your "life passions." To follow this "thread" chronologically, just go back to Monday's post, "Beyond Your Bucket List. What Are Your Passions?" and then read chronologically forward)

It's a sad commentary of our society that many of us now feel more constrained by the demands of time than by lack of money. Thirty years ago, the lottery exercise was sufficient. But at some point in the 1990s, I started using this one as well. It's kind of fun anyway so I though I'd share it.
"You get up in the morning. You have no obligations. You no longer need to have a job. Your bills are paid. There will be a delicious meal prepared for you whenever you are hungry. Your house is clean. Your laundry is done. Your yard is perfect. Everything you need is provided for you. What will you do today?"I understand that when this exercise is done in a seminar environment, sometimes a Pow…

You Just Won the Lottery! Now What?

Hopefully, yesterday’s Chinese menu of possible passions “primed the pump” for you to identify your own. Other ways to identify passions are to talk with family members and good friends (who really know you) about your list. What gifts do they see in you? What passions? These conversations are enjoyable in and of themselves, because they get us dreaming.

But if you like, I can share a couple of other dreaming exercises from my book Platinum Living: Getting the Best Out of the Rest of Your Life. Here’s the first one:

You Just Won the Lottery!
This is a “get us dreaming” exercise that I used years ago when I taught Personal Finance at a local college. On the first night of class, I had my students imagine that they had won the lottery. Their homework for night #2 was to turn in their plan for how they planned to spend, not invest, their winnings. The imaginary winning amount was enough so they could well afford the new car, the new house by the ocean, etc. You could generally throw out the…

What’s on Your “Bucket List”? What’s BEYOND Your “Bucket List"?

I was planning on covering this topic fairly soon anyway, but I’m guessing that the upcoming release of the movie “The Bucket List,” with Jack Nicholson and Morgan Freeman is about to create a lot of discussion in the “What do you want to do with the rest of your life?” category, so I might as well raise this discussion now.

In the movie, the Nicholson and Freeman characters are terminally ill men who go on a final spree, trying to cross as many things as possible off of their respective lists of things they want to do before they “kick the bucket.”

Since I am very interested in the topic of what people want to do with the rest of their lives, I am of course interested in the movie’s treatment of this topic, but from what I’ve seen of the previews, it appears to be more of an “old guy escapade” movie than anything else. Actually, I hope I’m wrong.

In any event, I’ll bet you already have a “bucket list” floating around in your head, even if you never called it that. I know I do. I’ve just…

Beyond Your "Bucket List"! What are Your Passions?

I was planning on covering this topic fairly soon anyway, but I’m guessing that the upcoming release of the movie “The Bucket List,” with Jack Nicholson and Morgan Freeman is about to create a lot of discussion in the “What do you want to do with the rest of your life?” category, so I might as well raise this discussion now.

In the movie, the Nicholson and Freeman characters are terminally ill men who go on a final spree, trying to cross as many things as possible off of their respective lists of things they want to do before they “kick the bucket.”

Since I am very interested in the topic of what people want to do with the rest of their lives, I am of course interested in the movie’s treatment of this topic, but from what I’ve seen of the previews, it appears to be more of an “old guy escapade” movie than anything else. Actually, I hope I’m wrong.

In any event, I’ll bet you already have a “bucket list” floating around in your head, even if you never called it that. I know I do. I’ve just…

And You Thought YOUR Savings Plan was a Sacrifice?

At church this morning, a series on Finances began with a message highlighting the life of Oseola McCarty, a local washerwoman in Hattiesburg, Mississippi who became The University of Southern Mississippi’s (USM) most famous benefactor.

McCarty drew global attention after it was announced in July 1995 that she had established a trust through which, at her death, a portion of her life’s savings would be left to the university to provide scholarships for deserving students in need of financial assistance. The amount was estimated at $150,000, a surprising amount given her menial occupation.

Mrs. McCarty had been taught the value of savings at an early age, and apparently she took the advice seriously. Her frugal ways were then contrasted with our country’s dismal NEGATIVE savings rate compared to the hefty rates of other countries, notably China. A lot of this has to do with the American cultural tendency toward consumerism, which was effectively illustrated by a clip from an old Steve Ma…

Social Security Early Retirement – Final Thoughts For Now

Previous Articles on this topic:
“Don’t Do It,” dated November 20, 2007,
“The Benefits of Delaying Retirement,” January 2, 2008, and
“When to Take the Money (Social Security) and Run,” dated yesterday
I plan to take these, along with “When Should I Start Drawing on my IRA, 401(k), or 403(b) Plan?” which I wrote on November 24, 2007 and massage them into the beginnings of a “Platinum Finance” Section sometime next week. I’ll let you know when that is posted. --------
As I mentioned, yesterday, I don’t like writing the “Don’t Do It”-type articles because it makes me feel like a killjoy. Now that I have given you some the exceptions, I’m feeling much better, thank you. But I’m not the only one with an emotional attachment to this issue. Chances are, YOU have one too. After years of talking to people about “accessing” their money, let me tell you what I think is really going on.

You’ve worked hard all your life, and you’ve set aside money all along the way, both voluntarily (IRA, 401(k), etc.)…

When to Take the Money (Social Security) and Run

This is a follow up of an original article, “Don’t Do It,” dated November 20, 2007, and “The Benefits of Delaying Retirement,” dated yesterday. In both articles, I made the case that taking benefits at age 62 is usually a mistake. Today, we’ll cover the exceptions. After a lot of reading on the topic I have been able to come up with three, two fairly common ones and one quite a bit more obscure:

Exception #1 – Shortened Life Expectancy. I was going to say illness for this one but a "life expectancy" test is really more accurate, because it might include family medical history as well. I indicated yesterday that if you run the numbers, you can come up with a breakeven date (often in the late 70s) beyond which you are better off for having waited. It stands to reason then that if you have reason to believe that you won’t make it to that date, you are better off taking what you can get as soon as you can get it.

Exception #2 – REAL Financial Need. I can’t emphasize the word “REAL…

The Benefits of Delaying Social Security

I occasionally plow through dreary assessments of how little we boomers are inclined to save and the risks that creates with our retirement prospects…. I do this reading for you, so you won’t have to :-)

Occasionally a gem of wisdom will pop out, making it all worthwhile. And those, of course I will pass along. So from an Economic and Budget Issue Brief from the Congressional Budget Office, dated March 14, 2004, entitled “The Retirement Prospects of the Baby Boomers,” comes an excellent and concise summary from a section entitled “The Effects of Delaying Retirement”:

"For households facing shortfalls in their retirement savings, relatively small changes in behavior can have surprisingly large effects. Because people who retire at 62 can expect to live another 20 years, each year they postpone retirement reduces their need for retirement savings by about 5 percent. An extra year of work also increases their Social Security benefits by several percent. Taken together, those effects l…

Opposing Views and Data in recent Survey

Just in case there is any doubt that we will faithfully report views and data that do not line up with our own, here are some highlights of an article from the Chicago Sun Times website, called "Zooming in on Boomers," and dated December 31, 2007.

This data is from a survey of boomers turning 62 this year (i.e. the oldest boomers, like yours truly), and NOT from the whole group. That may account for some of the discrepancies with the AARP surveys to which I often refer.

The majority of baby boomers to turn 62 in 2008 report that they:

Are retired or will be fully retired by age 65.

31% plan to apply for Social Security when they turn 62, and 32 percent say they will wait until age 66 or beyond when they can receive full benefits. (***Editors Note: If you are in that 31%, please at least read my article dated November 20th entitled "Don't Do It," and check back for updates.)

68% say they have employee or retiree health insurance.

47% are covered by a defined benefit …