This is a scary one. It’s scary because it threatens our self image. “How could I fall for that?” Unlike identity theft which has protections built in, there really aren’t any protections with scams. Apparently the Nigerian Prince is not coming to Bluegrass Field to drop off my inheritance. Which is sad.

• Remembering life expectancy, inflation and ‘too old’ brings us to #4
• Panicking in the next bear market
  • Only one call and doesn’t count as she was a new client
  • Don’t hesitate to call or schedule a time to come in
  • WE WILL ALWAYS CALL YOU if action is needed
• Hope for the best, plan for the worst.

I’m pretty sure this one is directly related to the first issue, life expectancy. And the assumption that there is no way you will live to see the market recover from a downturn or a crash. This is more of the assumption that the present moment is all there is. Things won’t change from “this”, whatever “this” is.

So, here are some numbers in a nice chart:

This is a tricky issue because the change isn’t very big in any given year. The long term average for inflation is 3.25%. That’s averaged out from 1913 to April of this year. If we refer back to the previous discussion of life expectancy, it starts to make sense. Over a single year, the cost of the car only goes up 3.25% or $812, but over 30 years the price goes from $25,000 to $65,259.

So the solution to this problem is:

The first way to run out of money is to Ignore your Life Expectancy.

A common issue is a tendency to under estimate their life expectancy. A woman aged 65 has a 50% chance of living another 26 years. The male expectation is another 24 years.

There are a lot of important considerations to weigh before doing a Roth Conversion. As a result of the current market condition and changes due to the SECURE Act, Roth conversions are becoming an important strategy that advisors are discussing with their clients. This flowchart addresses some of the major decision points to help guide you in the right direction.

I spent some time this morning helping a client get some money out of one of his investments. The virus has made a mess of his business for at least the first half of 2020. He came in this morning to sign some paperwork, because as you know, there is always paperwork in this business. We were talking about the benefit of “having a plan.” We had discussed where the money should come from among his options.

I started working in this business in 2006. One of the first lessons I got from my Father and business partner was this “Our clients have two questions; the first is am I ok, the second is where are we going to lunch?” While I might argue for a more sophisticated wording, this has proven very consistent. Our clients want to know if their plan is still on track, and then they are ready to talk about something else.

The coffee can full of $100 bills buried in the back yard is the safest investment available, right? Not really. The assumption is that the number of dollars contained in the can will not rise, or more importantly, fall. Right? Kind of. The number of bills is fixed, but the price of what they will purchase is going up everyday. Those pieces of paper are not intrinsically very valuable. 

Whether it is tennis shoes and cheerios, golf clubs and sails or cruises and plane tickets, they are all subject to inflation. Inflation has averaged a bit more than 3% annually in the long run. Just 3%. No big deal. Those cheerios that costs $2.99 today will cost about a third more ten years from today ($3.89). In 20 years, twice as much, ($5.98) and in 40 years, the price will have quadrupled to $11.96!

Viewed another way, that coffee can lost 3% of its value each and every year. A CD earning 2% only lost 1%. Not as safe as it might seem. 

To be sure, assets which are intended to fund expenses which may well occur in the relative nearer future need to stay in a more liquid, stable asset form, where the impact of inflation is less pronounced because of the shorter time period.

It’s one of the most common sentiments we hear: I wish I’d saved more.

Boy, who doesn’t!

It is doubtful that anyone has ever regretted saving too much. Saving makes so much sense, so we are too few of us saving and why are so many of us not saving enough?

It is so clear that to have money in the future, it needs to be saved now.

How much you save, how often and for how long will determine how much you have in the future. Those decisions actually are much more important than how much you earn on those savings.

So, why is it so difficult to do, when it is so easy to talk about and agree with?

Life gets in the way – braces, college, vacation, bigger house. They are true, and they are valid. But there are simple ways to start saving and stay motivated.

Here’s how to start:

• Set aside half of any raise or bonus: Deposit that portion of each paycheck automatically into a retirement plan. This is a no-brainer since you’re putting away the money before your lifestyle has not expanded to incorporate the added spending money. It still feels like a raise, and you don’t miss the money you never had.

• Find something that motivates you. Retirement can seem like such a distant dream, but here are a couple of more immediate reasons to motivate yourself to save:

  • Save money so you can say “NO.” If you have a decent nest egg, and a job you really don’t like, you can tell the boss “no.” It’s difficult to do when you have a goose egg instead of a nest egg but much easier to do when you have an account statement in your pocket.

  • Put a visual image where you will see it often: It could be a dozen photos of places you want to travel, a photo of a kid in a cap and gown, or a picture that depicts the life you will live when you can afford to work at a different career or working for yourself. Your dream may mean making less income but using an income from your nest egg to supplement your pay and meet the bills. The key here is to find a motivation that is real today — real, felt and not just thought

Each person has such a dream or goal, but it is not usually voiced or even recognized. We can help you identify and clarify it. Once it is clear, you can hold it and use it to help you to save.