Guiding Parents with Dignity

Your Parents are Aging, What Questions Should You Be Asking Them?

As you age, you may find your parents struggling with illness as they age as well. As their daughter, you may be responsible for their care. The emotional and financial strain can be exhausting and the commitment may compromise your career. It can be difficult know where to start when helping your aging parents. Here are some questions to ask yourself to get started:

  • What institutions hold your assets?
  • Ask your parents for a list of their bank, brokerage, and retirement accounts, including account numbers and online usernames and passwords, if applicable.
  • You should also know where to find their insurance policies (life, home, auto, disability, long-term care), Social Security cards, titles to their house and vehicles, outstanding loan documents, and past tax returns. If your parents have a safe-deposit box or home safe, make sure you can access the key or combination.
  • Do they currently work with any financial, legal, or tax advisors? If so, get a list of names with contact information.
  • Do they have a durable power of attorney? A durable power of attorney is a legal document that allows a named individual (such as an adult child) to manage all aspects of a parent’s financial life if he or she becomes disabled or incompetent.
  • Do they have a will? If so, find out where it’s located and who is named as executor. If it’s more than five years old, your parents may want to review it to make sure their current wishes are represented. Ask if they have any specific personal property disposition requests that they want to discuss now.
  • Are their beneficiary designations up-to-date? Designated beneficiaries on insurance policies, pensions, IRAs, and investments trump any instructions in your parents’ wills.
  • Do they have an overall estate plan? A trust? A living trust can help manage an estate while your parents are still living.

(Questions from 360 degrees of financial literacy)

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Financially Savvy Women are educated about investments

3 Simple Steps to Becoming More Confident with Your Money

Women are notorious for putting off making important financial decision or even facing their financial life, why? The most common answer is “I don’t know enough” or “I don’t understand it all.”

As a result they hold off and procrastinate until a crisis forces change (not a great strategy).

So how much do you really have to know in order to make progress with your investment?  It really all starts with three simple steps:

  1. Know how to read your statements: Come to us and we will gladly coach you through these statements so that each month you are crystal clear as to what your money is doing for you.
  1. Know what returns you are trying to achieve:  We have determined a number of factors that can help you achieve financial independence, one of those factors is your “Average rate of return” If you can’t remember this number ask us.  This number should be your guide as to how well you are doing because it’s really all about you achieving your goals.
  1. Know the function of each of your investments: You don’t necessarily have to understand the inner workings of the investment but you should know whether the investment is designed to protect your principle, generate income, grow at a steady pace, reduce risk or provide tax deferred growth.

Are You Prepared For Change?

You love enjoying your financial security; you’ve established your career, you earn a nice income, and you’ve already paid for a home and college tuition’s. However, drastic changes like disability, illness, job loss, divorce, or aging parents can blindside you and your finances. You need to prepare yourself for unexpected changes to protect the financial security you already worked hard for.

Facing Disability, Illness, or Job Loss:

The greatest costs you retain when you become disabled or ill are medical provider charges. These charges include hospital, doctor, and medication bills. It pays to have health insurance especially if you can obtain reduced rates through your employer’s group plan. You may consider disability insurance if it pertains to you. Researching and picking the right insurance for you will provide the coverage that will protect you from paying high medical bills out of pocket.

Losing a job is always a drastic and immediate change. You need to develop some risk management like setting up an emergency fund that will cover all expenses while you are between jobs. Also, think POSITIVE. A job loss can lead to a new career, or a better position in your field of expertise. You may also decide to take some time off to travel, spend time with your family, or try out a new hobby during this time.

(Morris, A Woman’s Guide to Personal Finance)

A young woman executive in a financial meeting

Women, Don’t Retire Without…

A practical financial checklist for the future.

 

When our parents retired, living to 75 amounted to a nice long life and Social Security was often supplemented by a pension. How different things are today!

 

The good news is that life expectancy for women – as measured by the Centers for Disease Control – is now 81.1 years. The Social Security Administration estimates that the average 65- year-old woman today will live to age 86. 1,2

 

Given these projections, it appears that a retirement of 20 years or longer might be in your future.

 

Are you prepared for a 20-year retirement? How about a 30- or 40-year retirement? Don’t laugh, it could happen: the SSA projects that about 25% of today’s 65-year- olds will live past 90, with approximately 10% living to be older than 95. 2

 

How do you begin? How do you draw retirement income off of what you’ve saved, and how could you create other possible income streams? How do you try and protect your retirement savings and other financial assets?

 

Talking with a financial professional – a female financial professional – may give you some good ideas. You want an advisor who walks your walk, who understands the particular challenges that many women face in saving for retirement (time out of the workforce due to childcare or eldercare, maintaining financial equilibrium in the wake of divorce or death of a spouse).

 

As you have that conversation, you can focus on some of the must-haves.

 

You should plan your investing. Many women (and men) retire with a random collection of investments, and no real strategy. Some are big on “chasing the return” – assuming risk they really shouldn’t in pursuit of a double-digit yield. Others are very risk-averse, so fearful of what stocks might do that they stay out of the market entirely – and in the current low interest rate environment, that represents an easy way to fall behind and lose purchasing power to inflation.

 

You need a middle ground. When you are in your fifties, for example, you have less time to make back any big investment losses than you once did. So protecting what you have is a priority. At the same time, the possibility of a 15-, 20-, or even 30- or 40-year retirement means you have to keep a foot, if not both feet, in some kind of growth investing. Your initial retirement nest egg has to keep growing.

 

You should look at long term care coverage. It is an extreme generalization to say that men die sudden deaths and women die lingering ones; however, women often have longer average life expectancies than men and can require weeks, months or years of eldercare. Medicare is no substitute for LTC insurance; it only pays for 100 days of nursing home care, and only if you get skilled care and enter a nursing home right after a hospital stay of 3 or more days. Long term care coverage can provide a huge financial relief if and when the need for LTC arises. 3

 

Claim those Social Security benefits carefully. If your career and health permit, delaying Social Security  is a wise move for single women. If you wait until full retirement age to claim your benefits, you could receive 30-40% larger Social Security payments as a result. For every year you wait to claim Social Security, your monthly payments get about 8% larger. 4

 

Married women can look at spousal claiming strategies such as the “file and suspend” approach and claiming spousal benefits first. This may help to maximize the Social Security benefits you and your spouse receive.

 

Above all, retire with a plan. Have a financial professional who sees retirement through your eyes help you define it on your terms, with a wealth management approach designed for the long term.

 

1 – http://cdc.gov/nchs/data/nvsr/nvsr61/nvsr61_06.pdf

2 – http://ssa.gov/planners/lifeexpectancy.htm

3 – http://medicare.gov/coverage/skilled-nursing-facility-care.html

4 – http://money.usnews.com/money/retirement/articles/2012/04/02/what-older-workers-dont-know-about-social-security

Why Women Are Prepared for Financial Success?

We have the ability to excel financially; it is a matter of shifting our outlook.

Statistics don’t mean everything. Read enough about women and money online, and you will run across numbers indicating that women finish a distant second to men in saving and investing. Only 42% of women save a specific amount money each month for retirement, the State Farm Center for Women and Financial Services at the American College finds. Aon Hewitt says that the average 401(k) balance for a man at the end of 2012 was about $100,000, while it was only about $59,300 for a woman. And so forth. 1,2

Depressing? Well, consider that you can be the exception. (Maybe you are right now.) You may already have the discipline and patience central to smart investing and saving.

Is making a household work all that different from making your money work for you? You may or may not have to broaden your skill set a bit to save and invest well for retirement; chances are, though, you already have some abilities you can draw on effectively.

The latest edition of Prudential’s “Financial Experience & Behaviors Among Women” study (2010-2011) shows that 54% of women either feel “very knowledgeable” or “somewhat knowledgeable” about financial products. The previous edition of the study noted that 95% of women are financial decision makers within their households, with 84% of the married women surveyed solely or jointly in charge of household finances. 3

Given that level of participation and control over household finances, is it such a stretch to believe many women could become equally financially literate in their understanding of stocks, bonds, commodities, and insurance? It isn’t a stretch, especially when you think about how much good financial knowledge is out there, some of it free of charge.

Most household financial decisions are short-term decisions. They are geared toward this month or this year, and often relate to cash flow management or debt management. The simplest step toward financial freedom for many women – perhaps the most valuable step – may be moving from a short-term financial outlook to a long-term financial outlook.

Think about becoming the “millionaire next door.” In many cases in this country, wealth is grown slowly and steadily. We all dream of a windfall, but usually individuals amass $1 million or more through a variety of factors: ongoing investment according to a consistent financial strategy, the compounding of assets/savings over time, business or professional success, and perhaps even inherited wealth.

When the focus moves from “how do we make it work this month” to “how do we make moves in pursuit of our financial goals”, the whole outlook on the meaning and purpose of money begins to change. What should money do for you? What purpose should it have in your life? What can you do to make it work harder for you, so that you might not have to work as hard in the future?

Women have the wisdom, prudence and patience to make superb investors. Understanding the financial world is ultimately a matter of learning its “language” and precepts, which will quickly seem less arcane with education. Today, do yourself a money favor and ask to talk with a female financial professional who can help you define long-term and lifetime financial goals and direct some of your money in pursuit of them.

1 – http://www.cnbc.com/id/100732440

2 – http://blogs.marketwatch.com/encore/2013/08/14/401k-gender- gap-is- bigger-than- pay-gap/

3 – http://prudential.com/media/managed/Womens_Study_Final.pdf

Building Wealth image

What are an Investor’s Best Friends’?

Meet diversification, patience and consistency.

Any investor would do well to call on three friends during the course of his or her financial life: diversification, patience and consistency. Regardless of how the markets perform, they should be a part of your investment philosophy.
Diversification. The saying “don’t put all your eggs in one basket” has real value when it comes to investing. In a bear market, certain asset classes may perform better than others. Ditto for a bull market. If your assets are mostly held in one kind of investment (say, mostly in mutual funds, or mostly in CDs or money market accounts), you could be hit hard by stock market losses, or alternately lose out on potential gains that other kinds of investments may be experiencing. So there is an opportunity cost as well as risk.

This is why asset allocation strategies are used in portfolio management. A financial advisor can ask you about your goals and tolerance for risk and assign percentages of your assets to different classes of investments. This diversification is designed to suit your preferred investment style and your objectives.
Patience. Impatient investors obsess on the day-to-day doings of the stock market. Have you ever heard of “stock picking” or “market timing”? How about “day trading”? These are all attempts to exploit short-term fluctuations in value. These investing methods might seem fun and exciting if you like to micromanage, but they will add stress and anxiety to your life, and they are a poor alternative to a long-range investment strategy built around your life goals.
Consistency. Most people invest a little at a time, within their budget, and with regularity. They invest $50 or $100 or more per month in their 401(k) and similar investments through payroll deduction or automatic withdrawal. In essence, they are investing on “autopilot” to help themselves build wealth for retirement and for long-range goals. Investing regularly (and earlier in life) helps you to take advantage of the power of compounding as well.
Are diversification, patience and consistency part of your investing approach? Make sure they are. If you don’t have a long-range investment strategy, talk to a qualified financial advisor today. Please let us know by posting your comments on our Financially Savvy Women Fanpage.

Do you have money questions

Delayed Gratification Today, For A Better Retirement Tomorrow

A little “delayed gratification” may help you retire more comfortably.

Baby boomers are known for wanting more out of life – and for living life on their own terms. They also get a bad rap as a generation weaned on instant gratification – wanting it all now, wanting to have it both ways.
It is neither wise nor truthful to paint a generation with a broad brush. What we do know in 2016 is that more Americans than ever are poised to retire. In fact, 10,000 Americans will turn 65 each day during the, last 6 years and for the next 12 years.1 Will their retirements match their expectations?
Are boomers in for a collective shock? Many boomers are used to affluence and expect creature comforts in retirement. Yet many may not understand how much money retirement will require. A 2010 study from the non-profit Employee Benefit Research Institute estimates that about half of “early” boomers (those aged 56-62) will face a retirement shortfall – someday, they will have inadequate income to pay medical costs and core retirement expenses. EBRI also estimates that 43.7% of “late” boomers (those aged 46-55) are likely to exhaust their retirement savings as well.2

Investing aside, what about the way we spend? EBRI research director Jack VanDerhei told TheStreet.com that beyond federal policy decisions, “[what is] even more important is to identify which of those households still have time to modify their behavior to achieve retirement security, and how they need to proceed.” 2

What is a need and what is a luxury? Now here is where it gets interesting. In a new survey of more than 1,000 boomers conducted by MainStay Investments, more than half the respondents identified “pet care” and “an internet connection” and “shopping for birthdays and special occasions” as basic needs. Almost half checked off “weekend getaways” and “professional hair cutting/coloring” as basic needs. Perhaps the definition of a “basic need” is expanding. Or perhaps we have gotten so used to these perks that we can’t imagine living without them (and not spending money on them).3
Boomers are necessarily growing more pragmatic. The MainStay survey results hint at a shift in their financial outlook. The survey found that 76% of boomers were willing to work longer and save more in pursuit of more retirement comfort.3
Additionally, 40% of those surveyed said they will have to delay retirement in order to afford their desired lifestyle – and 47% said they would be willing to live in a smaller house to have more of the above luxuries/needs. A whopping 84% of respondents indicated they would be willing to allocate a portion of their assets so that they might have consistent lifelong income. However, just 52% of them were in contact with a financial consultant.3
We can learn from our elders. Look at the sacrifices made by the “greatest generation”. World War II demanded so much from Americans, not only in the theatres of combat but at home. For several years, new cars weren’t manufactured, travel was discouraged, and food, clothing and gasoline were rationed. The entire economy was rearranged, and more than 40 million Americans had to start paying federal income tax.4
This generation certainly understood delayed gratification. Yet with all that economic and political upheaval, its members collectively enjoyed the most comfortable retirement in American history (and perhaps the history of the world).
Will we pay for today’s lifestyle tomorrow? Financially, that is a risk we face. Many of us have not saved enough for retirement, and the financial markets have been especially volatile of late. So it only figures that spending less and saving more today could help us out tomorrow. Who knows – if some extra effort is put in now, we may end up with enough money to “live it up” later.
Citations
1 – http://www.sacbee.com/2010/08/29/2990176/baby-boomers-signal-shift-in-what.html
2 – http://www.thestreet.com/story/10806795/even-wealthy-face-retirement-shortfall.html
3 – http://www.reeerisa.com/news/fe_daily.aspx?StoryId={66D70228-CEFE-4782-9058-F2F2DAB68DD1}
4 – http://www.nationalww2museum.org/education/for-students/america-goes-to-war.html

House and glasses on papers

When Mediation is NOT the best choice.

As a woman it’s easy to let your feelings of guilt, desire for closure and avoidance of conflict to undermine your divorce process, especially when engaging in mediation. When the emotions are running high you may be better served with a lawyer who can intervene when you are not making the best decisions for your future.

In mediation while the lawyer can suggest steps you should take to clarify financial values they can’t do more than just suggest. You may need someone to take you by the hand and lead you to the path that is best for your future. Remember in most cases it’s not just YOUR future it often includes your children as well.

Remember that it’s important to speak to a financial advisor, before, during and after a divorce, as lawyers are legal representatives, not financial ones? Please let us know by posting your comments on our Financially Savvy Women Fanpage.

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What do Women Want from their Financial Advisor?

Women are now the principal breadwinners in four out of 10 families with children younger than age 18, reports Pew Research (63 percent of such women are single and 37 percent out-earn their husbands). The financial-services industry is taking notice of gender differences, and so should you.

Finding an Advisor who speaks the female language is crucial. Presentations that focus on a portfolio’s return, investment style, market capitalization and performance compared with a benchmark tend to work well with men. This style does not work with women. Women prefer a more personalized conversation that focuses on their visions and goals.

When speaking with your Advisor, do you know what you want? Please let us know by posting your comments on our Financially Savvy Women Fanpage.

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Women’s Money Mantra

When you begin the journey of taking charge of your financial life remember and repeat the Women’s Money Mantra.

1. You don’t have to have it all together, just start
2. It’s okay not to know, as long as you are willing to learn
3. If in doubt reach out and find a professional you LIKE and likes YOU not just your money
4. There are no stupid questions just complicated answers, keep asking
5. When they say “Just trust me” run the other way and find another advisor

 

Do you have a Mantra you would like to share? I’d love to learn about yours! Please let us know what you think by posting your comments on our Financially Savvy Women Fanpage.