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What Can You Do in This Time of Uncertainty?

What were your major concerns in January and February of this year?

Are those the same top of mind issues for you now at the beginning of April 2020?

How different our lives have become from the beginning to the end of March 2020.

Many people are not allowed to go to work unless they are deemed critical workers. Many schools are closed. We are told we should only leave our homes for needed groceries, medicine and healthy exercise. We are to keep physically distant from each other; clean surfaces we touch, wash our hands, etc.

The Covid-19 pandemic is spreading all over the United States and the world and the death toll is rising.

The US stock market dropped on March 9 with history’s largest point plunge for the Dow Jones Industrial Average (DJIA) up to that date.( https://www.thebalance.com/fundamentals-of-the-2020-market-crash-4799950).

March 27, the $2 Trillion coronavirus stimulus bill was signed into law to help those who are out of work and the small businesses that have been ordered to close. Many other segments of the economy are on pause.

For many of us, it is difficult to deal with the changes in work, play, social and family life. But we can become overwhelmed when we add in the worries overpaying our bills and the fear of getting fatally sick.

What can you do, in the face of threats to your health, money, and security?

In addition to being of service to others, you can do what only you can do. That is to think about your life. Ask yourself what really matters to you? To get at that answer, people play with questions like: If you had to be alone on a desert island for a year what would you take with you? If your house was on fire what would you take out of the house? Most people don’t face such dramatic situations. Notice the questions seem to focus on stuff, physical objects. Although those with family members and pets would likely be sure those treasures were out of the house, safe from the fire.

The harder and more purposeful question is “How can you live your daily life well?” What is most important in each day for you? Is it important for the day, or for the long-term, however, you want to define long-term?

“How to live your daily life well” is a deep philosophical, psychological and spiritual question. The question may seem too big or fuzzy. However, you answer it every day, maybe not consciously, but you answer it by what you do, how you speak to others and how you spent your money and your time.

Since money is limited for most of us, the decision to spend on this rather than that discloses your values. Tell me how you spend your money and I’ll tell you who you are. You are not going to spend money willingly on things that don’t matter to you. Likewise, though we are grateful for each 24 hours, we can not make more hours in the day. So, how we spend each hour, underscores what we value.

You may have more free time than you have had in years and here are two thought experiments that can create personal certainty for you and ready you for the next phase of back to the normal rush.

The Zero-up Budget

Here is a short dialogue from my first book, Wealthy Choices: The Seven Competencies of Financial Success. It is between a husband and wife.

Mary: “Jim, how could you spend $130 on baseball tickets?”

Jim: “It’s my money I can do what I want with it.”

What’s next? A quiet cup of tea, or a fight? Why is Mary angry? Why does Jim answer as he does? If they were your friends, what advice would you give them?

If Mary and Jim could have created the Zero-up Budget described next, maybe they could understand each other and not fight.

To discover more about your inner workings and values, I suggest that you create a Zero-up Budget. If the household money and responsibilities are shared, then each person should create a Zero-up Budget.

Here’s the process. Start with any dollar amount. It could be your income for the month. What is the most important and first use of the money? Write that down. That statement will go at the bottom of the list. Lay on top of that, the next most important thing to spend money on. Keep doing that until you have spent the whole sum. What was left out? Should an item you included be swapped out for something that is more meaningful to you? Can you lower the cost of some items?

It is possible that you and the other persons disagree. No arguments or loud voices are allowed. Ask with love, “That’s an interesting choice. Why is that important to you?” Hopefully if this is a conversation with yourself or with someone else, it leads to a deeper understanding of what is important, and an opportunity to make other choices that in the long run make you more the you you want to be. It is likely when you are really living from your values, stress, overspending and feeling unsatisfied will lessen, and feeling more at ease and sure of yourself will increase.

The Time Thought Experiment

The Time Thought Experiment is the same process as the Zero-up Budget. Think about how you spent your time when life was more “normal” for you. Then log what you are doing now. Write down hour by hour, or quarter hour by quarter hour, how you have spent your time. Notice we commonly use the word “spent” when we talk about our use of time. It is a treasure and we spend it. As you look over days of your log, what does it tell you about what you value, what you made time for, and what you wasted?

If you have gotten upset if you wasted money, lost money in the market, or overpaid for something, how do you feel about wasting your time? Does it make sense to say, “I did such and such just to kill time?”

In the face of so much exterior uncertainty, you can create more internal stability, joy and peace by thinking more deeply about your life. Yes, there are many more questions to ask about relationships, faith, what it means to be a citizen, a neighbor, a person of integrity, etc. Create your own thought experiments. I would be grateful if you shared your thoughts.

I pray that you and your loved ones stay well and manage the present external difficulties with courage and optimism and that you are more centered in your own values by giving yourself time to do what only you can do; uncover your central values and be better aligned with them.

 Penelope@wealthychoices.com. In all 50 states, Penelope S. Tzougros is registered with, and securities and advisory services are offered through, LPL Financial, Member FINRA/SIPCShe is affiliated with Bay Financial Associates, LLC. Financial Planning is offered through Wealthy Choices® and Bay Financial Advisors, Inc. Both are registered investment advisors. Neither is a broker-dealer nor affiliated with LPL Financial.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

 

What Women at Fifty Heading into Retirement Solo Need to Know

What’s important and different about being a woman in your fifties heading toward retirement?

Assuming that the money you have saved is not augmented by an inheritance (parents needing care can eliminate an inheritance) or some other significant influx, how should you think about your retirement? Three things:

  1. Know your values.
  2. Know your expenses.
  3. Know your risks.

Values: You have the freedom to spend money on what is in line with your values. What do you value? IF it is a trip abroad, are you willing to be sure you can cover the expense by choosing wisely about how often you are eating out or having a drink (often expensive) with friends?

Are you still pulled into spending more than you want because the whole group is going to do this, or buy that? You go to an expensive restaurant and others are having drinks and appetizers. Your meal was on the less expensive side. They decide to split the bill equally. Is that what you intended? You’ve just subsidized their good time.

Ask before you spend money, which of my values is this enhancing: staying fit, giving to charity, looking good, being financially secure?

A professor who had retired from teaching decided that the cost of cut and color was no longer worth it. She had her hair cut and let it go gray. Those dollars could be spent elsewhere.

Thinking about your values may make each thing you spend money on an addition to your life not just an expenditure.

Expenses: Budgets can be as detrimental to good health as diets. However, the world of guesstimates is also dangerous. You need a baseline which shows you THIS is what you are actually spending. It includes dry cleaners, vet bills, postage, apps, costs for repairs and maintenance of your home. IF your home is a house, then the detailed costs down to having the gutters cleaned and the AC / heating system tuned up must be included. Such details are often overlooked. No wonder people look for reverse mortgages.

Figure on expenses rising by at least 4% a year with medical costs increasing by 5% or more. If you want to be independent and secure financially, you want to have the numbers helping you, not haunting you.

It is likely your portfolio can be improved to grow the income and the principal. Growth and guarantees can create a tranche of security. Talk with someone knowledgeable who you trust.

Risks: If you had to be quarantined for 14 days, is your banking set up to pay the bills? Who walks Fido? Who takes the car in for an inspection? Who returns the books to the library? Who brings in the groceries? Who does the laundry? What if you need not 14 days of care but long-term care? Do you have a devoted group of friends and extended family who would commit to being there daily to take care of you? IF not, how are you planning to address this risk?

You are used to being your own backup, but sometimes that isn’t enough. What are you putting in place to cover health and financial risks?

Being an independent, single, woman headed to retirement is an invigorating time because it can all be on your terms. You can have a retirement that is satisfying and full of self-discovery. It’s all in your grasp if you have thought deeply about what is important to you, your values, how your money supports your values and how you have braced yourself for health and financial risks.

Enjoy your days!

My Portfolio Sank. Now what?

The markets have declined and so have many portfolios.

A client called me and asked which of three options she should take: 1) stay put; 2) sell everything; 3) commit suicide. Fortunately, she meant the third option to be humorous.

Here are the guidelines I suggest.

1) If your account statement shows a loss, it is a paper loss until you sell. When you sell, you lock in that loss, that lower dollar value. Keep in mind the difference between a paper loss and an actual loss.

2) If you bought an investment because it was good quality, give it time to recover. The comparison I make is if a healthy person gets the virus (not covid-19), then rests, gets proper nourishment, etc., that person is likely to be fine in a week or two. A good investment is like that though the recovery time may be different. So, just be patient.

3) If you are not confident that your investment will recover, or you think is will lose more value, then consider an investment that will guarantee growth. There aren’t a lot of guarantees in the investment world, but annuities do offer guarantees based on the claims paying ability of the issuing company. Would it be acceptable to you if your portfolio grew at a guaranteed 5%, 6%, or 7%?  If you answer, yes, then learn about annuities and understand their benefits and limitations.

They are long term investments with fees, and restrictions. I’ve written, Annuities-Retirement Promises or Traps to introduce you to this type of investment. You can download it here.

You might ask, “Wouldn’t I do better just to wait for the market to bring up the value of my portfolio?” Maybe. But, consider this if you are nervous about it sinking more, or how fast it will grow back, you could take just a portion of your portfolio and invest it at a guaranteed rate, that portion would be guaranteed to grow at a specific rate for a specific time.

This action might make you feel better and also help your money grow.

There are many types of annuities but what I have found as a financial planner for over several decades is that those in their 60’s and 70’s might find two types of annuities attractive for their purposes.1 One is a Single Premium Immediate Annuity (SPIA) and the other is a Variable Annuity with a Living Benefit. Those are explained more fully in the Annuities article.

Any investment should be a right fit for your goals and your mindset.

4) Explore and learn about investments. Look at the history of the stock market. Notice the downturns and the recoveries. When you see those patterns, you have a context for understanding what is happening now.

Purposeful and thoughtful investing lessens stress and can help you be a successful investor.

Perspective on Retirement

I’d like to share with you a perspective on retirement.

Entering retirement is like entering you late teens – without the acne.

What do the two time periods of our lives have in common?

Uncertainty, vulnerability, changing identity.

Uncertainty in the years to come

When we are in our late teens there are big unknowns:

  • Am I going on to college, which college?
  • What will the course of study be?
  • Will I marry? Who will I marry?
  • What kind of job will I find?

Entering retirement also has very big questions with answers that are just as uncertain.

  • Will my money last?
  • Will I be able to stay in my home?
  • Will I stay healthy and able?

Vulnerability

As teenagers and as retirees—we may feel that we are at the mercy of our emotions

Our reactions may be out of proportion to whatever event triggered them. Suddenly we experience surging emotions –passion, depression, anger, or fear.

Sometimes we feel out of control not sure what is pushing our buttons.

In both time frames, we may feel we don’t have much control, or power to shape our lives?

Changing identity

The teenager is finding a voice, maturing, trying to fit in, be liked and be taken seriously.

The retiree may be asked: “What do you do for work?”

Perhaps the retiree happily answers, “I’m retired.”

OR maybe the person says, “ I used to be…. such and such.” The title at work gave the person an identity and gave structure to the day. The retiree is not ready to completely remove that identity and is trying to figure out what to do with the hours of the day, and asks:

  • Who am I if I am not that person who did such and such a job?
  • What do I do all day?
  • Well, the volunteering, gave me something to do. It whiled away the hours.
  • I wish there was something I could do that is worthwhile.<>/li

Are the sentiments above going to express your view when you have time on your hands?

As you head to retirement, why not have a discussion with yourself, or others about these ideas:

Uncertainty– What does your future look like?

When you were 18 what did you guess or think would unfold in the next five years?

Did what you expected to happen, actually happen?

Now that you are retired – what do you expect or guess might happen in the next five years?

Vulnerability

Who are you emotionally?

When you were 18 what were you passionate about?

what got you angry?

What did you fear?

At your current stage of life, what are you passionate about? what makes you angry? What do you fear?

What is the same emotionally? What’s different?

What do you feel in control of?

Identity

Who are you?

What is your gift to others now?

For what talents, or actions do you want to be remembered?

Try out this comparison of you as a teenager and you now and see what it leads you to. You might rediscover deep interests that you set aside for years, because of the pressures of making a living.

You may find more to treasure in your life, more to live for, and more vitality.

May your retirement be a lively one with the energy of a youth and the wisdom of age.