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Before You Retire, Ask These Thorny Questions

Most of the focus for retirement planning is about how much money you need.

Yes, that is important, but if you haven’t asked the right questions about how you live in retirement, all you have is a target number from a calculator.

There are many retirement calculators on the internet and there are even more used by a variety of financial advisors.

You assume that you have an answer to “how much money do I need to retire?” because the process and technology gave you a specific number, or range of numbers. That is logical, and the calculator may have provided a reasonable assessment. But, the quality of your retirement rests on more than dollars.

Did the inputs to the calculator ask you the questions that follow? No, of course not. Its job is the numbers from investment statements, Social Security or a pension.

Okay then, have you answered the questions about the quality of your days? If not, give yourself time to consider these questions now before you retire so you can protect your retirement and make it what you hope it will be.

These Are the Thorny Questions to Ask Yourself

Why should you assess these questions for yourself? Because they prick your awareness and force you to be more conscious of your decisions.

Answer them well and then secure the fragrant, beautiful rose of retirement.

  • Describe what you would be doing on a day that you said that was a good day? How many days could you spend this way?
  • What would block your having such good days?
  • How often have you missed a meal because you were too busy doing something you enjoyed? What were you doing?
  • Will you fill your days by doing things just to pass the time, or do you have things you want to do that are satisfying and purposeful? What are those things?
  • If you were sick, not sick enough to be hospitalized but you were bed ridden for a month or more, who are the people who you could count on to prepare food, get groceries, do laundry, walk the dog, feed the cat, water the plants, bring in the mail, pick up medicine, pay your bills, etc.?
  • How often would these people be able to help you given their other commitments?
  • Would you have to pay for helpers? Is that in your budget?
  • How would you pay for an extended incident of long-term care?
  • If you’ve made friends at work, have you made a plan for how to stay in touch, or are they just friends at work?
  • Who are the people you will want to spend time with, and when are they available?
  • What gets you out and about every day?
  • Can you regularly share a meal, a drink, coffee, or tea with friends in the neighborhood, or have many of your friends moved away?
  • While you were working and getting raises, increasing maintenance costs for your house and the increasing real estate taxes were manageable. When you retire, will you be able to cover those added costs?
  • Once you pay all your expenses and bills, how much do you have left to cover unexpected or rising costs?
  • Over the next five to seven years, will keeping your house in good shape eat up most of your “extra” money that you would rather spend on leisure or other things?
  • What does it cost to run your house? Did you include even things that are not annual like repointing the bricks, cleaning the chimney, painting the exterior etc.?
  • What does it cost to run your lifestyle? Did you include items like the annual fees on your credit cards, the excise tax on the car, gifts, club memberships, internet subscriptions, etc.?
  • Given the expenses for your house and the cost of running your lifestyle, will you run out of money? How did you arrive at that answer?
  • Can your portfolio produce more income? How much more?
  • What are your top two concerns as you enter retirement?

If you have not retired yet, or even if you are early in retirement, you have time to work on these questions and make adjustments. The value of really digging into these questions is strengthening your retirement and making it a time to savor and appreciate much that you had to rush past when you were working.

What are the secrets of happy retirees (you will likely to be among them)?

  • When you are engaged and productive.
  • When you maintain close social connections.
  • When you manage money so that you are spending less than is available and there is money left over after expenses.
  • When your age is for you a number and not a limit.
  • When you feel that you are continuing to grow into the fullness of who you really are. Alternatively, the question would be “When did you stop growing?”

IF as you developed your answers to these questions, you realized that you would benefit from talking with someone who has coached hundreds of retirees as they navigate the transition to retirement, then call me, Dr. Penelope Tzougros, at 781 577 2311 or email me at [email protected].

I can help and I’m eager to see you succeed.

 

 

Penelope S. Tzougros, PhD, ChFC, CLU. Financial Planner, Author, National Speaker. Wealthy Choices.com. In all 50 states, Penelope S. Tzougros is registered with, and securities and advisory services are offered through, LPL Financial, Member FINRA/SIPC. She 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. The opinions expressed in this material do not necessarily reflect the views of LPL Financial. To determine which investment(s) may be appropriate for you, consult me prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

Does Your Retirement Portfolio Have Fat Cows?

Let’s define the terms. “Portfolio” is all your assets that can grow and produce income. I’m looking for fat cows. I apologize to farmers and ask their indulgence as this city person talks metaphorically about cows.

By fat cows I mean a cow that gives milk which is the dividend or income and a cow that is not losing weight which means your assets are holding their value or growing.

Identify each of your retirement investments. They can only have a space in your portfolio if they are growing your money or producing income. You want both functions because you want to keep up with rising costs during retirement.

“Strong” is subjective but it suggests the cow is healthy and is strong enough for your purposes. What are your retirement purposes?

  1. You want to pay all your bills and expenses.
  2. You want to have something extra for those things that make you smile and expand your horizons (i.e. travel, family reunions, class reunions, a new hobby or business, etc.).
  3. You want the ability to withdraw up to $25,000 for an emergency without reducing the income you need for normal living expenses.
  4. You have created a strategy for covering the cost of long-term care that will not make the cow very, very skinny. Bringing care into your home might cost $25 an hour on average [Genworth Cost of Care Survey 2018]. If you needed twenty-four-hour care for six months, that might run about $109,000. Can your portfolio pay that? When you recover, will your portfolio recover too? Will that expense permanently reduce the portfolio? Are you aware of the other ways to pay for long-term care?
  5. When you review your assets at the end of each year, have your assets either grown or have not declined.

If your portfolio is a fat cow that can stay fat, then your portfolio is strong enough for your purposes.

It is easy to get caught up in analysis and forget the big picture. Fat cows are not the usual metric that financial planners use to discuss portfolios, but a vivid image can do a lot to keep us focused.

If you want help with working towards keeping your retirement portfolio strong, meaning keeping the cow fat and giving milk, give me a call. Dear Farmers, these are metaphoric cows. Much as I admire what you do, I can’t help with real cows. Sorry.

 

1 The payment of dividends is not guaranteed. Companies may reduce or eliminate the payment of dividends at any given time.

Penelope S. Tzougros, PhD, ChFC, CLU. Financial Planner, Author, National Speaker. Wealthy Choices.com. 2019 Eric Hoffer Award Honoree, Your Home Sweet Home: How to Decide Whether You Should Stay or Move in Retirement. 2014-2020 Five Star Wealth Manager (Award based on 10 objective criteria associated with providing quality services to clients such as credential, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2014-2020 Five Star Wealth Managers.)

130 Turner Street, Bldg. 3, Suite 230, Waltham, MA 02453. Direct to Penelope 781 577 2311.

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. All indices are unmanaged and may not be invested into directly. This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor. Passionate World Talk Radio and Wealthy Choices are separate entities and are not affiliated with LPL Financial.

 

 

Risks That Can Batter Your Retirement Assets

Your retirement assets may have to respond to many different risks. Which of these worry you and which do you have a strategy for?

Risk to principal. You buy a stock at $30 a share and it drops to $15 a share. Ouch! What are your choices? Wait for the price to rise? Take the loss and move on.

What you do will depend on why you bought the stock, your target for selling, and what caused the price decline. Does it signal something had fundamentally gone wrong?

Market risk. The market goes down, not just your stock.  Don’t be startled. Let me share what I hope is a calming perspective about the S&P 500 composite index. You may know that it is an index that you cannot invest in directly. Past results are no guarantee of future results.

Let’s consider research from 1949 to 2019. Knowing the historic patterns may remove some fear and prevent you for jumping out of the market when it would be better to stay in. [American Funds, “Investor Resource: A Guide to Market Fluctuations Keys to Prevailing Through Stock Market Declines” 2019]

In that 70-year period:

5% declines happened 3 times a year

10% once a year

15% every four years

20% about once every seven years

In addition, history shows that for the worse declines those of 20% or more, in the next five years, the investment doubles from their lows.

So, patience and holding on are likely to be a good strategy. IF you are holding quality investments that have been resilient at other times, then you have a reason to stay invested. The analogy is a healthy person gets the flu and is knocked down for a while but is likely to recover and be fine.

Inflation risk. Inflation is like a silent thief. Today you have $1000 and if inflation averaged 2% for ten years, your account may say $1,000 but that money can only purchase $818 of goods.

You can look at these in two ways; your money can buy less, or you need more money to buy the same thing. So, forty years ago a gallon of gas for a car cost on average 86 cents. The average now is $2.77 which is three times more. [AAA national average 7/7/19]

So where will you get the money for the increase in goods and services? If you are working, hopefully you will have raises. If you are retired, then what?

Recall that the rate of inflation in the 1970’s was 7.25% and in the 1980’s it was 5.82%.

[Average Annual Inflation Rates by Decade FEBRUARY 22, 2019.tby   Tim Mcmahon  https://inflationdata.com/Inflation/Inflation/DecadeInflation.asp]

Do you know if and when those levels of inflation might return?

There would be a significant impact on mortgage rates, credit card interest, and car loans. If those increased what would you do?

The risk of being too conservative. You may not like the first two risks (risk to principal and market risk) and therefore you don’t want to take risks.

An NYU professor tracked the returns for 90 years from 1928 to the end of 2018 on 3-month Treasury Bills and the S&P 500 index. He showed that $100 invested conservatively in the 3-month Treasury became $2,063.40 and the $100 in the S&P 500 became $382,850. [You can get the excel spreadsheet that contains all of this data and more here: http://www.stern.nyu.edu/~adamodar/pc/datasets/histretSP.xls]

How conservative can you afford to be?

Has someone shown you how you can be conservative and also grow your money? If not, you may want to access my free white paper to help you begin to understand this concept of growth for someone who is risk averse.

Risk of Under reporting expenses. For instance, those expenses for your house and your lifestyle. Know the total cost of running your house and your lifestyle expenses.

You can run out of money because you are under-reporting what you are spending. You may think it doesn’t matter. But, focus in detail at least once a year. Get accurate and comprehensive numbers for the house and your lifestyle otherwise you may lead yourself into a downward spiral and wind up running out of money.

You do not want to outlive your money!

Risk of poor financial planning and poor portfolio construction. Have you, or has a someone else provided a financial plan that included health care costs and an assessment of the strengths and vulnerabilities of your portfolio?

With a clear view of what your portfolio is doing for you, you can make improvements now if needed. Don’t wait for a crisis to find out your portfolio never considered your being sick. Optimism is fine but poor planning isn’t.

Risk of relying too much on one asset. Examples of this are the house, the stock of the company you work for, your art collection, investment real estate.

Diversify the money streams. Different asset classes each have their highs and lows and respond to the larger forces of the economy (there is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk).

IF you know that you will need to sell a specific asset, find out the trends that make a sale advantageous for you.

A wonderful asset may lose its value not intrinsically but because of timing. Risk is about timing not only fundamentals.

Risk of not saving enough for each investment goal. Most people have five pockets for investing:

  1. Rainy day or emergency.
  2. One-year goals.
  3. Two to five-year goals.
  4. Five to ten-year goals.

It’s valuable to adequately fund each goal otherwise you may be forced to borrow from retirement to pay a rainy-day incident. That’s not a good outcome.

Risk of not knowing when to begin to fund retirement and when to end funding retirement. When you have steady work (meaning income) that you expect to continue for six months or more, SAVE SOMETHING. Even if it is a dollar. The function of this deposit into a savings account is to create in your mind a pattern that will serve you well. You don’t live life only aware of today. You plan other things you will do this week and next. In the same way, money is not all for today.

When do you stop saving for retirement? You don’t unless you are exceedingly wealthy.

You are saving something in retirement for the same reason you saved when you started out. There are unexpected good things and bad ones and having the “extra” money makes a big difference to your sense of calm.

Small sums matter:

  • $5 a week if it could earn 5% on average in 5 years might become $1,473.
  • $50 a week might become $14,734 in 5 yrs.

This is a hypothetical example and is not representative of any specific situation. Your results will vary. The hypothetical rates of return do not reflect the deduction of fees and charge inherent to investing.

Do you have a family? The risk of forgetting you are a family and that you can pull together. When an elder parent or relative needs care, there is often an unspoken assumption that a particular person will take on the role of caregiver.

Let’s say everyone assumes Alice will take it on. Maybe because Alice lives closest or has fewer family responsibilities or a more flexible work schedule. However, Alice does not want to take on the role and is not assuming she will.

If you have an elder who is in their late sixties, or in his or her seventies, that person may not qualify for long-term care insurance. IF the person is healthy enough to qualify, but cannot afford the premium, what if all of you contributed to paying the premium? Then there would be professional care for your loved one and you could be supportive, visit and help without just one person like Alice taking on the full-time duties of a care giver.

According to the Altzheimer’s.org fact sheet, every 65 seconds someone in the United States develops the disease. It is the sixth leading cause of death in U.S.

The national median cost for a year in a nursing home is $100,375 and over five years it has increased by 3.64% according to the Genworth Cost of Care Survey 2018.

US Department of Health and Human Services says that people who reach age 65 will likely have a 40% chance of entering a nursing home.

But 70% of those over 65 will need some type of long-term care services.

So, who are you going to take care of? Who is going to take care of you?

The government does not pay for custodial care unless your assets as a single person are under $2000. For a couple the numbers are low but not that low.

Can your portfolio pay out over $100,000 for a nursing home or do you have a devoted circle of friends and family who will take care of you 24 hours a day?

As a family, you could chip in to pay for a long-term care policy for your mom or dad (guarantees are based on the claims paying ability of the issuing company).

If you are 50 you should consider some sort of long-term care strategy. As a family you can help each other and care for a parent by sharing the financial commitment.

Life and investing expose us to many risks. By being aware of some of them, we can plan and create alternatives or safety-nets. A spirit of resilience and optimism helps.

 

Penelope S. Tzougros, PhD, ChFC, CLU. Financial Planner, Author, National Speaker. Wealthy Choices.com. [email protected]. In all 50 states, Penelope S. Tzougros is registered with, and securities and advisory services are offered through, LPL Financial, a registered investment advisor. Member FINRA/SIPC.

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.

 

Uncertainty: The Market is Not Alone

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It’s often said that the market doesn’t like uncertainty. How about you and friends, do you like uncertainty? This period of the Great Dislocation has yanked us from what anchors our active lives. For millions of Americans, gone are the regular schedules for work, school, entertainment, shopping for groceries, going to the gym, seeing friends and family. Savings are being spent because income has stopped.

What is certain is:

  1. Americans are dying of Covid-19
  2. The stock and bond markets have declined and are gyrating
  3. People continue to love their families and friends
  4. People are brave, kind and devoted to caring for others

Some people are right out of Arthur Miller’s play All My Sons, in which the lead character lies and protects the profits of his business and sends out faulty airplane parts which cause the deaths of American soldiers.

No doubt, you and I have other certainties we can list.

For those of us under “stay at home” orders, we ask…

  • When will the restrictions be lifted?
  • Will there be work to go to?
  • When will we be free of the corona virus?

We don’t know answers to those questions. It’s all up in the air- that very air that can carry the virus. But then, wasn’t uncertainty the daily state of mind for people living through WWII? Did they know when the war would end, or who would win? In your family, did someone have a biopsy or a critical medical test? What did waiting for the results feel like?

In these early months of 2020, we keep saying to each other that these health and financial circumstances are unprecedented. Which course of action is best? We’re uneasy, frightened and anxious because we are aware that wrong choices can lead to people dying, small businesses failing and economies collapsing.

However, consider this: underneath our plans, appointments and to do lists is more uncertainty than we want to acknowledge. It’s as if every day we get up and go through our day walking on a tightrope. When we get back home, without a fall, we don’t think about the safety net beneath the tightrope. We didn’t need it because we didn’t fall. That’s how it’s supposed to be. That’s the order and certainty we expect. We walk that tightrope with courage, flexibility, optimism, doubts and the best life skills we have.

This Great Dislocation has made us aware that many of us can fall at the same time and we need a strong community safety-net. That protective safety-net is made of compassionate, active, creative, intelligent people. It should be reinforced by government systems and funding. We’ve found that the safety-net has tears and needs repair. We can repair it if we stay focused.

We can also strengthen our own safety-net by committing ourselves to our values, the causes that matter to us, the people we love and protect, and the good we can do for others. We have the power to do good. Exercising that power can give us a sense of purpose and control. It can anchor us and allow us to face what we intuitively know: uncertainty is normal. Let us take heart from the fact that we have walked that tightrope thousands of times successfully. We can keep doing that. Although we, like the markets, might not like uncertainty, we both have a history of resilience and managing uncertainty.

 

[/et_pb_text][et_pb_text _builder_version=”4.4.6″ text_font_size=”14px”]Penelope S. Tzougros, PhD, ChFC, CLU. Financial Planner, Author, National Speaker. Wealthy Choices.com. [email protected]. In all 50 states, Penelope S. Tzougros is registered with, and securities and advisory services are offered through, LPL Financial, a registered investment advisor. Member FINRA/SIPC.

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.[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

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.

 [email protected]. 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.