Boomers, Markets & Money

A Down-to-Earth Discussion of Financial and Lifestyle Information for Baby Boomers

Tightwad Tips: Small Recurring Savings Add Up

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I’m into saving with the least amount of work.  I just don’t have the patience for coupon clipping or other time-consuming money-saving habits.

Still, as we transition into a new stage of life, what is important to us evolves; our spending patterns should evolve as well.  Take the time to review spending to make sure that money isn’t leaking out of the budget unnoticed.  The way I look at it, if we take the time to do this, we increase our chances of securing what we need and of having the resources to do what we most value with our time.

For example, like many other baby boomers, my husband and I decided to buy a vacation home on the west coast of Florida in 2009.  I know, I know, I can already hear the jokes.  Florida–God’s waiting room.  But anyway, it’s been fun and a great place to stay active in the cold weather months.

But it’s not cheap supporting a second home and we need to save more for our retirement years.  So we had to be creative.  We rent out the house part-time. We combed through our routine expenses to see if we could shave a bit off each one.  Pruning expenses helps with saving now, but also helps us to get used to living on less. Looking at credit card and bank statements for bills enrolled in automatic payment plans was a good place to start. They have a way of getting more expensive, and it’s easy not to notice the increases when we have them on “set it and forget it.”  Here are a few of the items we were able to cut:

  • The cable bill. Like some lucky pre-retirees our kids are out on their own and self-sufficient now. (Whew!)  But we were still paying for premium channels that we rarely watched. I dropped the channels and now every month we save a bit.
  • You may be enrolled in a Web or print subscription that you no longer read. Cancelling those is an easy way to cut spending.
  • Call your wireless carrier. They may have a cheaper plan that fits your current calling patterns.  The company is not going to call you up to suggest that.

If you manage to save $75 a month, that adds up to $900 a year.  After five years, that’s $4,500—serious savings without a lot of work.

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FASCINATING VIDEO: The State of Manufacturing in the United States

I was watching Bloomberg Surveillence this morning and saw a very interesting guest interview regarding the manufacturing sector.  The team interviewed Willy Shih, Harvard Business School professor and Chairman of QD Vision.  He is very knowledgeable, discusses very important issues affecting our country now, and has some good recommendations. I hope you take a look at it and give it some thought.


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Small Business Saturday is November 24

In recent years, I’ve tried to buy as many of my holiday gifts as possible from local businesses.  It is my small effort to help the local economy.

SCORE, a volunteer organization that helps small business, explains how we can all help. SMALL BUSINESS SATURDAY

Another way I like to help small businesses is to shop at the Rhode Island School of Design Holiday Alumni Art Sale.  It’s coming up Saturday, December 8th.  It’s a great way to get unique gifts at a reasonable price.  I figure I am helping artisans keep afloat and am buying American-made products.  Perhaps you can see if your local art school or university has a similar art sale.

Happy Shopping!


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LESSONS FROM RETIREMENT SURVEY RESULTS

BlackRock conducted a survey of retirees, retirement plan sponsors, and workers saving in retirement plans.  A few points jumped out at me:

  • People expect retirement to be an active time in their lives.  Currently, 47% of retirees work or volunteer because they enjoy it while 1% work for income.  However, current workers have dramatically different expectations for the retirement phase. The majority, seventy percent, expect to work for enjoyment and fifteen percent expect to work for income.
  • Over half of plan sponsors are not confident plan participants are saving enough for retirement.
  • Current retirees in the survey were confident in their retirement.  They also had the vast majority of their expenses covered by traditional secure sources of income such as Social Security and defined benefit plans.

How can we use these survey results?

  • Clearly, people nearing retirement expect their lives to be different than the traditional retirement scenario. Some type of work will be a part of their lives for personal satisfaction, and for many, by necessity. We should be exploring ideas on how to make that happen before we retire.
  • This may be stating the obvious, but most of us should be saving more money. Probably a lot more money.

 

The survey raises a lot of questions for me as well. How is the quality of life of people going to be affected when they don’t have these secure sources of income? Plainly, the practical aspect of affording necessities is a concern for many. But I believe stress levels for retirees and those approaching retirement are elevated and will continue to stay high.

Looking at the big picture—how is the economy going to be affected? (Not to mention the effect of stress on our health.) The United States had a low savings rate compared to other developed countries in the past.  The high level of spending helped our economy grow at a higher rate than other industrialized countries.  Will the loss of secure sources of income be a permanent drag on the economy as people are forced to save a higher percentage of their income?

You can find the survey at: 2012 BlackRock Retirement Survey


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BOOK REVIEW: Stock Trader’s Almanac

I enjoy occasionally browsing through Jeffrey Hirsch’s Stock Trader’s Almanac because he looks through market data to find seasonal patterns in stock and commodity performance.  The book is presented in a calendar format and reviews the performance of various indices on different days of the month throughout the year.  The effect of the presidential election cycle on market performance is also investigated.  Helpful information is noted on the calendar, including Fed meeting dates, option expiration, and so on.  Entertaining quotes from well-know investors, business leaders, and politicians are sprinkled throughout the calendar.

I’m not a trader and I wouldn’t trade or invest solely on this information.  But I do think this information helps investors understand some of the cyclical undercurrents affecting market performance throughout the year.


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Where Good Ideas Come From: The Natural History of Innovation

I’ve “read” (listened three times on audio book) Johnson’s book and found it educational, entertaining and inspirational. He compares patterns of innovation across nature, cities, and the World Wide Web. Johnson uses an interdisciplinary lens to compare the characteristics that seem to nurture innovation versus ones that stifle it.

Johnson uses fascinating short stories to illustrate his ideas. In one story, we hear how Stephane Tarnier, a French obstetrician, came up with his idea of incubators for newborns in the late 1870s. As a physician to poor women in Paris, he witnessed the high rate of infant mortality. He knew temperature regulation was critical to keeping underweight babies alive. While strolling through the Paris Zoo, he came upon chicks being heated by an incubator. Something clicked in his head and he had the zookeeper build a similar device for the babies. While other warming devices were tried before, Tarnier did something more than come up with a new contraption.  He knew the French medical establishment revered statistics. So as soon as the incubators were introduced, the obstetrician conducted a statistical study of 500 newborns. The incubators almost halved infant mortality in underweight newborns.  Within a few years, incubators were required in Paris hospitals and in the coming decades, were used widely in many countries.  Stories like these made the book come alive for me.

After listening to the audio book, I broke down and bought the book.  I found the appendix enjoyable to look through. It was an interesting chronology of innovation from 1400 to 2000.  I believe anyone who reads Johnson’s book will find useful suggestions for nurturing innovation in their own lives.  http://www.stevenberlinjohnson.com


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SANDY: Homeowners Insurance Coverage for Food Spoilage

So many of us have been impacted by Hurricane Sandy on the East Coast.  At our house, we were fortunate in that we only lost electricity for over three days.  But we did have to throw out the contents of two refrigerators and two freezers.

I’m not an insurance expert so I contacted our insurance company to see if there was coverage for this loss.  The process was quick and painless.  We will be receiving a check for the amount of the loss minus $100 deductible.

Give your Homeowners Insurance Company a call to see if your policy has similar coverage. The deductible for food loss may be less than for other property loss.