Boomers, Markets & Money

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


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Book Review: “What if…Workbook: Give the Gift of Preparedness to Your Loved Ones

Now that fall is here, many of us are dusting off our neglected to-do lists. For those interested in organizing their financial information, Gwen Morgan has put together a handy fill-in-the-blank guide to “putting your affairs in order.”

A ceramic mother mallard duck followed by two ducklings

PUT YOUR DUCKS IN A ROW! (Click to Enlarge)

The workbook guides an individual or family as they assemble their important information in one place. This helps us by:

  • Making it easier to find information when we need it
  • Helps someone forced to take over in an emergency

After losing her mother to Alzheimer’s, Morgan realized she didn’t really know how her mother wanted her to handle many decisions, including planning her funeral service. She thought a guide would help loved ones carry out a person’s last wishes.

I like the workbook and think it has value even if a person isn’t ready to record all of his or her “last wishes.” Even people who are more organized than usual will appreciate the prompts for information.

A Ceramic Mallard Duckling Sitting on Grass

Take Care of the Little Ones (Click to Enlarge)

Space is provided for:

  •  A page to rip out to send to two people to tell them where your workbook is.
  • Personal Information
  • Contact information for loved ones
  • Contact information for household matters such as utilities, attorneys, medical and friends. There’s even a section for important information on dependent children.
  • There are pages for financial accounts such as banking, brokerage, mortgages and other loans, insurance, document storage.
  • Family medical history. This is helpful to an individual in an emergency. But it also can be helpful for the rest of the extended family to have a record of medical conditions that run in the family.
  • Personal Last Wishes.  A lot of space and suggestions are given for detailed instructions.
  • Gifts for loved ones. This can save a lot of family arguments!
A Ceramic Mother Mallard Duck with a Duckling on Each Side

Gathering Together Important Information Helps the Whole Family (Click to Enlarge)

You can find information on the guide at http://www.whatifworkbook.com


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Resources for Baby Boomer Entrepreneurs

The over 50 set are becoming entrepreneurs

Baby Boomers Open Small Businesses (Click to Enlarge)

Many Baby Boomers are starting small businesses

  • To pursue an interest or goal they didn’t have time for when they were younger
  • For flexibility in work hours or location
  • Persistent unemployment. The 55+ age group has the longest period of unemployment before being hired. Do you think there is age discrimination involved?

One important point I came across when researching this post—Don’t lose your retirement money!

You have less time than other age groups to make up your losses, so take less risk. Don’t use funds that you need to live on in retirement.

Here are some helpful small business resources:

  • Small Business Readiness Assessment. The U.S. Small Business Administration’s (SBA) online checklist forces you to examine your personality, physical and emotional health, as well as skills and experience. The main strength of the checklist is that it forces you to slow down and really consider the many different factors that are needed to run a successful business.
  •  SCORE, a volunteer resource partner of the SBA, offers free business counseling. Help is available for established businesses, start-ups, and non-profits. Chapters also offer small business workshops. I’m partial to this organization since I volunteer with the Rhode Island chapter.

 Visit the SCORE website at www.score.org to find:

A mentor. Free, confidential counseling is available face to face or by email.

Chapters near you. Type in your zip code for a map of local chapters.

Online workshops. Many live webinars are offered in English and Spanish.

Templates and Tools. Over 100 articles are available with advice on small business challenges. For example, I found an interesting article “10 Steps to Protect Your Great Idea.”


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Summary and Link to Interesting Video on Recent Retirement Study

I saw an interesting interview on Bloomberg Surveillance this morning that is worth watching and have included a link below.  Tom Keene interviewed Andrew Sieg, head of Global Wealth & Retirement Solutions at Bank of America, about a recent study on near-retirees and retirees.

A quick summary of some of the points:

  • Tom Keene believes politicians have created an uncertain future for people nearing retirement. Conversations seem to be dominated by this fear.
  • Healthcare costs are the big “wildcard” of retirement expenses.  Retirees on average spend about $20,000 per year on health care costs per year. Baby Boomers worry about healthcare costs more than any previous generation.  Sieg said that it is critically important that people purchase long-term insurance at as young age as possible.  People’s biggest concern is that they want peace of mind during retirement and long-term insurance will help.
  • Sieg said Boomers are radically changing retirement.  Seventy percent plan to work in retirement with about a half doing so by choice.  The optimistic side of this is that many are choosing to use the “longevity bonus” as an opportunity to use their new freedom to pursue careers that they didn’t have time for when they were younger. Many see it as an opportunity to reinvent themselves.
  • Current low interest rates are punitive for retirees.
  • Both Keene and Sieg are concerned that proposals are being circulated around Washington that reduce the incentive to save.  Most people need to increase their saving rate.

Bloomberg TV Video. “BofA’s Sieg on Retirement Planning” Video


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Review of PBS Frontline’s “The Retirement Gamble”

I recommend that you watch the eye-opening PBS Frontline Special “The Retirement Gamble.” Thank you to Claire for suggesting it.

Some key points from the program:

  • Many hidden layers of fees are eroding individual investor wealth.

Jack Bogle, founder of The Vanguard Group, gave an example of how much fees cost an individual over a 50-year investing lifetime. If this consumer receives a 7% annual return and pays 2% in annual fees, fees will erode two-thirds of the investor’s gains. Bogle said you can see these results on a compound interest table.

I decided to do just that and found an investment calculator at Buyupside.com. (Please click on the image below.)  Using the same figures show that the portfolio would be reduced by 63.58%. We should all be checking the fees on our retirement plans!

Annual Fees Greatly Reduce Portfolio Results

Investment Key Calculator (Click to Enlarge) http://www.buyupside.com

  • Robert Hiltonsmith, a policy analyst at Devos, examined his own retirement plan to see what fees were taken out of his account. He found that about 25 fees were extracted from his account by mutual funds, fund brokers, plan adminstrators, etc.

  • Teresa Ghilarducci, economist at The New School for Social Research said:

401(k) plans were originally designed for wealthy people. Now, the advisors middle class have access to are really just sales people.

American consumers don’t know the price, quality, or dangers of their 401k plans due to strong industry lobbying.

“So we know after 30 years of this 401(k) experiment that people do worse in 401(k)s than they would have if their money was in a traditional plan or if it was in a plain vanilla retirement account.”

  • Many of the options in plans are mediocre and many people are not prepared to invest their own money.

This became clear to me when I had someone from a cable company come to my home to repair the phone. When he saw that I had the TV set to a financial news channel, he began telling me that he had all of his retirement money in marijuana stocks. Although his portfolio had lost 50% of its value at this point, he was very optimistic about his future prospects. I was very shaken when he left as I wondered how many people were investing their retirement funds this recklessly.

  • According to the Department of Labor, there are no clear standards on who can give advice to consumers of retirement plans. Also, there is no clear way for a consumer to tell who has the expertise to advise them. There was intense industry lobbying when new standards were proposed, forcing them to be withdrawn.

Source:

PBS Frontline. Videos and transcripts.

Related Posts on This Blog

“Resources to Help You Decide  When to Take Social Security”

“A Critical Step for Preparing for Retirement”

“How the Heck Do I Invest My Money?”

“Book Review -‘The Bankers’ New Clothes: What’s Wrong With Banking and What to do About It”


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Resources to Help You Decide When to Take Social Security

At What Age Should I Take Social Security Benefits?

At What Age Should I Take Social Security Benefits?

Are you confused about what age you should begin taking Social Security? I came across an article that clearly and efficiently summarizes information about the pros and cons of taking Social Security benefits at various ages. At the end of the post, I include links for other resources.

The article is “When Should You Take Social Security?” by Rande Spiegelman, CPA, CFP at the Schwab Center for Financial Research. It is a bit long but I like the article because:

  • There’s a handy table letting you know “When can you get your full Social Security benefit?” by birth year. Retirees born in 1937 or earlier received full benefits at age sixty-five. If you were born in 1938 or later, the retirement age to receive full benefits gradually increases. People born in 1960 or later must wait until age 67 to receive full benefits.
  • It gives specific figures on how much you will be penalized by the amount of months you retire before your “full retirement” age. It also let you know how much your monthly benefit will increase by the amount of time you delay in taking the check later. You don’t receive additional benefit for delaying past age 70. That shouldn’t be a problem for most people because over two-thirds take their Social Security benefit early.
  • The article gives a list of factors to consider when making this decision.

Here are a couple of other links:

  • U.S. Social Security Administrations benefit estimator
  • Kiplinger’s has an index of articles on Social Security topics. “10 Things You Must Know About Social Security” covers a lot of the same information as the article above as well as some additional tips. Another short article that you might find helpful is “How to Check Your Social Security Statement Online.