06/25/13

Don’t let retirement stress marriage: Plan to be busy

I use a four step Retirement Income Planning Process when working with clients.  It is my opinion that Step #1 – Envisioning Your Retirement, is one of the most important steps in the process since retirement may be the first time in many decades that a husband and wife will spend 24 hours a day together since they first dated.  For this reason, I wanted to share this article from USA Today, published on June 17, 2013, since it does a great job explaining the potential problems with planning your retirement as well as some solutions to think about.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®

 

Rodney Brooks,  USA Today, June 17, 2013

Author and former financial planner Frank Maselli tells a story of a man who retired and went home to spend his days with his wife. It didn’t take long for him to become a major intrusion in his wife’s world. He told her the way she did everything was wrong, even the garden she had tended for 25 years.

“She had to kick him out of the house,” he said. “She made him get involved with a charity group and start going to the gym.”

It’s a huge adjustment to shift from spending two or three hours a night to spending all day together, says author and psychologist Robert Bornstein. “It happens all at once. It would be nice to go from full-time to half-time to quarter-time, but that’s not how it works.”

“Take the normal stress of a transition into retirement,” says Maselli, “and throw in the fact that your wife can’t stand seeing you all day.”

People are working with financial planners to make sure that they will have enough money to retire. But what they are not doing, retirement experts say, is preparing psychologically for retirement. And as a result, three big problems are popping up.

First, retirees without any kind of a plan are just going home to their spouses with nothing to do and causing stress in their marriages. “We are the first generation who is going to live 30 years in retirement,” says Maselli, who is based in Raleigh, N.C. “We are not prepared financially or emotionally. It will be a major issue.”

Second, people who have been working for 30 or 35 years are suddenly home with absolutely nothing to do. “You lose a ready-made social network,” says Bornstein. “We don’t think about it that much. Much of your daily social contact comes from the office. When you are no longer going into the office, it’s not uncommon for people to discover that they have few or no friends.”

Third, says Bornstein, people underestimate the loss of status and self-esteem that comes from working. “So many people identify with their career or the company they own,” he says. “Their profession and their identity are intertwined. The two are one and the same, So when they retire and separate, it is a loss from an emotional standpoint.”

All three issues could be contributing to a record divorce rate among Baby Boomers. But the resulting stress can easily be avoided if people retire with a plan, retirement experts say. And foremost in that plan, set a schedule and make plans to do something … anything. Just do not sit around with the TV remote.

“Most couples don’t prepare well psychologically for retirement because they are so focused on financial and housing issues, which makes sense,” Bornstein says.

Joe Heider, managing principal for the Ohio region for Rehmann Financial, says the issue reminds him of the Chevy Chase vacation movies. “It’s kind of like being on a permanent family vacation. There is a lot of stress being with each other 24/7. All those things that were annoying suddenly became difficult — if they don’t have hobbies.”

“A big depression sets in with a lot of guys,” Maselli says. “It’s a major problem. You’ve worked for years. They give you a gold watch. Then what? What happens to that emotional intensity? It goes into me arranging my wife’s spice drawer.”

Heider says it can be a dangerous time. “I have seen clients who have developed serious drinking problems because they’re bored,” says Heider. “Happy hour used to start at 5:30; now it starts at noon. Retirement can be a wonderful thing. But depression, drinking, drug issues — they are all symptomatic of people bored and their lives have lost meaning for them.”

Financial planner Brad Zucker, president of Safe Money Advisors in Las Vegas, says before people retire they need to find their passions. “Retirement could last 25 years,” he says. “You want to be certain you have some kinds of interests and passions to make it through those years.” Zucker says he has one client who turned his love of baseball into becoming an assistant coach for a high school baseball team — at 71.

Maselli teaches a program he calls “Never Retire,” which deals with the psychological transition into retirement. “We actively tell people and teach people how to restructure their lives — not to retire,” he says. “Start a business. Don’t think about slowing down.

“You want to relax,” he says. “That goes away in a week.” He says retirees should think about mentoring, teaching, board memberships … anything to keep busy. And make those necessary contacts before you retire.

Heider says retirees should also consider volunteering as an option. “Volunteer your expertise to whatever you were doing,” he says. “Spend time mentoring a young entrepreneur. It gives them something meaningful to do with their time.”

Retiree George Milonas, 84, of Las Vegas says he gets up every morning on schedule. “It’s like going to a job,” he says. His passions are sports, horse racing and playing the slots. And that works for him because he has the funds to do that, he says.

Janet Taylor, psychologist and a consultant with AARP’s Life Reimagined program, says the success and well-being of couples in retirement depends on their pre-retirement planning. “Plan early; communicate expectations; and recognize what the existing demands are,” she says.

“Initially, retirement might involve understanding and accepting changes in your personal privacy,” Taylor says. “After a few months there is some normalcy and some understanding. But give yourself time to adjust to that.”

But start planning early. “Rule No. 1 is to start thinking about this now,” says Maselli. “What are you going to do? What kinds of things will you be doing together? How much time can you stand each other together? How will you structure your day so that you are out of the house?”

And how did it end for the husband who got kicked out of the house?

“He learned to stay active, and his wife learned to be patient with him,” Maselli said. “The charity work led to more community involvement. But the gym thing never caught on.”

 

06/15/13

7 Famous Dads Who Make Good Financial Role Models

Despite their wealth and fame, these celebrity fathers have set a good example in frugality for their kids to follow

(Below is a June 14, 2013 article by Joyce Hanson of Advisorone magazine)

 Celebrities don’t usually enjoy a reputation for being prudent with their finances, but some famous dads are surprisingly sensible when it comes to teaching their kids lessons in frugality.

Just in time for Father’s Day this Sunday, GoBankingRates.com has released its list of celebrity dads who make great financial role models for their children. The El Segundo, Calif.-based personal finance site points to a Charles Schwab & Co. parents and money survey that shows one in four parents believe that the best way for teens to learn about money management is by example.

“People don’t often associate celebrity fathers with frugality, but there are a few out there who choose to make saving money a lifestyle, no matter how much they earn,” says financial writer Stacey Bumpus in her article for GoBankingRates.com, which connects readers with the best interest rates on financial services nationwide.

Read on to discover which seven famous dads make good financial role models—and why.

 

1. Carmelo Anthony, All-Star Forward of the New York Knicks

1 Carmelo Anthony

Parents know that their actions can speak louder than their words, “which is why it’s important to model good money management as well as to teach it,” writes Stacey Bumpus for personal finance and interest rate siteGoBankingRates.com.

For example, she says, New York Knicks All-Star and Olympic champion basketball player Carmelo Anthony still models smart spending habits for his son, Kiyan, despite earning $19.4 million in 2012 from his NBA salary alone, surpassing star player Lebron James’ earnings.

“I go to the supermarket, make sure I get the newspaper and tear the coupons out; save a dollar or two,” Anthony said in an interview with CBS Denver.

2. Dave Grohl, Foo Fighters Frontman

2 Dave Grohl

Although a member of two wildly popular grunge rock bands, Nirvana and Foo Fighters, Dave Grohl is not one to live the typical rock-star lifestyle of excessive partying and spending.

“You can’t take your lifestyle for granted,” Dave Grohl said in a 2003 interview with USA Weekend. “I’ve got tons of money, but I’m afraid to spend it. Knowing I don’t even have a high school diploma to fall back on, I’m going to be really careful with what I’ve got.”

According to Celebrity Net Worth, Grohl’s net worth totals approximately $225 million—not bad for a grunge punk.

 

3. Darius Rucker, Former Hootie and the Blowfish singer

3 Darius Rucker

Hootie and the Blowfish may have gone the way of the 1990s, but that band’s singer, Darius Rucker, leveraged his fame as Hootie’s lead vocalist to become a celebrated country music star. His success with the group and as a solo artist has helped propel his net worth to approximately $14 million.

“Despite his grand wealth, though, he’s not big on teaching his children to spend lavishly,” writes Bumpus for GoBankingRates. “After being raised by a single mother, he prefers to do his shopping at Target and only buy a new car every two years, preferring to trade the old one with each new purchase.”

 

4. Eric Clapton, Rock Guitarist

4 Eric Clapton

“When we think of respected guitarists, Eric Clapton definitely tops the list,” Bumpus writes. “In fact,Rolling Stone magazine named him one of the ‘100 Greatest Guitarists of All Time’ in 2003. He’s undoubtedly one of the country’s richest rock stars with a net worth of nearly $200 million.”

And yet, the former Yardbirds and Cream guitarist was reportedly spotted doing his own laundry in Los Angeles, clearly demonstrating the frugal values he learned as a lad when growing up in post-World War II Britain.

“The good news,” Bumpus adds, “is his children will not only know the value of saving money, but also understand the meaning of a good wash and fold.”

 

5. Paul McCartney, Beatles Legend

5 Paul McCarthy

Sir Paul McCartney, he of the famous Beatles songwriting duo Lennon & McCartney, is a proud father of five, including successful fashion designer daughter Stella, (pictured far left). But this doesn’t mean that Sir Paul would shower money upon them if it meant giving up his frugality.

“Though McCartney is said to be worth $1 billion, he reportedly sent four of his children to local state schools instead of costlier, private schools,” Bumpus writes. “He also is said to have made guests at his ex-wife’s birthday party pay for their drinks.”

 

6. Mick Jagger, (Former) Bad Boy Rocker

6 Mick Jagger

Rolling Stones front man Mick Jagger is celebrated not only for being the king of rock, but for being the king of frugality. This father of seven—and former London School of Economics student—reportedly made his ex-wife, the model Jerry Hall, “pay for everything to do with the house and the children,” she said in an interview.

While he’s known for being generous when it comes to buying gifts and presents, he likes to live a frugal lifestyle, writes Bumpus. “He even taught his children to repair vehicles before having them junked.”

TheRichest.org puts the 69-year-old Jagger’s net worth at a cool $300 million after a career spanning more than 50 years.

 

7. Warren Buffett, Investment Guru

7 Warren Buffett

Warren Buffett, obviously, is known for his tremendous wealth.  Forbes magazine this year listed the Oracle of Omaha as the fourth-richest person on the planet, with an estimated net worth of $53.5 billion.

“But his wealth has never altered his frugal lifestyle,” writes Bumpus for GoBankingRates. “In fact, Buffett still lives in the same five-bedroom home he purchased for his family in 1958.”

Happy Father’s Day!

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®

 

06/10/13

Nation’s nest eggs stuck in 2009

By most measures, the economy is doing much better today than it was in 2009, and stock markets are certainly in better shape. But average Americans are no better prepared for retirement than they were in those relatively dark days – or so says a study released this week by the financial-services practice group at the consulting giant McKinsey & Co.

The firm maintains a “Retirement Readiness Index” (RRI) that takes into account Social Security, pension and defined-contribution plans, real estate and other savings and measures those assets against people’s projected retirement-income needs. On a scale of 1 to 100, where 100 means a household could sustain its pre-retirement standard of living, the national average score on the index stands at 64, up only slightly from 63 in 2009. At that level, McKinsey says, a person can afford to retire only by “cutting spending on essential needs such as housing, food and healthcare.” Put another way, the firm says that a present-day middle class family would need about $61,000 a year in income to sustain its current lifestyle, and would fall short of that mark by about $20,000.

Later in the report, the authors urge companies in the retirement-planning business to use the RRI, or something like it, as a way to “educate customers on how each product purchase will influence their RRI,” the report continues.  The company makes the case that, like a credit score or a body-mass index, having a single, memorable number as to quantify retirement preparedness could motivate consumers to change their behavior in ways that more complicated measures would not. Of course, credit scores and BMIs can oversimplify and miss a lot of the nuances of what they measure, but the point is worth pondering all the same.

Tunneling deeper into its RRI data, McKinsey finds a generation gap. People between the ages of 60 and 65 are generally in better shape, with an index score of 80 or higher (meaning they could safely retire with only some cuts in discretionary spending). Those age 59 and under, on the other hand, are generally in the firm’s danger zone. Their main obstacles: Too many of them (around 50%, the authors say) have no access to a retirement plan; and too many of those who do are too risk-averse, so they haven’t benefited from a rising stock market.

Interestingly enough, across all age groups, middle-income earners (defined as those earning between $50,000 and $100,000 a year) have made the biggest progress by McKinsey’s metric (gaining 4 to 7 points since 2009). On average, folks in that income group were starting to save earlier, maintaining healthy savings rate and seeing increased incomes, according to the authors.

To Your Successful Retirement!

Michael Ginsberg, JD, CFP®