I Love It When A Plan Comes Together
Behind the scenes at Madrina Molly™, we’ve been working our little tails off to create a digital home for Financial and Longevity Planning Education. In fairness, my explorations on the Internet have yielded a few good teachers out there in social media land. But it’s hard to find them.
Currently, the “finfluencers” want to teach you how to trade options, buy tax liens, and purchase their “secret sauce” training.
Newsflash: If you haven’t spent any time learning how to trade up until now, what makes you think you’d be interested in it moving forward? Plus, you don’t have to “trade” to invest successfully.
Do You Want Lifetime Income in Retirement?
A few weeks ago, I met with Tamiko Toland, fellow Woman of a Certain Age(ncy), Principal of Toland Consulting, and Co-Founder and CEO of IncomePath, a new way to visualize retirement income intended to provide “freedom to spend” by enabling advisors and their clients to see how the use of guaranteed income can benefit their retirements.
That’s a mouthful, I know. And it’s complicated if you don’t operate in this space. But Tamiko’s nickname isn’t “The Annuity Yoda” for nothing. And she’s both a 20+ year veteran of TIAA and a sought-after expert in retirement risk mitigation. She is committed to doing a better job of educating the public and helping advisors educate their clients in how to build the lifestyles we all want in later life.
What if They’re NOT Hot Flashes at All?
I’m not sure I even know where to begin with this post. There are so many things to be angry about. And so many areas of frustration. And so many opportunities to be fearful. But I’m not going to start there. I’m going to start with my blessings and some #LoudFinancialPlanning:
How Much Runway Do We Really Have?
Have you heard the expression “thanatological age”? It refers to the average number of years you are expected, actuarially, to live. While insurance people are familiar with the term (although I can never pronounce it) the public at large is not. If you subtract your chronological age from your average life expectancy, what you have is your thanatological age. And 50% of us will live longer than this age.
That’s how averages work.
On Anti-Anti-Aging
What if we celebrated our friends and daughters’ first grey hairs with the same enthusiasm and chutzpah with which we celebrate their first steps, first job, or first drink? Whatever we need to feel beautiful, we should do. There’s no shame in that.
I’m not against self-care, but …
… our wrinkles mean we smiled.
… our mom-bellies mean we loved.
… our sunspots mean we enjoyed the outdoors.
… our muffin tops mean like good food.
… our grey hairs mean we made it.
These days, we can’t escape those pushing all sorts of anti-aging products at us: serums for youthful skin, injections for plump lips, dyes for grey hairs, push-up bras for sagging breasts, and modern-day corsets to fit in that dress we used to wear.
Romancing the Home
I started writing a serious post, but it just wasn’t happening. I took a break to find something amusing on TV and settled on Zombie House Flippers. I have thoughts.
For starters, their math doesn’t “math” for me, and I’ll explain that in a minute. But it made me think about how our DIY economy has grown beyond all measure, courtesy of these types of programs, customer workshops at Home Depot/Lowe’s, and social media. I applaud the industriousness, talent, and personal ambition of these creators.
But ….
The Kids are Alright
Recently, I went a couple of rounds (respectfully) with some readers on Facebook about my statement that I don’t think it’s productive for parents to tell their children that buying real estate is the “correct” path to wealth. I get that the real estate market sucks right now in lack of inventory, inflated prices, and that mortgage interest rates have adjusted upward. (My first mortgage was 11.85%. Either you can afford a mortgage, or you can’t. Rock bottom interest rates were never guaranteed. A decade of people got lucky, and that’s no longer the case. Get over it.)
Sentimental Stockholdings
As stock pickers, professionals and amateurs alike are terrible. Seriously, terrible. Like so many wise people before me, I would want you all to know that nobody knows anything about what’s going to happen. And it’s completely possible that a major player in the S&P 500 will be disrupted (think GE, now reinvented and back in the index) or a minor player on the NASDAQ (think any number of de-listed tech or bio companies) will cease to exist. There are no guarantees.
What if You Planned a Sabbatical?
Let me cut to the chase: I’m giving you permission to plan a sabbatical. Do I have your attention?
Traditionally, we have divided our lifespans into three unequal stages: growing up, working, and retiring. Of the three, a 30- or 40-year working career usually dwarfs the other two stages. In less than a generation, however, we have seen our retirement stage catching up to our working stage. For some of us, we may live (hopefully in good health and security) another 35+ years beyond age 65. That’s a retirement as long as our working careers.
Everyone, Everywhere, All the Time
I’m having a delightful time reading Dr. Andrew Scott’s new release, The Longevity Imperative. Maybe it’s delightful because he’s saying many of the things I’ve been saying (and living!) as I transit my second half. I mean, who can resist someone who agrees with you? In this book, Scott discusses how we have two ways to view an aging society: as a problem or an opportunity. I strongly favor the latter, because I’m far from being ready to be put out to pasture. #NotYoungNotDone
Family is a Fixed Expense
I just returned from a drive to see Grandchild #1 (Ava) play soccer on her college club team two-and-a-half hours north. A wave. A smile. I stuffed some cash into her hand. She laughed and thanked us because she knows that’s what we do. Then, she headed to Texas Roadhouse with the team, and we headed home, two-and-a-half hours south. We may have paid for her dinner (with a popcorn booster purchase the week prior). I didn’t check what I was funding because she’s a grandchild.
If you want a Successful Financial Plan for Retirement, you need a Longevity Plan Too
As we build out our “successful second half” capabilities, I keep returning to the notion that we have such a long runway from our 50s to the end of life (like, another 50!) that saying we are planning for retirement feels wrong. Rather, I think we should replace the “R-word” with the term “post-work” because none of us is going to be in the state of retirement for 30 or 40 years. Instead, we’re going to be doing and being many different things during that time, all kinds of “non-retirement” things. As a result, much of the financial conversation stops being about investment portfolios and insurance and more about:
· Health and healthspan
· Caregiving and family obligations
· Geography and community
· Philanthropy and legacy
· Consulting, volunteering and encore entrepreneurship
· AND … optimized distribution and retirement income from portfolios and insurance
Retirement is Dead! Long Live Continuous Reinvention!
According to the American Heritage Dictionary, retirement is the “withdrawal from one's occupation or position, especially upon reaching a certain age.” Note that the definition uses the word “withdrawal” and not “end.” The definition of “withdrawal” uses the words “retreat” and “removal.” Again, not the word “end.” That should be instructive for us in the 21st Century.
Retirement is not an end. We do not expire. Ageism in society notwithstanding, we have choices:
· Fund retirement in our 50s to support ourselves in our 80s and 90s. Or don’t.
· Be curious and embrace lifelong learning to nourish our brains. Or don’t.
· Invest in our health so that our bodies will stand a chance of taking us the distance under our own steam. Or don’t.
Should You Undertake Your Children’s College Debt?
I’m diving into an ugly discussion here about a middle-class reality: student debt.
I’ve seen this movie too many times. Far be it from me to cast aspersions on the failings of my clients or their children. But at least a couple times a year, I would find clients who had signed on to pay for their children’s college debt, assuming that once out of school, the child would be responsible for repayment. Alas, the child decided (for whatever reason) they were not interested in “adulting” at that level. And Mom and Dad, responsible on paper, continued to make the payments, often at the expense of their own retirement security.
Okay, okay… This is It (I Promise)
I’ve probably bored you to tears over the past few blogs, but I can’t help trying to be more complete. (This is in response to some finfluencer posts I found that only give the sexy part of any story.)
Somewhat tangential to my recent Taxes Matter posts, I want to offer two more tax ideas for diversification, but first a word on Required Minimum Distributions (RMDs).
Do I Need a Diversified Portfolio? And Other Risk/Reward Questions
“Wide diversification is only required when investors do not understand what they are doing.”
These are strong words from Warren Buffet, the CEO of Berkshire Hathaway, which arguably is its own diversified investment. Buffet has been known to say that concentration builds wealth and diversification protects wealth; that diversification is a hedge for when you are not knowledgeable.
That said, what should you do with your nest egg: build wealth or protect it?
Financial Literacy:
April is Financial Literacy Month, wherein we encourage Americans to create and maintain healthy financial habits. The only problem is, depending on your source for financial education, you can go down a rabbit hole quickly in the wrong direction.
Not every self-proclaimed financial “expert” delivers best practice information; in other words, generally accepted and researched principles and guidelines. And that means it’s sometimes hard for you to extrapolate what information is right for you. Most of the reputable talking heads deliver solid data, but they also have something to sell. And that can be problematic when what you are learning is sales opinion and not fact.
Taxes Matter In Retirement (Part II)
Last week, I discussed why tax diversification matters in retirement. In it, I described how we tend not to think of tax treatment in distribution as we build our wealth. Instead, we place most of our wealth in accounts that are taxable as income (IRAs, 401(k)s) and in our homes (equity.)
But in retirement, we may want to finesse how much income we show year-over-year in order to take advantage of the tax code; because having assets with different tax treatments (capital gains, Roth, deferred) provides more choices, which lead to (potentially) paying less tax out of your savings.
Taxes Matter In Retirement (Part I)
It’s Tax Day! Welcome back to the surface, all my CPA friends. Well done on this year’s efforts. Get all the extensions filed and head out on your well-earned spring vacations! When you come back, let’s do coffee.
As for the rest of us, we tend to think of taxes as a necessary evil, which of course, they are. It’s hard to love tax information. Now, before I lay some on you (tax love, that is) in honor of this auspicious annual event, I’d like to address something truly important in grammatical constructs. And while my reach is not far (yet), I will be gratified if just one person learns this and uses it properly going forward:
The Feminization of Wealth
We’re going to hear more and more about the “feminization of wealth” as the great wealth transfer—$80 to $90 trillion from Boomers to Millennials—takes place. By the end of the decade, we expect that women will control $30 trillion, and, eventually, about 60% of all wealth in the U.S. For perspective, U.S. gross domestic product for 2023 was just under $28 trillion.