Protect against inflation or preserve capital?

A man is lying in his hospital bed, surrounded by friends and family, reflecting on his recent near death experience. “I always thought it’d be the ulcer that killed me. I did everything the doctors told me. I drank the cream, ate the butter, drank the milk. And now I have a heart attack!” This was a scene from the …

The role of luck in a financially secure retirement

A new type of mutual fund was introduced in late 2007, by the fund industry, called managed-payout funds. The goal of these funds is to give retirees a steady stream of income. At the time, they were touted as being an easy way for investors to get regular income payouts, professional money management and relatively low fees. Early players in …

For better or for worse … when life changes

Think back on the seminal events in your life. How many would you say were fortunate? How many unfortunate? Financial planners have a term for those changes. We call them transition events. Examples of transition events include: marriage, retirement, career change, divorce, loss of a spouse or parent, a windfall or settlement, bankruptcy, the sale of a business and inheritance. …

Step #5 – Retirement Preparedness Checklist: Create Enough Cash Flow to Cover Retirement Expenses

Think about this. Most companies don’t go bankrupt because they are not profitable. They don’t go bankrupt because the value of their assets has declined. They go bankrupt because they do not have sufficient cash flow to pay their creditors and employees. A company can lose money, on paper, but stay in business indefinitely so long as it has sufficient …

Step #4—Retirement Preparedness Checklist: Put Away 12 Months of Expenses in an Emergency Fund

Harold Wilson, former British Prime Minister joked, “I am an optimist, but I’m an optimist who carries a raincoat.” You probably already have some cash stored away for the inevitable rainy day. Indeed, you should have savings for those one-time, non-recurring expenses that come up—a water heater replacement, a roof repair, the auto insurance deductible—but this savings should actually be …

Step #2 – Retirement Preparedness Checklist: Insure Risks You Cannot Afford to Take

One of my clients, a physician, when discussing insurance, said to me, “We’re all just one step away from the banana peel.” She would know better than most. While it’s not particularly pleasant to think about becoming sick or needing assistance, healthcare and long-term care costs pose very real risks to your retirement nest egg. Can you afford to chance …

Step #1 – Retirement Preparedness Checklist: Create Personal Financial Statements

No self-respecting Chief Financial Officer would dream of trying to run a company without a constantly updated set of financial statements. Neither should you. That is why the first step, in our Retirement Preparedness Checklist, is to create personal financial statements. The Purpose of Personal Financial Statements Personal financial statements serve several very important functions: 1) they tell you where …