I recently happened on a thought-provoking article by, Paul Merriman, in Advisor Perspectives. He called it “Ten Retirement Lessons from the Smartest People I Know”. From my unique vantage point as a financial advisor, financial radio talk show host and financial mentor to thousands, I too have the good fortune of knowing and watching a lot of really smart people. …
Why Buy Term Life Insurance and Invest the Difference
If you were to die tomorrow, who would suffer financially? This is the planning question you use to decide whether or not you need life insurance. If the answer is no one, it’s simple. You don’t need life insurance. If the answer is someone – your spouse, children, parents or business partners – you do. When the answer changes from …
Is running out of retirement money a fate worse than death?
Imagine this – the year is 2040. You are 80 years old, in reasonably good health, and you have just spent your last penny of retirement savings. You have no other sources of income. For the rest of your life, you will rely on government handouts and the charity of others. Sit with that image for a moment and then …
What to do with your 401(k) or 403(b) if you leave your job
A while back, I had the radio on in the car, listening to an investment show on the radio: “Hi. My name is Ron. I am a first time caller.” “Hi, Ron. What can I help you with?” “I was laid off from my employer due to downsizing. I was wondering whether to leave my 401(k) where it is or …
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 #3—Retirement Preparedness Checklist: Get Rid of All Bad Debt
“What I am about to share,” Dr. DuBois replied, “you would do well to write on your heart and place in your purse. Many a ruined man dates his downfall from the day he began buying what he did not need. If you are in debt, part of you belongs to your creditors. To whom you give your money, you …
