Lessons From Having the Flu and Pneumonia

January 17, 2014

One of my philosophies of life is that if you’re going to take the time to do something, you should take pride enough in yourself to go all out and give maximum effort. I took that to a new level recently by not only getting “The Flu” (It’s an actual thing, not just something that people talk about and it’s terrible! Get a flu shot!!!) and to go along with it, I went the extra mile and got pneumonia as well. I don’t get sick very often, but when I do it’s usually a complete wipe out for a few days. Fortunately for me, I was able to go to my doctor, be seen in a timely fashion, get the tests I needed (flu test and chest x-ray) and then hit the pharmacy for the meds I needed. The good news is that like all of my prior minor illnesses, I survived this one and am here to write about it… Continue reading “Lessons From Having the Flu and Pneumonia”

7 Steps For Millennials to Define Their Financial Future

January 16, 2014

Over the last two days, we discussed the Baby Boomers and the Generation Xers. Finally, let’s take a look at the newest generation to enter the workforce: the Millennials. Like the other age groups, not saving enough for retirement is the biggest vulnerability facing Millennials. However, they’re the only generation that doesn’t seem to know it as Millennials ranked more urgent needs like managing cash flow, getting out of debt, and investing as higher priorities. Here are some steps Millennials can take to strike a better balance between the needs of today and tomorrow: Continue reading “7 Steps For Millennials to Define Their Financial Future”

7 Steps for Generation Xers to Reclaim Their Financial Future

January 15, 2014

Yesterday, we provided financial tips for the Baby Boom generation. Today, we take a look at Generation Xers, who are suffering the double whammy of experiencing tough economic times at a particularly vulnerable financial stage of life. While most Millennials were too young to own stocks or real estate during those market crashes, and Baby Boomers enjoyed decades of growth in both assets throughout the 80s and 90s, many Gen Xers had the misfortune of starting their investing just as both markets were peaking. This comes at a stage of life in which a majority of Generation Xers own a home (translate: have a mortgage payment) and have minor children (translate: extra mouths to feed). So if you’re a Gen Xer, here are some moves to consider: Continue reading “7 Steps for Generation Xers to Reclaim Their Financial Future”

7 Steps For Baby Boomers to Secure Their Financial Future

January 14, 2014

This week, Financial Finesse is releasing our second annual generational research report so over the next few days, we’ll be addressing in our blog how each generation can overcome their unique challenges and take advantage of the opportunities they face. Today, we’ll start with the Baby Boomers, the last of whom will be celebrating their big 5-0 this year. In addition to now being able to apply for their AARP cards for discounts on eating out and travel, here are some more critical tips for their financial wellness: Continue reading “7 Steps For Baby Boomers to Secure Their Financial Future”

Retirement Saving Strategies: Going Beyond Your 401(k)

December 09, 2013

Are you doing enough these days to prepare for retirement? If not, you’re not alone. Nearly four out of five people feel they aren’t on track to meet their retirement income goals. Continue reading “Retirement Saving Strategies: Going Beyond Your 401(k)”

Lessons From Detroit

December 06, 2013

Recently, a judge allowed the City of Detroit to remain in bankruptcy court which will allow the city to try to find a solution for an $18 billion debt problem. As a part of the solution, the pension benefits for a lot of retirees and current workers may be significantly reduced. The city is in serious financial trouble and without some sort of drastic measures, it might never recover. Continue reading “Lessons From Detroit”

Understand the Facts About Target-Date Funds

December 02, 2013

During a recent series of retirement workshops geared toward early and mid-career employees, I received numerous questions regarding the role of target date funds in their 401(k). This brought up an interesting discussion about hands-on vs. hands-off investing options. Target-date funds are supposed to provide simple solutions for people seeking an all-in-one fund that is diversified. Yet, a tremendous amount of confusion surrounds these seemingly basic asset allocation tools. Furthermore, not all target date funds are created equal so it’s essential to first look under the hood if target date funds are a part of your investment plan for retirement. Continue reading “Understand the Facts About Target-Date Funds”

Automatic Enrollment Does NOT Mean Automatic Retirement

November 27, 2013

As Thanksgiving approaches, what are some things you have to be thankful for? Your health? Your family? Your friends? How about a new job? According to the most recent data released by the Bureau of Labor Statistics, over 200,000 people entered the workforce in October. Whether they are entering the workforce for the first time or found a new job after previous employment, many will be automatically enrolled in their new employer’s 401(k) plan. Continue reading “Automatic Enrollment Does NOT Mean Automatic Retirement”

Getting Back to Basics

November 08, 2013

I grew up playing sports almost year-round. When I was 6, I started playing football. I played some sport competitively all the way through college and for many years afterward. (I’m currently debating whether or not to become a referee in a local youth rugby league so that I can still get out there and run around a field, but not wake up stiff and sore from being tackled.) Continue reading “Getting Back to Basics”

Is Optimism Helping or Hurting Your Financial Plan?

October 28, 2013

A couple of weeks ago, I discussed the important role that our thoughts and beliefs can play when it comes to working toward important financial goals. While an optimistic outlook is associated with many positive outcomes related to our health and wealth, as with most things in life, moderation is the key when it comes to optimism related to our personal finances. Here are some questions to help determine if your optimism is helping or hurting your personal finances: Continue reading “Is Optimism Helping or Hurting Your Financial Plan?”

Why Millennials Shouldn’t Worry About Retirement

September 30, 2013

Millennials shouldn’t worry about retirement! OK, now that our CEO, Liz Davidson, and the rest of the research team at Financial Finesse are having heart palpitations (and the CFP® Board has started the process of stripping my credentials) I must clarify this statement. I don’t mean that Millennials (a.k.a “Gen Y”) should ignore saving for the future. My point is that as the saying goes, “Sometimes it’s not what you say; it’s how you say it.” When it comes to financial planning, we often give the right message in the wrong way.

Think about any commercial that you’ve seen for retirement planning or investing. Have any of them been geared towards anyone under 50, let alone 40? There is nothing wrong with the retirement and investment industry focusing their attention on the Baby Boomers – they are the ones that are concerned about a life changing event just around the corner and frankly they have money to invest. Unfortunately, if there is any generation that needs to be prepared financially, it is our youngest generation in the workforce.

As the recently released Retirement Preparedness report from Financial Finesse points out, employees under 30 are actually less prepared for retirement than they were last year and will face higher medical costs, longer life expectancies, and the potential for much higher inflation and higher taxes. So how do we fix it? Maybe we don’t talk about retirement. Think about it. When you were 26, were you worried about what you were going to do after your career was over or were you trying to figure out what in the heck you were going to do for a career?

There is a lot of talk about various methods of reaching Millennials – social media, smartphone apps, and SEO marketing, but in the end, it doesn’t matter how we deliver the message if the message doesn’t resonate. What does matter to someone early in their adult life? I would suggest that the motivating factor when I was a young adult was being able to make my own decisions. From the time we are teenagers and get a taste of freedom, we tend to crave all the freedom we can get our hands on.

So what does freedom have to do with retirement? Everything! Think about it. What retirement really means is that you have options: Do you want to keep working or not? Do you want to live here or travel, or maybe relocate to the place you’ve always wanted to live? In many ways, retirement is the ultimate expression of that teenage craving for the freedom to do whatever we want.

So if you are a human resources professional trying to boost 401(k) participation, a financial planner working with younger clients, or a concerned parent talking to your kid about money, there is a key message here when talking to Millennials about financial freedom. Don’t dwell on retirement. Emphasize that money can’t buy you love or happiness (once your basic needs have been met), but it can buy you freedom to live life on your terms.

For all of the doomsday talk about the financial challenges facing Millennials in so many ways, they have the greatest opportunities of any generation. If a young person today takes advantage of their full 401k match and they max out their health savings account and contribute to Roth IRAs for an entire career, they have a great chance to build wealth. In an era with massive student loan debt it won’t be easy, but if we can help young Americans understand that the biggest limitation on them is not their age but their debt, they will find a way to solve it.

It’s what we do as Americans. Then Millennials will be in a position where they can use the money freed up by paying off their student loans and increasing their savings of all types. Many employees also have the opportunity to set up an automatic increase in the percent they set aside in their 401k every year. Those factors could help them accumulate a bigger nest egg than their parents or grandparents could have imagined.

If you are in the Millennal generation and you are burdened with student loan debt, imagine having your student loans paid off in 5 years. What if you could buy a house and still be debt free by 45? What would life look like if you had true financial freedom (a.k.a. “kiss my back side money”)?

It can happen if you make small changes to help fund the big picture, but it starts with believing it is possible. The reality is that Millennials need to seriously focus on creating and following a plan that will give them financial independence. However, the traditional retirement messages of previous generations needs to be re-framed or Millennials could become the “lost generation” when it comes to retirement.

So go to iTunes , download some of my favorite 80’s rock and Don’t Stop Believing that you can take control of your financial present and future! (Yes, many of us Generation X types are as cheesy as an Adam Sandler or Vince Vaughn movie.)

http://youtu.be/aH0EBpRXixM

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How Much Will You Really Get From Social Security?

September 23, 2013

Will Social Security be around when we need it the most…and if so when should we take it and how will it be taxed? These days, those are some of the biggest retirement planning concerns among anyone that’s not currently retired. It’s no secret that Social Security is in need of some significant changes to strengthen the ability of future generations to receive Social Security benefits. The reality is that without any changes to the system only 75-80% of projected benefits would be able to be paid. Continue reading “How Much Will You Really Get From Social Security?”

How to Invest for Income When Rates Are Rising

September 19, 2013

One of the biggest challenges facing current and future retirees is shifting from investing for growth to investing for income. This is especially difficult in today’s environment of low and possibly rising interest rates. Let’s start by taking a look at some options for getting investment income in retirement: Continue reading “How to Invest for Income When Rates Are Rising”

The 3 Most Important Words in Financial Planning

September 05, 2013

According to this article, the three most important words when it comes to investing are the “margin of safety.” The article discusses how inaccurate people tend to be at making predictions about things like the economy, industry trends, and business growth. Since this unpredictability can wreak havoc on investment plans, many of the top investment experts recommend investing with a margin of safety, which is “simply the distance between your predictions coming true and needing those predictions to come true. You can still try to predict the future, but a margin of safety gives you room for error to be wrong.” In other words, rather than pick the investment that needs to grow at 10% per year to payoff, pick the one that could grow at 10% but would still be a good investment if it only grew at 5% with anything else being gravy on top. Continue reading “The 3 Most Important Words in Financial Planning”

Short on Retirement Savings? Here’s How to Save More

August 30, 2013

Have you ever compared your current retirement savings balance to where it should be, according to the advice of a financial adviser or online calculator? Most Americans haven’t. According to the Employee Benefits Research Institute, roughly 60% of Americans have less than $25,000 set aside for retirement and about 30% have less than $1,000. If you haven’t already done so, check on your retirement accounts and see where you stand. If you’re behind and want to catch up, consider the following five strategies. Continue reading “Short on Retirement Savings? Here’s How to Save More”

Which States Are Really Tax-Friendly?

August 30, 2013

One of the more interesting conversations I get to have with people who are close to retirement is about where they plan to live. Often, inertia (or a paid off mortgage) leads people to stay exactly where they are today. People are often attached to their homes and moving is rarely if ever a smooth and easy process. Continue reading “Which States Are Really Tax-Friendly?”

4 Easy Ways to Pay Your Mortgage Off Early

August 16, 2013

One of the things that I’ve grown to believe in more and more as I talk to people who are nearing retirement and hitting the panic button about their ability to fund their retirement lifestyle is that retiring debt-free is the only way I want to retire. I’ve always been debt-averse, but as I help people look at their financial lives and their ability to live the lives they want in retirement, the more clear the vision I have for myself is becoming. I have seen people with near identical incomes, 401(k) balances, pensions, and Social Security estimates have completely different views on retirement. The #1 reason for those views is their mortgage payment. Continue reading “4 Easy Ways to Pay Your Mortgage Off Early”

10 Common Financial Mistakes to Avoid

August 15, 2013

A friend of mine recently sent me this article about how in many competitive areas of life, it makes more sense to focus on preventing bad decisions rather than trying to make good ones. That’s because the advantages of making the good decisions can be largely cancelled out by other people making good decisions. In other words, it’s really hard to beat everyone else by making good decisions and relatively easy to avoid making the bad ones. This is what’s called a “loser’s game.” Continue reading “10 Common Financial Mistakes to Avoid”

The Case Against “Moderation”

August 01, 2013

In this blog post, Michael makes the argument for a moderate middle ground between a couple he knows that are living well beyond their means and another couple he read about in this article that managed to pay off their mortgage in less than 5 years. While paying off your mortgage early may seem like a great thing, Michael worries that the couple may look back on this time of their lives with regret at all the things they didn’t do with that money. I don’t and here’s why. Continue reading “The Case Against “Moderation””

In All Things, Moderation

July 26, 2013

To borrow a line from Dickens: “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness…” The title of A Tale Of Two Cities really hit me as I read this article about a couple who paid off their mortgage in less than 5 years. They made a lot of changes/sacrifices in their financial life in order to pay off their mortgage and be totally debt free in a short period of time. They are being very frugal, looking for ways to trim their cost of living and putting off instant gratification and some “fun” right now in favor of getting totally out of debt and putting into place a lifestyle that would require only minimal incomes to sustain. This is a family that is taking financial independence and financial security VERY seriously. Continue reading “In All Things, Moderation”