What Will Happen When You Get There?

Monday 1/19/2004


Lately I’ve been seeing some disturbing financial situations.  Some income statement affluent people who are suddenly coming to grips with the fact they didn’t save enough or invest wisely enough or they have made too many financial commitments to be secure in their retirement.

Do you remember the topics from last year about being balance sheet affluent and not just income affluent?  The income affluent have lots of income to do whatever they want – but they don’t save enough to produce that same income later.  The balance sheet affluent have lots of money working for them as well as continuing to earn.  They are working and their money is working.  Remember the story of the richest women in Syracuse last week?  She was balance sheet affluent.

Having a million dollars seems like a great thing – unless your lifestyle requires 2 million dollars to generate the income you have locked yourself into spending! 

I’ve found lately that a number of people won’t get comprehensive financial advice because they are afraid to admit to not having saved enough.  Just as many are reluctant to show their tax return for fear they did something wrong, these folk who won’t get the advice they need suspect they don’t have enough money to be ok financially or to take care of their spouse if they should die – but they are very afraid to admit it – and perhaps look foolish to the one who is depending on them for income now and later.  Do they think it is better if they just die and let their wife find out later just what incomplete planning they did? 

That does happen to a lot of women who love and trust their husbands – but don’t get involved in the family finances.  It is a lack of involvement they may pay dearly for later in life!

Tuesday 1/20/2004

How do you pick a financial advisor?


At a seminar last week, I was asked how to pick a planner.  Earlier in the week I had two phone calls from people wanting help in other parts of the country finding a good advisor – one women looking for someone for her mom in Tennessee and another who lives in New Mexico part of the year – for her new husband.

It’s not easy finding a good advisor.  A comprehensive financial advisor is fee based.  They will probably spend a lot of time working with you to determine your cash flow and budget before moving to the next steps in your planning.  They are not trying to sell you a financial product.  They have credentials – but many do.  That alone won’t help you.

The couple in New Mexico – he went to see a planner there while his fiancée was working with me here. He found the planner because of his radio show.  As they spoke over the phone he realized that he wasn’t getting from the planner there what she was getting from me here – so he asked for some help.  First he wanted know what I could find out about the planner in New Mexico.  Thanks to the Internet I found the planner’s website.  It was clear from the info on the site that he was an insurance agent who also sold mutual funds.  There was no indication that this planner did any fee based advising – except he was an enrolled agent – that is he could represent a tax client before the IRS.  He is a CFP.  Now what?  I go to the NASDR website.  I plug in his name and company affiliation and tadah – there he is.  Under complaints it said “maybe”. I thought that was a bit odd so I dug further.  He had three customer complaints that were settled in arbitrations for about $25,000 each.  Based on all that - not the planner they were looking for.

Did you know you could get all that info?  You have to know what you’re looking for.



Wednesday 1/21/2004

I want to retire at 62, said the 60 year old single woman sitting across from me.


Here’s what she is doing:
pumping up her 401k
paying down debt
continuing her charitable giving
lots of travel

She has:
Assets of about $700,000
A nice chunk of Social Security

Can she do it?  Retire in two years?  Does it depend on the stock market?

When we ran the budget it said she would need just under $7000 a month in today’s dollars. 

What do you think?  Will Social Security and her assets give her a $7000 a month income?

Got the answer yet?  Her Social Security will be $1200 a month.  So now she needs about $5800 each month from her assets.  Can you get $5800 a month from $700,000?  What percentage of the assets is that?  5800 times 12 = $70,000.  That’s 10% of her total assets.  That means she will have to earn at least 10%.  If she wants her income to rise with inflation she will have to earn 14%.  What do you think?  Can she do it?  Maybe for about 15 years – and then what?  The money is gone – she’ll be 77 and she comes from a family that lives into their late 80’s. 

I think we’ll have to develop Plan B.




Thursday 1/22/2004

Last week we talked about sticking our financial heads in the sand – it amazes me how many people get themselves into trouble because they are afraid to look at the financial facts and work out a plan to deal with shortages.


Coaxing information out of someone is not a problem if they seek me out.  If their spouse drags them in it’s another matter altogether. 

I’m working with a couple right now where I have serious doubts about the wife’s financial security.  Many women trust their husbands to do all the financial planning work.  That’s not fair – it’s a big job – and it is very dangerous. If you are life partners you need to partner in all of it.  Deciding what your goals are, deciding each year how to spend the money you will make, deciding how to save some and invest some and whether or not to use debt to get what you want.

Husbands, if you are handling the finances and you run into a problem, let her know.  Hiding the facts in a misguided effort to save her the pain and stress you are going through is not a favor.  In the long run, she will pay the price anyway.  Good marriages are made better by dealing with tough issues together – just as we individually become better people by being beaten up a little by life.  Easy is not necessarily good.



Friday 1/23/2004

When I was giving that Smart Women Finish Rich seminar I mentioned on Tuesday, one woman I sat with at dinner said she was having trouble finding an advisor.


She had been to 4, I think she said.  Each one of the 4 looked at what the others had recommended and tore it apart.  I asked her why she thought that happened.  She figured they wanted to discredit the competition.  I asked her if they were all selling products and investments and she said yes – in fact she thought that was a big part of the problem – the inability of the sales person to give unbiased advice.  I said to her, you know you really have to pay someone by the hour to get that kind of advice.  I think she had realized that but wasn’t sure about the cost.

Any good fee-based advisor will give you an hour free – just like a good attorney or good accountant.  At the end of that time they should be able to give you a synopsis of what they can do for you and a cost range.  A fee-based advisor will then put everything in writing before they begin work so there are no surprises.

A comprehensive retirement plan should include at least the following 5 areas:
Cash flow/budget
Analysis of current assets
Asset allocation ands risk strategies
Asset Protection planning
Retirement income analysis

If you are not getting this in at least three planning and goals setting sessions, you are shortchanged in your planning.


Monday 06/28/2004 Property Exchanges

Monday 06/21/2004 Selling Your Business

Monday 06/14/2004 Investment Thoughts From A Nobel Prize Winner

Monday 06/07/2004 Money Can’t Buy Me Love

Monday 05/31/2004 IRA – Your Biggest Asset - Or Your Biggest Tax Bill?

Monday 05/24/2004 Retirement Blueprints – What’s Your Game Plan?

Monday 05/17/2004 Planning for Death

Monday 05/10/2004 The New Retirement Challenge – Healthcare

Monday 05/03/2004 Taking on The Risk of Loss

Monday 04/26/2004 Is a House a Good Investment?

Monday 04/19/2004 Attorney Selection, Personal Education and Divorce Agreements

Monday 04/12/2004 Estate Planning Curve Balls

Monday 04/05/2004 Can Reading Be Dangerous To Your Future?

Monday 03/29/2004 Mistakes that Cost Us Money

Monday 03/22/2004 Financial Truths

Monday 03/15/2004 The Worst Mistake a Young Couple Can Make

Monday 03/08/2004 More on Money Attitudes

Monday 03/01/2004 Statistics

Monday 02/23/2004 Why Do You Make The Decisions You Do?

Monday 02/16/2004 Empowering Caregivers – What You Need to Know

Monday 02/09/2004 Pay Now or Pay Later: Rules for IRAs and Other Retirement Plans

Monday 02/02/2004 Maybe We Should Call Them Million Dollar Clubs

Monday 01/26/2004 Women on Their Own Face Financial Challenges

Monday 01/19/2004 What Will Happen When You Get There?

Monday 01/12/2004 They’re Closing the Loopholes for Retirees

Monday 01/05/2004 A Fresh Start