MONEY matters

We’re only three weeks into the New Year and hands down, almost every potential client I’ve spoken with so far is concerned about one thing and one thing only - retirement planning. More specifically, they want to know, based on their current financial picture, if they’ll be able to maintain the lifestyle they desire when no longer working for money. That, ladies and gentlemen, pardon the cliché, is the $6 million dollar question on many a boomers mind these days.

Where most of us do really well is on understanding and executing on the accumulation phase, such as saving and investing X amount in your IRAs, 401ks, 403bs, each year. We get that concept. Where things become murky for many people is when you get to the income distribution phase of retirement planning. This is when you need a long-term strategy to fill the gap between your social security and possible pension payments and your lifestyle expenses. To do that, you ask the following questions:

• How much can you safely withdraw each year from your investment portfolio?
• What’s the rate of return you’re assuming with your portfolio? 
• How should you develop your investment strategy?
• Do you withdraw your cash monthly, quarterly or once a year?
• Do you withdraw the same amount each year or will it depend on your investment returns?
• What’s the defensive strategy to preserve your capital if inflation starts to increase rapidly?  

According to the Transamerica Center for Retirement Studies, a measly 8% of employed women feel they are building a sufficient retirement fund. One of the main reasons for this is that women aren't talking about retirement planning.

So to remedy the problem, and based on it's research, the Center for Retirement Studies came up with some questions that family, friends and advisors can ask women to get them started with talking about retirement.

Can you guess the average age at which we are at our mental sweet spot?

How much money does it really take before we consider ourselves to be rich?  Based on net worth and income, this infographic by Mint.com, which is based on a recent Gallup poll reveals just what we Americans believe the 'rich index' is.

This is the time of year people often start thinking about getting their financial house in order. So if creating a personal financial plan is on your list as a personal and financial goal to accomplish in 2012, you won’t be alone.  As you survey the landscape of fee-only financial planning options available, keep this in mind;

Creating and implementing a comprehensive financial plan that

• optimizes your cash flow and investments;
• aligns your money with your values;
• provides you a smart and strategic financial roadmap that’s easy to understand and implement;

Yesterday, a slew of articles appeared in the news proclaiming Married Couples at a Record Low. I’m aware of the trend that younger people are delaying or reevaluating whether they want to make the plunge, and with over 50% of marriages still ending in divorce, I can understand the hesitancy.

So as we prepare to bid farewell to 2011 and ring in 2012, I find myself wondering, will money continue to be one of the major causes of couple’s calling it quits?

Although poor investment choices and shoddy money management habits pose some of the greatest risks to your long term financial security, an additional risk that’s not often considered is the risk our over demanding egos pose to our financial freedom.

It's the ego that wants us to believe that we are how much money we make, the job title we hold, the type of clothes we wear, the home we live in or the car we drive. It’s the ego that demands we compare ourselves to our colleagues, neighbors, family members and even celebrities. The ego has us continually striving yet never quite arriving. And most toxic of all, it’s the ego that convinces us our self-worth is linked indelibly to our net-worth.

Are you planning on a miracle or planning for success in 2012?

I heard two new great phrases pertaining to money this week. The first was “living below your means” which I wrote about in a previous blogpost after hearing Suze Orman promoting her new Money Class. Living within ones means is now a common phrase, but below ones means? – now that’s a concept that I truly hope goes viral. 

The second phrase appeared in an article one of my favorite clients, Eddie M sent me – the phrase is “time affluent.”