You Are Not Your Net-Worth
Since the stock market crash of 2008, investors of all stripes, but especially boomers, have had a love-hate relationship with the market. When the markets are relatively calm and trending up, we love the markets, when the opposite is true, we hate the stock market.
I’m purposely using words like love and hate to illustrate a point. These are powerful words that in turn create powerful and impactful emotional responses. And if there’s one area of life that truly benefits from rational decision making as opposed to emotionally based decision making, it’s the world of investing.
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:
Of all the many golden rules when it comes to managing money, one of the most classic and familiar is to “live within your means”. How many times have you heard that expression?
But how about “living below your means”? Suze Orman, (whose style is not my favorite, but whose message is clear and spot on) has a new series called The Money Class which is where I heard the phrase living below your means. I’ve watched some of her specials before, yet I think this is her best yet. From the intro I watched on PBS, I believe this Money Class series is going to really benefit many, many people in bad financial shape.
When considering the retirement alternatives out there - people are getting more and more creative in their thinking. Karen DeMasters outlines some other options you may not have considered, including what is known as a '"transitional strategy', in an article she wrote that appeared in the most recent Financial Advisor magazine.
In laying out a case where when approaching retirement, one has to balance both time and money, the article states, "T. Rowe Price believes that even if you both work part-time in your 60's while you begin playing, the financial benefits may be significant, or, in some cases a couple may choose to have one spouse retire while the other continues working." It's not often you read an article about retiring with the phrase 'funding your fun' in it.
These are not happy days here in the U.S. With a constant barrage of bad economic news and a stock market that has even the most earnest long-term investor rethinking their investment strategy, hope and optimism is in short supply.
That’s why this week, when the PBS News Hour did a segment on a new book titled: Millennial Momentum: How a New Generation Is Remaking America by Morley Winograd and Michael Hais, I could barely contain my excitement and enthusiasm. Finally, finally, after drowning in a sea of gloomy news comes this inspiring book that can remind all of us intelligent optimists why we prefer to see the glass as half-way full.
Who remembers the 7-up ‘un-cola’ commercials? All these decades later I still remember that distinctive voice of actor Geoffrey Holder. If you want a flashback-here he is in a YouTube video that will bring you back in time: 7-up
If you’re the type of investor that thrives on volatility in the stock market, this is your kind of summer. With the advent of high frequency trading, multiple hedge funds using Wall Street as one big casino, the global sovereign debt crisis, etc, market volatility for at least the short-term is here to stay.
