Retirement Lifestyle Planning

Retirement lifestyle planning looks beyond numbers. Beyond money there is the question of how to spend and invest a more precious resource – time.

The normal approach to retirement planning is to start with the amount of savings. Then ask for an idea of how much income those savings will produce. Conversely a retirement lifestyle plan starts with describing what you need, want, and wish for. Then ask for an idea of how likely it is those savings can get you there.

Some people need help coming up with their wishes. It might not have occurred to them before to ask what will bring meaning and fulfillment to them in that chapter of life. For some this is a more difficult decision than figuring out an investment plan or tax strategy.

If you come up short on your goals, the plan recommends what can be done instead. If you come up with excess, the plan asks what you might have left out.

People who engage in the retirement lifestyle planning process understand that there is only so much that money can do. The rest is up to you.

Scared of Financial Success?

At one point in my banking career I was in line for a big promotion that involved a panel interview, and I blew it. People who served on the panel couldn’t believe the same person showed up for the interview who showed up for work every day. Instead of feeling pride and confidence when I first heard about the opportunity, I remember feeling discomfort and anxiety with the new title and bonus potential. It made no sense. Because I thought I might be given the opportunity again, I spent the following year working on the internal and external sources of my fear of success. I improved my inner confidence by joining Toastmasters (see that story here); and I improved my external messages by consciously surrounding myself with people who gave me joy and support. It worked: the next year, I aced it, and got the promotion. Research on our messages about money has uncovered that some people may have an inner upper limit they have set on financial success. Past that limit, they become uncomfortable. Unknowingly, they will begin to sabotage themselves.  According to Ken Donaldson, LMHC, an emotional intelligence expert in Seminole Florida and author of Marry Yourself First , the upper limit is set by “history, events, programming, parents, institutions and cultural messages.” Financial professionals often see this with windfalls. When someone has been handed a great deal more money than they have had before, and are uncomfortable with their new position, they may spend it or give it away until they are back in the financial position where they first started. Still others allow the windfall to sit in an account, untouched, unwilling to acknowledge its presence. For some people, the windfall can represent a real or imagined radical change in lifestyle and in relationships. It may give them a new self-identity, and they need time to grieve their old one. Meanwhile, some in their circles will accept them as they are, while others try to drag them down. To address fear of success, self-made or not, work needs to be done on both inside and outside factors. Two steps in this direction: First, write your feelings about your new position today, then imagine how you would like to be spending your life three years from now. Second, surround yourself only with people who bring you joy and support. This may mean saying "no" to people whom you previously said "yes" to, detaching from them in a loving way. Keep the messages of confidence flowing - from the inside and out - to embrace success, rather than ruin it.

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Having “The Visit” At The Holidays

For many families, the holidays are one of the few times when adult kids, parents, grandkids, and grandparents get to see each other. That time together might be the best time to have a planned "Visit." There are two common topics for the Visit: 1) finances; and 2) health and home. Today's post will deal with finances. Next week I will have a guest post from Monica Stynchula, LCSW and CEO of ReunionCare, about health and home. Members of the Greatest Generation are notorious for keeping quiet about money. Yet, as they reach old age, their Baby Boomer kids begin to wonder, "Do Mom and Dad have enough money to live on?" "What if they need in-home care?" "What if they need to make modifications to their home?" "Did they really need those $5000 new windows, or are they being scammed and not know it?" "If I had to pay bills for them, where do they keep their money?" "What if they have money or accounts stashed somewhere and they forget about it?" Some parents may discourage the money topic by cutting conversations about it short. Perhaps they do not want to acknowledge their own mortality. Perhaps they are embarrassed about falling victim to a scam already. Perhaps they see all of their kids as spendthrifts who will not be responsible (regardless of their age, education, and career status). Perhaps they are afraid of having the keys to their car, or their home, taken away. And it's not always the parents that don't want to talk about it. Sometimes the adult kids are uncomfortable talking about their parents' mortality, and they are the ones cutting off the communication. Regardless, every time the topic, and its underlying emotion, is avoided, it feeds an elephant in the living room. If not acknowledged, it stays there, and gets bigger, until a crisis erupts, and everyone is forced to talk about it under duress. How do you bring up the money topic before a crisis?  Try owning your discomfort about it up front. "There's something I am struggling with talking to you about," might be a good beginning, for example. Then let them know what you want to talk about: "There are two main concerns that keep coming up for me, and I need your help." However, if they still shut down, keep your cool, and ​be empathetic: "I​f I were in your shoes, I would find this hard to talk about, too. Perhaps this wasn't the best time to bring it up." ​Try writing them a letter instead to keep the conversation going. ​​But, ​if you find the discussion goes even better than you thought, let them know how relieved you are: "Wow, I was so worried about talking to you about this, but I feel better now." You may find you have paved the way for more open conversation, and even happier holidays with the family, in the future. 3-Minute Video: Having "The Visit" At The Holidays

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To Be Or Not To Be….A Halloween Scrooge

Retailers want to know - Are you ready? Got enough candy? Bought your pre-carved pumpkin? How about costumes for Lucky and Whiskers? When it comes to Halloween spending, it seems they've thought of a million different ways to get Americans to celebrate. And what's wrong with it? Compared to the other big consumer holidays, Halloween comes with the least sense of duty and obligation. It's, more simply, pure discretionary fun. Add to the mix that this year it falls on a Saturday, and retailers will likely get even more of our wallets. So what if we spend money on corn-syrup candy and pet costumes? Which is it - unnecessary, irresponsible spending (as a Halloween Scrooge might say) or necessary, letting-off-steam, fun? To answer for yourself, think about these 3 questions: 1) Do you have a play-money account or amount set aside in your cash flow plan to spend however you like? 2) Have you ever tracked your discretionary spending? 3) Do you ever have spending "hangovers," and suspect you may spend too much on spontaneity? Financial planners ourselves may be the most guilty bunch of failing to appreciate money as a tool for bringing spontaneous fun to our lives. We don't want to be the unwitting Scrooge to anyone - not our clients, nor our families, yet our analytical nature can sometimes come across that way. Spending with healthy enjoyment is one of the greatest balancing acts we can all learn. Whether you plan it all out ahead of time, or see who comes knocking on October 31, make your Halloween hangover-free. Enjoy the holiday in the way that seems right for you. And if you're still not sure, you could call your financial planner....or just ask Lucky and Whiskers. Holly's Video: Halloween Scrooge

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What Were Your Generation’s Money Messages?

Members of the Greatest Generation are famous for their frugal habits, sometimes to the frustration of their Baby Boomer kids.   It can be hard to understand why Mom or Dad refuse to part with Ziploc bags and empty shoeboxes, or why they will not buy something nice for themselves. Many of us recognize that these habits probably evolved after being raised in a time of true scarcity - the Great Depression.  What I didn't know until recently was how this money mentality was reinforced by our government throughout World War II. A baby boomer friend recently showed me a historic relic I had only read about but never seen: a war ration coupon book, issued in 1943. It belonged to his mother, born in 1928. The language and tone on the ration book is striking. Authoritarian, even threatening. If you had been a young person holding this ration book, what money messages might you have received? My own thoughts, if it were me at that time, are below. "Rationing is a vital part of your country's war effort. Any attempt to violate the rules is an effort to deny someone his share and will create hardship and help the enemy." (Yikes! Both of those sound pretty bad. I'll comply.) "This book is your Government's assurance of your right to buy your fair share of certain goods made scarce by war. Price ceilings have been established for your protection. Dealers must post these prices conspicuously. Don't pay more." (Those evil dealers/merchants. They're always trying to get us to pay more than what's fair.) "Be guided by the rule: 'If you don't need it, DON'T BUY IT.' " (Right! I got through the last ten years with one pair of shoes; the next pair can last that long, too.) Contrast the last message to the one to "go shopping" following the 9/11 attacks.  The word "ration" itself is used 9 times on the outside of the book, plus on every stamp in the book. Other scarcity terms pervade: "This book is valuable. Do not lose it." "Without the stamps you will be unable to purchase those goods." "Do not throw this book away...You may be required to present it..." You may ask what self-respecting Americans would have put up with this rationing garbage. Yet, at the time, the government had been given credit for bringing us out of the Depression. We had been attacked by Japan, and German U-boats were off our coastlines. Who else would you turn to for protection? If you wanted "rationed goods," (many of them household staples), the government was the provider, unless you wanted to risk a $10,000 fine (a lot of money now, and in 1943?), imprisonment, or both. Stiff penalties awaited noncompliant rule-breakers. From this place of fear, a message of scarcity to a Depression-battered generation must have seemed natural, even patriotic. Money messages from authority make the most impact in our formative years, and in times of fear. It depends on who we view at the time as authority: parents, teachers,…

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Independence, Emotional Intelligence, and Better Business

(Prefer video to text? See this message in a 3-minute video here: Independence, Emotional Intelligence, and Better Business) This month included Independence Day, but it is also included Independents Week - a nationwide campaign to heighten awareness of local businesses, jobs and economic prosperity brought to a community by non-chain, non-corporate enterprises. As an independent businessperson for 10 years now, I learned that practicing emotional intelligence is one of the best skills for managing the multiple relationships that come with running a business. Following are 3 of these skills. 1) Boundaries - Being unaware of my need to please people, I took a very nice client in my first year who asked me to make house calls. She often had to meet after work, which was a 50-minute commute for me in bumper-to-bumper rush hour traffic. The doorbell or her phone would ring, which sometimes prevented her from focusing on our tasks at hand. I violated my policy of meeting during regular business hours in my own office environment, free of distractions, because I wanted so badly for "her to be happy." While I believe she was happy, and we got her project completed on time, I was usually exhausted, a little irritable, and resentful before, during, and after our meetings. Yet, it was not her fault - it was mine, because I made a business decision without the intelligence of setting boundaries. 2) Listening - I used to think listening meant keeping my mouth shut until the other person quit talking. That certainly works better than interrupting, which I used to be a pro at. Later I learned that repeating back what I thought I heard, followed by something like, "Have I heard you correctly?" worked wonders for my relationships with clients, vendors, employees, and, wow, even friends and family. There are as many ways to strengthen your listening skills as there are ways to strengthen your muscles. Exercising my listening ability has helped me be a better receiver of sensitive information, and deepened my understanding of where others are coming from. Whether it's a vendor or a client, both of these made me better at business. 3) Customer Focus - I used to think if I advertised or discussed my credentials, picture, achievements, or experience, then I would win people over. Instead I found that the more I make it about them, the happier everyone, including me, is. I find other people's stories and tribulations far more interesting than my own. Besides, business is not the best place to get my needs met. I have a support network of friends and family who gladly fill that role. My website, my marketing materials, my message, and my meetings may include personal stories, but their purpose is an attempt to provide a direct lesson or benefit for my reader, my client, or my vendor. These interactions focus primarily on what they have told me is most important to them (which is generally not my credentials, picture, achievements, or years of experience) -…

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Give Yourself a Break With Your Money History

When I was interviewing for my first job out of college, one of the vice presidents who interviewed me was Joy Turner. A woman on the move in her 30s, Joy seemed highly respected by her peers at the bank. She had a calm demeanor, and while reviewing my resume', she noted my GPA was 3.2. Immediately assuming she disapproved, I blurted out, "Yes, I could have done better." Her expression softened as she supportively responded, "Well, 3.2 is not bad, and considering you went to Davidson, don't you think it's actually pretty good? We don't always want people with perfect 4.0's." I exhaled, relieved. I got the job, and later she became one of my favorite mentors. No matter how good the financial statements look, many people I have met come in and say, "Yes, but, I could have done better." When I ask, "Why do you think so?" the three most common reasons I hear are something like: "I panicked and sold everything in 2008." "I trusted that financial person before I did my homework on them." "I haven't paid enough attention to this stuff." I understand where they are coming from. It's common to think we can always do better. I am just as bad at looking at my mistakes, my humanness, and blaming myself for not being "better," as the next person. But over time I have learned to reframe the question. Rather than play the "What if I hadn't made that mistake" game, I can take inventory of many things I have done right that have led me to the life I have today. Why waste time inventing a future that never happened, where I had a 4.0, got a different job, or didn't buy Enron in 1999? All you can do is resolve to be better and make better choices, now that you know the difference. Why not be glad that now you know the difference? I am guessing Joy Turner thought someone who had learned that lesson, and was ok with it, would make better decisions in the long run. Try treating yourself the same way, and see if you don't make better decisions, too.

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What’s Your Next Chapter? Questions for Any Age

“Would you tell me, please, which way I ought to go from here?” “That depends a good deal on where you want to get to,” said the Cat. “I don’t much care where...” said Alice. “Then it doesn’t matter which way you go,” said the Cat. “... so long as I get SOMEWHERE,” Alice added as an explanation. “Oh, you’re sure to do that,” said the Cat, “if you only walk long enough.” (Alice’s Adventures in Wonderland, Chapter 6) https://youtu.be/KPqJjiDUkRM What will I do with myself every day in "retirement"? Many 45 - 65-year-olds struggle to answer this. But what if, for you, "retirement" is a long way off, or, has been going on a long time already? What if you just want to know how to spend your mid-life? Or your 80s? Since I was 20, I have relied on the What Color is Your Parachute? book series to help with this kind of question. There is the original one for career-hunting, and a "Retirement" edition. They may sound different, but both books essentially ask the same questions...When have been the times in my life that I felt most fulfilled? What accomplishments, big or small, brought me the most joy? What places have I lived where I was happiest and why? What kinds of people do I enjoy being around the most? How much alone-time is necessary for me? It turns out that, in many respects, planning for "retirement" is not much different than planning for any other decade. But what about money? While retirement might be a time of "financial independence," that term can vary by degrees throughout our lives. Many people start a new chapter in their 20s, 30s, 40s, or 70s. They must feel financially independent, at least for at time, in order to do so. If you are not there yet, what's one thing you could do? Take ownership of your purpose. Some people hand over that ownership to a financial professional when they ask, "Here is the sumtotal of my financial decisions over my life so far... What kind of life (income) can you get me?" Some people even shop financial professionals this way and choose the one that gives them the highest answer. What if, instead, you did the homework to determine what kind of life you want first? Then you could go to the financial professional and ask, "What are the chances I can lead this life, and not run out of money? How big or small are the changes I might I have to make to get there?" When you determine your purpose first, you can align yourself with someone who can guide you to get there. You don't give up ownership to them, because they help you know the impact of your decisions. You could wake up every day with purpose, knowing exactly what you are meant to do. That's not retirement. It's independence, no matter what age you are.

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Letting Indecision Delay Your Estate Plan

https://youtu.be/Ufyt8eEq1jk The best reason I ever heard for not seeing an estate planning attorney came from a late client who, upon learning that over half of his estate might be taxed, said, "I don't mind. The government has a lot of good programs."  (I responded, "Ok. How can you be sure your money will go to the programs you like?") I don't believe, despite his political views, that he really wanted to leave half of his money to the government. I do believe it seemed better than addressing his mortality, though. Talking and thinking about our own death is stressful, so it's no wonder many people avoid it, deny it, and don't want to deal with it. But what if your reason is simply, "It's too hard to decide"? No doubt about it, estate planning can involve gut-wrenching decisions, like choosing a potential guardian for your minor children. (Ugh.) Or figuring out what's "equal" vs. what's "fair." Who to include and who to exclude? Which charities will handle a bequest most responsibly? Leave money in a lump sum, or spread it out over time? In-laws, multiple marriages, step-relatives, girlfriends, boyfriends....today's families are complicated. Perhaps you and your spouse or partner disagree. Or you and your children do. The more you delay, the more the questions, and their unknown answers, multiply. You might want to brush it off, like my client, since you "won't be around anyway to worry about it." But until then, it can still eat at you. A lot of people think they must make all the decisions before they go see the attorney. But when you think about it, estate planning attorneys deal with such decisions all the time. Many of them are actually pretty good at suggesting alternatives you might not have considered. Attorneys are more than just note-takers; they are advisers and advocates. The good ones are smart people who love to come up with creative solutions to legal questions. So when I hear someone can't decide, I encourage them to make the appointment anyway. Addressing our mortality may not be pleasant, but it's better than being eaten alive by indecision.

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Financial Success: Too Hot to Handle?

Have you ever known someone who spent or gave away a windfall, seemingly believing they didn't "deserve" it? Or were they scared to have more than they ever had? In a recent meeting, a client shared stories of times when she committed financial self-sabotage. When she was on a tear, making what she considered to be "a lot" of money, she began to slow down. The success felt uncomfortable. T. Harv Eker, author of The Secrets of the Millionaire Mind, talks about an "inner-money thermostat," an inner upper limit we have set on financial success.  According to Ken Donaldson, LMHC, an emotional intelligence expert in Seminole Florida and author of Marry Yourself First , the thermostat is set by "history, events, programming, parents, institutions and cultural messages." At one point in my banking career, my thermostat got too hot, too. I was in line for a big promotion that involved a panel interview, and I blew it. People who worked with me couldn't believe the same Holly showed up for the interview who showed up for work every day. Instead of feeling pride and confidence in the opportunity, I remember discomfort and anxiety. It made no sense. Because I thought I might be given the opportunity again, I spent the following year working on the internal and external sources of my thermostat. I improved my inner confidence by joining Toastmasters; and I improved my external messages by consciously surrounding myself with people who gave me joy and support. It worked: the next year, I aced it, and got the promotion. What if you know someone who seems uncomfortable with what they have either earned or been given? Try asking five questions: 1) What money messages do you remember from childhood? 2) Imagine you freely embraced all the financial success that comes your way for the next three years. When that occurs, how will you be spending your life? 3) What would you think about keeping a journal of every unexpected windfall and success you experience for the next 12 months? 4) What one thing could you focus on for those 12 months that would go the farthest toward your financial success? 5) What could you change in order to surround yourself only with people who bring you joy and support? With awareness, time, and the right support network, financial thermostats can be reset so that no matter how hot it gets, you've got it handled.

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When Going Over Budget is Good

Last week I looked at my income and expenses for the first six months of 2014, comparing them to the budget I made at the beginning of the year. One category had a big surprise - groceries. Everyone knows about supermarket inflation, but upon further inspection I realized my own personal inflation was due to some "bad" (financially speaking) choices I have been making for my own "good." In my newly single life, I assumed I would be spending about two-thirds of my old married grocery budget. Instead, I found that I have actually spent more. My analysis showed three reasons - 1) my healthier food choices; 2) my love of cooking, especially for others; and 3) general grocery inflation. When I go to the grocery store now, I hardly spend any time, or money, in the middle aisles. I spend it on the perimeter, where the produce is. As a result, I have managed to keep off the ten pounds I tried for several years to lose. But produce is generally more expensive, and not quite as filling, as packaged goods and carbs, so I buy more of it. It also spoils, so I buy more often. I have always enjoyed cooking, but now I have someone new in my life for whom I especially enjoy preparing meals (lucky guy, huh?). Upon reflection, he estimated I am buying 75 percent of the groceries for our two households. And he is probably right. I nearly always send leftovers home with him, then bring groceries to his house, too. Relatively speaking, I would guess that eating healthier, and cooking for two, have far more impact on my cash flow than general inflation has. But I have no intentions of stopping either one. I will find other areas to sacrifice first. Compared to the cash flow impact, my much-improved health and wellbeing is far more worth it.

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