The best retirement plans start with a plan for a fulfilling life first, then match up the plan with money decisions. That's why good planners ask, what's the money for? For most, it's not to support boredom, stagnation and decline. If you define what an ideal retirement means first for you, then your retirement plan and your retirement life have far better chances of success.
The best retirement plans start with a plan for a fulfilling life first, then match up the plan with money decisions. That's why good planners ask, what's the money for? For most, it's not to support boredom, stagnation and decline. If you define what an ideal retirement means first for you, then your retirement plan and your retirement life have far better chances of success.
A CFP® wrote a bad IRS check. That would be me. Yes, I bounced a check to the IRS. Accidentally, of course, but still. Behind my name are the initials "CFP," for CERTIFIED FINANCIAL PLANNER™, so supposedly I'm some kind of financial expert. And yet, I did a very un-expert thing that even most financial non-experts do not do. Brain Fog The bad check was written in April 2014. The tax year in question was 2013, which was the same year I got an unexpected biopsy (which came out clean after several weeks), an unexpected audit by state regulators (which came out clean after several weeks), and an unexpected divorce (which took "only" several weeks and much of it wasn't clean). All of these - the biopsy, the audit, and the unexpected divorce - happened between August and November. If you've ever been through one or more of the above, perhaps you can relate to the feeling of going through the rollercoaster of life, trying to act like a rational person, but constantly getting hijacked by these human things like emotions. Wishing you could concentrate better, focus like you used to, but the brain just won't cooperate. I wasn't aware I was in that much of a fog. I thought I was keeping it all together pretty well, considering. Until the IRS notice showed up. "Check Payment Not Accepted By Bank: The bank did not accept the enclosed check for the following reason: INSUFFICIENT FUNDS. Please return the bottom portion of this form with a certified check...The PENALTY amount is...The current Interest Charge is..." Shock and Shame "Wut?" I thought. My first reaction was to get mad at the bank. It only took a few minutes, though, to research there was no mistake. Shock, embarrassment, humiliation, shame. My jaw and knees dropped to the floor simultaneously. I bounced a check to the IRS?!? That's when it dawned on me that the events of 2013 were still affecting me or I wouldn't have written a check on one of my new post-divorce checking accounts without putting any money in it first. So, the next paragraph caught my eye. "You can request penalty relief by explaining why you believed the bank would accept the Check and by providing any supporting evidence." My backbone straightened up. Although it was not the bank's error, I needed to plead my case to keep my sanity. Making the Case for Penalty Relief It turns out the IRS (back then) would seriously consider applications for relief, although that doesn't mean they will grant them. First, I immediately deposited more money in the account and had the cashier's check, including the penalty and interest, sent. Then, I sat down to write to the human who would be reading my request. I crossed my fingers that it would be a 40- or 50-something who had been unexpectedly divorced after a 20+ year marriage and perhaps had a biopsy scare plus an audit of some kind. I fell on my…
What is retired husband syndrome (RHS)? I first heard of Retired Husband Syndrome at a book signing in 2013. From across the book section in the exhibit hall, I saw a young man with jet black hair staring at the back of my newly-published book, The Mindful Money Mentality: How to Find Balance in Your Financial Future. He turned it over, opened to the table of contents, flipped a few pages, and turned it over again. Until that point, he acted like other book-browsers: look at the back, flip to the front, open to the table of contents, flip to the back, flip it again. Some would then take the book to the register. Others set it back on the shelf. The whole decision took less than 2 minutes. But this young man took so long reading, I wondered if he might consume the whole book right there. Then I got distracted by conversation with another attendee. When I turned back to look for him, he was gone. Figuring he had decided against it, I was surprised a couple of hours later to see he was the first in line at the book signing. Retired Husband Syndrome – in South Korea Approaching with an enthusiastic smile, he said “Hello” in a heavy Asian accent. He was from Seoul, South Korea, (which, considering English was his second language, might explain why he took longer examining the book). He said that he thought the book would be helpful to his male clients. Unsure why he was excluding the female ones, I readied my pen to sign, but asked him to tell me more. “In Asia, we have Retired Husband Syndrome (RHS),” he said. “I’ve never heard of that. What is it?” I asked, putting the pen down. “Some husbands spend their whole lives working for a company, and when they retire, they are at home, and it is not good for the marriage. The husband loses his identity because he is not in his job anymore, and he wants to be home with his wife. The wife has been at home her whole life, but she doesn’t like the husband being there, doing nothing.” “So sometimes the retired husbands do…nothing? They don’t have hobbies or hang out with their friends?” “Yes, that’s right.” “Wow. So you must see a lot of marriage problems in your practice?” “Yes! And it is too bad. They have a pension, but the couples never spend time planning what they will do.” He explained more about the strain on the marriage; the sadness he sees at a time when there could be great joy and celebration; and the effect on their children and the families. "This makes me sad. Sometimes I am going to be the only person outside of the family who might see it. All of the financial advisors in Seoul could help people with this. This is preventable.” Retirement Planning Is About More Than Money I once heard a financial planner say, “We spend…
5 identity theft types of pain. Yes, identity theft is a pain. Before a family member's recent experience, my thinking was "pain in the neck." It's a nuisance, for sure. However as experienced by this family member recently and by me as the power of attorney holder, it's more than just a nuisance. It can induce shame, violation, hypervigilance, and eventually isolation. Pain Type 1: Shame The family member fell victim to a spoofing scam. The bad guys called her pretending to be AT&T. They convinced her to share the Multi-Factor Authentication (MFA) code which allowed them to steal her phone number through a SIM swap. Although they were unsuccessful with her multiple times at first, it only took one convincing moment that they were really from AT&T and trying to help for her to cave in to their pressure. Three days later, they called me too. The AT&T logo appeared on my screen. I answered it, thinking it was AT&T calling about her phone. Fortunately when I heard the man with the Eastern European accent ask for her, I was hesitant. But not suspicious. Just wondering why AT&T was calling my number (surely they know this number belongs to me?) and asking instead for her. The reason was that my phone number was on a few of her accounts as the MFA device. So her stolen number wouldn't work for those accounts. They needed mine, and were calling to attempt the same ruse that had worked with her. The call lasted all of 26 seconds before he abruptly hung up. Only then I thought, "Hey, wait a minute. I don't think that was AT&T." I felt like an idiot at that point. I even called the number back and it played an AT&T greeting. Fortunately I had not given them any information. Since that time, I have read that a cybercriminal ring bribed AT&T employees which allowed them to impersonate AT&T to conduct their operations. Being a victim is nothing to be ashamed of. Professional criminals are skilled. Yet many victims feel shame at being duped. Pain Type 2: Violation Three days prior to that call, I received multiple email alerts that changes were being made on her USAA profile. It was a Saturday night. I called her to confirm she had not spoken with USAA. She had not. "Hmm," I thought, "We will have to call about this when they're open." I wasn't alarmed. Two days later, a holiday, email alerts began coming from her bank account. The password and mailing address were changed. I knew she had not done this. I certainly had not done this. Who is doing this? Someone is breaking into the bank account and changing information? How did they even know where she had a bank account? How did they get the username and password? Is this connected to USAA? When someone is in your bank account changing personal information, it feels violating. Despite the bank's assurances via hours of calls and visits…
5 top books read in 2023: What books made an impact on you last year? Each year a few selections from the prior year's reading are highlighted here. For 2023, below are 5 favorites (actually, 4 books and 1 app) from finance and retirement, self-help, and fiction. Finance and Retirement The finance and retirement book recommendation this year is Get What's Yours: The Secrets to Maxing Out Your Social Security, by Lawrence Kotlikoff, Paul Solomon, and Philip Moeller. Although published in 2016 it's been updated for current changes to the claiming rules. Do you really need to read a book about Social Security? Isn't filing pretty straightforward? Maybe, maybe not. It's easier to say who would not necessarily benefit from the book than who would. The book might not be for you if: you already filed for Social Security more than 12 months ago (because, did you know everyone gets a one-time filing do-over in the first 12 months?); or you are not yet 62 and you and your spouse have never been divorced, disabled, widowed, or worked for an employer who opted out of participating in Social Security (generally this would be certain railroad companies or municipal governments). These rule out a few million people, but for the other tens of millions, there is probably something useful inside this book that could save anywhere from a few thousand to a few hundred thousand dollars over the rest of their lives. Life Improvement: (also known as "self-help") Fierce Self-Compassion: How Women Can Harness Kindness to Speak Up, Claim Their Power, and Thrive by Kristen Neff, Ph.D.. Neff's specialty reminds me of Brene' Brown's - a narrow niche of psychological research for which she has chosen to become a deep expert. In Brown's case it's empathy while in Neff's case it's self-compassion. I didn't even know what self-compassion meant when I began reading and studying Neff's work about three years ago. Lest it be confused with becoming a tender-hearted wuss, Neff makes clear that self-compassion requires a ferociousness that is societally frowned upon in women. How to act on that feeling while also expressing self-compassion is the balancing act which she skillfully examines and explains. Not a book, but an app: Insight Timer. I keep this one in my Mental Health folder on the first screen of my phone. It's my go-to app first thing in the morning for a guided meditation or simple calming wake-up music (try for example, "A New Day," by Wakes/Ada and Nathan). Later I consult it again when I need to get to (or get back to) sleep. The teachers are well-vetted by IT and then rated by worldwide listeners. Guided practices span the gamut of spiritual and religious traditions. There are musicians in varied stress-relieving genres to choose from (calming piano - try Chris Collins; cello - try The Wong Janice; recorded nature sounds - Insight Timer Earth). Currently IT claims 28 million listeners. Fiction On the fun side, here were 2 picks for fiction.…
When money-opposites attract: One's a saver. One's a spender. One would rather be at the mall. The other is into investments. While they love their differences overall, they struggle with disagreements about money. Money is the third most frequent topic of marital arguments, after chores and children. Ironing out the wrinkles in money beliefs, behaviors and decisions can go a long way toward reaching financial goals with peace and harmony - whether those goals be at the mall, or in the savings account. How can couples handle mixed money messages? Try three steps. Step 1: Money Script Awareness Sometimes we don't realize the underlying money beliefs that drive our own and our partner's decisions. These are often called money "scripts." (You can find yours using an online test developed by Dr. Brad Klontz here.) Share with each other the money messages you grew up with. Examples might include "Money doesn't grow on trees," or "You only live once." The goal in sharing is to begin to reach an understanding of the other's background. Share who influenced you when it came to handling money. Money script influences can come from various authority figures - parents, grandparents, teachers, coaches, or spiritual leaders. Share what you believe is the most important value that money provides to you. Values derived from money can include security, achievement, sharing, and spontaneity/having fun. Even a general rejection of money (think 1960s hippie culture) can be a money value. Step 2: Concentrate on conversation Now that the money differences are on the table, how do conversations about it go? It's important to communicate about how you communicate. The goal is for each partner to feel heard and understood. If one or both are falling short on feeling heard and understood, "active listening" is one tool to try. In an abbreviated form of active listening, each partner takes a turn being the sharer and the listener. The sharer tells their story or shares their statement about a topic. The listener then completes three steps. mirror back what they thought they heard, check for understanding, and empathize if appropriate. For example, say the sharer talks about feeling discounted or ignored with important money decisions. The listening partner listens without comment. The listening partner's three steps might begin like this: "So what I heard you say was..." (repeat back, even if it's verbatim, what you heard) "Did I get it all?" (If yes, go to next step. If no, listen to what was missed, and go back to mirroring what you heard.) "I can see how that would be difficult/challenging/etc. for you." Or, if it's true, "If I were in your shoes I would feel the same." This empathetic statement is not necessarily an agreement (although it's nice), but at a minimum an acknowledgement of understanding. All three of these must be completed before it's time to switch roles. Step 3: Respectful Negotiation With enhanced understanding, a couple is better equipped to come to a mutually agreeable solution. Several years ago…
My story: The following is an updated excerpt from the introduction to my book, The Mindful Money Mentality: How To Find Balance in Your Financial Future (Porchview Publishing, $20). As a behavioral economist (in a field that studies the psychology of personal economic decisions), I have a keen interest in our relationships with money. I care about maximizing its usefulness as a tool rather than elevating its status as an end. But for much of my life, I had those two reversed. I did my own financial planning backwards. I put the pursuit of money first, life second, and myself last. In other words, I floated in a fog about my attachment to money, swept along by society’s encouragement and my own beliefs. My money mentality was not aware, awake, or intentional. It was unconscious. It was anything but mindful. Ironically, I was one of those successful savers. Starting when I was a teenager, I kept track of every penny I spent. I could not wait until my 21st birthday so I could start contributing to the 401(k) at work. Money as the Main Goal In my 20s and 30s, I focused on money as an end, determined to define my success as a person by the amount of money I made. As a result, I made some choices that caused me, and those around me, to suffer unnecessarily. I fretted over how much essential things cost. It hurt me to spend on myself for anything nice, much less on anybody else. I now realize that having money was a way to feel good about myself. In my mind, my earnings defined my success as a person. This is the area where I was most imbalanced, and I regret some of the decisions I made then. After college, I joined a Miami bank training program. I saw that most of the trainees chose to live in a new suburban complex requiring a Metro commute. I chose to live in cheaper North Miami, only ten minutes from downtown, proud that I was saving on rent, gas, and Metro fares. The building was newly renovated but occupied mostly by taxi drivers who kept odd hours, and the crime rate was higher in my neighborhood. My car was broken into in the parking garage. I did not get much exercise because, as a 5-foot-3-inch 20-year-old, I didn’t feel safe going outside. Further, while my coworkers were discussing the fun evenings they had had at south Miami neighborhood restaurants, I thought, “Bah, humbug!” I was proud not to “waste” my money on frivolities. I ate mostly sauteed vegetables and microwave popcorn in my apartment. Over the seven-month training program, I not only did not exercise enough, I unconsciously distanced myself from the camaraderie of the other trainees. While I eventually fixed the exercise deficiency later in life, the friendships I might have made and enjoyed today are absent. A Vicious Cycle It was not easy for me to accept that what you have is…
How to make worry melt: As an expert worrier, I often wonder why I worry, even when I know the answer: Worry gives me a (false) sense that I will be prepared and in control. It's my fallback when I feel out of my league. Take this example. One of my biggest worrying times happens before I head to the airport. What am I so worried about? Unlike many, it's not the actual flight. It's about missing the plane. It feels silly to even write this. And yet, Butterflies in my stomach. Little waves of nausea. Tight chest. It happens nearly every time. And I have coping mechanisms: I tell myself things like, "Breathe.“ "Calm down.” “It’s going to be ok.” I even have a special spirit animal - a deer - that I think about to help me feel better. Additionally, as a result of this predictable worry, I have an irrational need to leave home at least two hours ahead, get to the gate an hour before the flight, and, when I get there, to sit where I can see the gate agent and the boarding door. Then there is this acute physical transformation. Once I can see the gate and hear the agent, my entire nervous system relaxes. It feels like the worry just melts. Expected and Unexpected Worries How silly this feels. And yet, it seems I am not the only one to worry about expected and routine things like a departing plane. It's expected and routine, yet a source of great worry, that teenage children will start driving, and that 90-year-old parents should probably stop. In working with money, it's a source of great worry, yet expected and routine, that stockmarkets, interest rates, and gas prices will rise and fall repeatedly. Upcoming retirement is expected and routine, yet a source of great worry (and excitement). Understandably, it's a big step into an unknown future. That can especially bring on the jitters. Adding to everyday events are unexpected random ones, like pandemics. Further, sudden market meltdowns, tsunamis, cancer, dementia, layoffs, election surprises, terrorists, and hacker attacks are all things we know aren't probable, but are possible. Just checking in - how's your heart rate now? Butterflies? Tight chest? Although we might prepare as best we can, worry on top of preparation helps some feel as though we are doing something about the problem. But what toll does worry take? Does it help us to prepare that much better? As a result of worry, I'm quite sure I have shortened telomeres and life expectancy. That's a pretty high cost. How To Melt the Worry Away When I get to the gate and see the agent, I feel the worry melt away. But it's strange - I don't think too many airline employees worry about the same thing I worry about. There's something about having exposure every day to systems and knowledge that produces confidence. Aviation is now one of the safest modes of travel in the world.…
What's your closet type? Thrifty Penny, Generous J-Lo, Savvy Suze or Imelda Galore On a 2004 visit to Ghana, a west African country, I noticed lots of people wearing second-hand Western clothes. While others donned beautiful traditional garments of their country, it was equally common to see second-hand t-shirts, khakis and jeans. The second hand clothes were sold in nearly every street market. My hosts told me these were commonly called obruni waawu, which literally means, “dead white people’s clothes.” I understood that the clothes looked like those of white Westerners, but “Why dead?” I wondered. Before long, an answer dawned on me. Maybe to Ghanians, many of whom don’t have closets, the only reason a white Westerner would give away perfectly wearable clothes would be because they are dead. To them, clothes might be something you use up until the day they are no longer needed at all. I don't know if this is the actual reason, but it led me to compare and wonder how often we buy new clothes and get rid of old ones. For some, it's quite frequent, and not so much for others. Having seen over 400 budgets in my lifetime, I've noticed spending on new clothes that ranged from $2,000 to $50,000 a year. But what I have not asked and do not know is, how often are the old clothes being thrown out or given away? Money Velocity and Money Supply: Closet Velocity and Clothing Supply There are two concepts in economics that come to mind - money velocity and money supply. Money velocity refers to how many times a dollar changes hands in an economy. There is also money supply, which is the amount of money available in an economy to be spent at any time. Taking this to the closet analogy, what would closet velocity and clothing supply be? Let's say closet velocity refers to how often the clothes on hand are changing. This would mean not only how often new ones are bought, but how often old ones are discarded or donated. Correspondingly, the amount of clothes we have on hand at any point in time would be our clothing supply. Taking four combinations from these two concepts and having some fun with the names, what's your closet type? Closet Type: Thrifty Penny, Generous J-Lo, Savvy Suze or Imelda Galore If you have a low clothing supply and low closet velocity, you might be a Thrifty Penny closet type. This means: you have a small number of clothes that you wear until they have holes, stains, or are otherwise unusable before you replace them you feel ok not being trendy there aren't a lot of choices of what to wear, and you don't require a large closet. Conversely, if you have a high clothing supply and high closet velocity, you started with lots of clothes, are buying lots of new clothes, and are also giving or throwing away old or never-worn ones fairly frequently. This would be the Generous…