Retirement

As Halloween hovers on the horizon, the most frightening prospect for some adults has nothing to do with ghosts or goblins.  Rather, it’s their scary lack of preparation when it comes to retirement planning.

We suggest a new activity: fleshing out your financial skeleton. Here are the rules.

I have seen into the future. It just took me a while to realize what I was looking at.

I have written numerous, specialized financial articles, and I continue to be asked for this material time and again because I have the Knowledge. The feedback I've received on this work has generally been positive, but of course you can never be quite sure of how much actual good you are doing regarding your chosen subject.

Even so, nearly 100% of the technical information that one can acquire on retirement oriented financial planning has either been written about in a book, published in articles like this or available on-line to those with the wherewithal to go find it. The problem I have found is that none of these sources speak to us personally- capturing our imaginations and pulling us along towards molding our own unique picture of the future.

I'm going to start by being perfectly honest here, because I'm going to ask the same of you later. I never intended to go into the financial services business in the first place. My career started shortly after graduate school, and early on it teetered on a razor's edge, doing temp-to-perm jobs with the government on one hand and a private financial services firm on the other. I decided full-time on the latter (because the pay was marginally better) and landed with a smallish mutual fund company, then another one, and then on up to a nice paying job on Wall Street before settling down to establishing my own practice. In another life I could be an assistant director at the Bureau of Labor Statistics!

I never really intended to start my own financial services practice either. My initial work as a prime broker for another advisory firm was, in my mind, going to be temporary. Then I added anther client. And another. And another. And that was over 10 years ago!

I know for a fact that there are literally millions of people like me who have cobbled together careers, many of them quite stable and even lucrative, that simply did not turn out as we imagined for a thousand reasons. Perhaps it was because of a failure of imagination in the first place. And we stayed with it, because we had bills and kids and responsibilities and inertia.

The fact remains that most of us do not derive the primary passion of our lives from work; we are not, as sociologists say, in our "right livelihood" (only about 5% of the population is), and we still look dreamily out of the window of our downtown office buildings counting the hours until we're eligible for Social Security, a pension and medical benefits. It is to you that I am addressing this series of articles.

The good news is that we can still get a "mulligan." Some gerontologists call the coming retirement phase of the current generations the Third Age, based on unprecedented life spans and breadth of economic opportunity. I've likened the concept of Retirement Planning to second career planning as much as to investment and tax strategies. Too many times I've looked across my desk at blank faces as we address the dreaded "R" word. Sometimes it's outright terror, or a complete blank. Other times it's a grouchily dismissive, "I'm never gonna retire." Others of us still conjure out-dated images of what our grand-parents might have been doing, hovering over a shuffle board court. Some still suffer from that same failure of imagination. Whatever your reaction, the point is that we have a chance right now to plan for a phase of life that could span upwards of 30 years!

One of my favorite literary passages is this one from Alice in Wonderland: Alice went on, "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.

Too much written or talked about in retirement planning focuses on the How and not Alice's Where. I've seen the word "goals" in relation to financial planning so many times it's lost its efficacy. Yes, it's important to know that if you can dream it, you can do it. And if you can dream it then you can also verbalize it, put a price tag on it, take an inventory, and set a date. But it starts with knowing what we really want if we got the chance to do it all over, and that's where we have to be utterly honest with ourselves, roll up our sleeves and get to work.

I've been blessed with the realization that regardless of how I got to this point, I am now in a position to help people create a compelling vision of their future and guide them financially in their quest to achieve it. This is the first part in a series of articles in Living.Well where we'll be addressing the "new" future planning opportunity. I hope you keep reading.

Provided courtesy of Eric D. Etshman, a financial advisor with Dow Financial Group in Wilmington, DE. Eric is a Registered Representative with VSR Financial Services, Inc., Member NASD, SIPC. For more information, please contact him at (302) 765-9753 or This email address is being protected from spambots. You need JavaScript enabled to view it.

As an investor, how much risk can you tolerate? It's an important question — because the answer can help you make the right investment choices.
Before you know your risk tolerance, you'll want to make sure you first understand the nature of investment risk — the risk of losing principal. This risk is especially prevalent when you invest in stocks, because stock prices will always fluctuate — and there are never any guarantees about performance. Of course, a decline in value does not mean you need to sell; you can always hold on to the stock with the hope that its value will bounce back. And this can certainly happen, but again — no guarantees.
How you respond to this type of investment risk will tell you a great deal about your own risk tolerance. Of course, no one, whether he or she has a high tolerance for risk or a low one, particularly likes to see declines. But people do react differently. If you're the sort of person who can retain your confidence in your investment mix and can focus on the long term and the potential for a recovery, you may well have a higher tolerance for risk. But if you find yourself losing sleep over your losses (even if, at this point, they're just "paper" losses), becoming despondent about reaching your goals, and questioning whether you should be investing at all, then you may have a low tolerance for risk.
This self-knowledge of your own risk tolerance should help inform your investment decisions — to a point.
Even if you determine you have a high tolerance for risk, you almost certainly should not load up your portfolio exclusively with stocks. If the stock market enters a prolonged slump, you could face heavy losses that may take many years to overcome, causing you to lose significant ground in the pursuit of your financial goals. Conversely, even if you discover you don't have much tolerance for risk, you won't want to invest only in supposedly "safe" vehicles, such as certificates of deposit (CDs). During those periods when rates on CDs and similar instruments are low, as has been the case in recent years, your interest payments from these investments may not even keep up with inflation — meaning that, over time, you could end up losing purchasing power, which, over the long term, can be just as big a risk as market declines.
Ultimately, then, you'll probably want to let your risk tolerance guide your investment choices — but not dictate them with an "iron hand." So, if you believe you are highly tolerant of risk, you might have a somewhat higher percentage of stocks in your portfolio than if you felt yourself to be highly risk-averse — but in any case, you'll likely benefit from building a diversified portfolio containing stocks, bonds, government securities, CDs and other investments. While this type of diversification can't guarantee profits or protect against loss, it can help reduce the effects of volatility on your portfolio.
By knowing your own risk tolerance, and the role it can play in your choices, you can help yourself create an effective, suitable investment strategy — one that you can live with for a long time and that can help you avoid the biggest risk of all: not reaching your long-term goals.

Many Americans begin each new year with a list of resolutions and goals.  You may want to go on a diet, shed a little weight, do a bit more exercising, or clean out the long-neglected attic.  The trouble is these well-intended goals often melt away long before winter’s snow does.  

So why not make a resolution that’s easier to keep? 

If applying for retirement benefits is on your list of things to do this year, resolve to do it online.  To get started, visit www.socialsecurity.gov/applyonline.   

 Improvements to one of the most popular online services in government — the Retirement Estimator,allow more people than ever before to get a personalized and instant estimate of future Social Security retirement benefits.

 Since its launch last year, the Retirement Estimator has provided more than four million personalized estimates, and is one of the most highly rated online services in government.

The greatest fear of most retirees is the risk of longevity: outliving their money. The meltdown of retirement accounts, rising medical costs, uncertain entitlement programs and higher taxes have added to the risk. Facing 30 years of retirement living on past savings and Social Security benefits is a scary reality. What can be done?

To handle other unaffordable risks you buy insurance. The same companies that protect your home, life, health and auto can also protect you from the risk of longevity. The basic principle of insurance that makes your coverage affordable is “pooling of risks”. Since the greatest fear of retirement is outliving your money and your remaining life span is uncertain, the solution is to insure the unaffordable risk. Let’s see how this is done.

     Retirement as we know it is a function of the Industrial Age, the one we left behind in the 20th Century, where the age of 65 vis-a-vis one’s expected life span was really no more than a one or two year bridge as many workers physically outlived their usefulness. Thus it is interesting that retirement as an institution still drags around with it many of the same features of a bygone era, and the perception of it by many people is still framed by an old paradigm. 

Three Advantages a ROTH IRA May Offer Your Estate Plan

Many may not consider the possibilities that a ROTH IRA can offer an estate plan. But, there are three advantages that a ROTH IRA can offer if your estate value is under the Applicable Exclusion Amount ($2 million in years 2006, 2007, and 2008) and if one of your planning goals is to leave as much money as possible to your heirs.

I have seen into the future. It just took me a while to realize what I was looking at.

      I have written numerous, specialized financial articles , and I continue to be asked for this material time and again because I have the Knowledge. The feedback I’ve received on this work has generally been positive, but of course you can never be quite sure of how much actual good you are doing regarding your chosen subject.

     Unless you’ve been living in the bush in Papua New Guinea for the last couple of years, you have probably seen the Visa Signature advertising campaign that exhorts us to check a number of things off a list that they have entitled “Things to Do While You’re Alive.” This grandiose to-do list includes relatively inexpensive moments like taking in the Northern Lights, to pricier pursuits like riding first class on the Orient Express.