Get Financially Fit!
Retirement
Life Stages
Apr 15th
In my latest article, I will address one of the comments a number of our readers have shared with us over the past week. Several readers have told us that “building wealth” sounds great, but they just don’t have time to think about this due to other life events and priorities.
The way I’d like to respond to this comment is to outline an illustration of the life stages we go through and the various events that will be competing for our attention:
1. Your Roaring Twenties: At this stage, most of us are concerned about graduating from school, finding a good job, and paying down debt if we’ve financed our education. As we start to accumulate some savings, most of us will find a way to spend most of our income stream on discretionary expenses such as eating out with friends, buying a gadgets or wardrobe, and taking an occasional trip / vacation somewhere. If we’re lucky, a few of us may be thinking about saving or, even better, investing this money.
2. The Thirties: By now, you’re either advancing in your career or thinking about what you want to do professionally for the rest of your life. If you’re in a steady relationship, you also may be thinking about settling down if you haven’t done so already. This means you’ll have some big expenses in store if you haven’t dealt with them already such as owning your first home or paying for your wedding. If you’re already past this stage, then you may be thinking about starting a family if you haven’t done so already.
3. Forties and Fifties: I’ve lumped the next two decades together because I haven’t yet seen a specific differentiator between the two. In general, individuals are reaching the height of their earning power. The areas for concern can include but are not limited to retirement and saving for your kid’s college tuition. I’ve also met many individuals who are starting to re-think their investment strategy and their financial goals at this stage. One of the key concerns is, “Will I have enough and what do I need to do to hit my financial goals?”
4. Your Sixties: By now, you should be enjoying the fruits of your hard work over the past three to four decades. If you’re working, you do so because you want to. If not, then you’re working because you haven’t met your financial plan and don’t have enough to provide for your own retirement. Assuming you’re in the latter, there is heightened urgency to build your net worth and cash flow so you’re able to comfortable deal with rising healthcare costs and other similar expenses that will come up over the next two or three decades afterwards.
Even if this profile isn’t 100% accurate to your unique, individual situation, I’ve intentionally sketched a life stage profile to show the types of real-life events that will distract you from improving your financial education and building your wealth.
If you don’t start now regardless of whatever stage you’re at, then when are you going to build your financial plan? You should start today without delay.
Bonus: During this past week, I discovered an incredible offer from Jay Minton at National Training Institute. If you check out his link in the upper left, he’s giving away a free book, DVD, and eBook. All you pay is the shipping and handling. It may be worth your time looking into this especially if all you have to give up is a latte or two or bring a brown bag lunch to work instead of eating out. I am not affiliated with this offer and will not make a penny if you decide to take advantage of this offer. If you decide this isn’t for you, then I encourage you to review my recommended reading list and visit your local library to start building your financial education!
To your wealth and success!
Brion
P.S. If you have any comments about this article or suggestions for a future topic, let me know through our contact form.
How to Discuss Finances with Aging Parents
Apr 12th
by Eric Heckman
Growing up, many of us were taught by our parents to never talk about money. The subject is viewed as being taboo, like discussing your political or religious beliefs. Adult children who grew up with this mindset typically feel uncomfortable broaching this difficult subject with their aging parents. Many adults are in denial about their parents’ mortality and avoid asking questions about their estates and wills. Oftentimes they do not want to appear greedy about their inheritance or controlling of their parents’ personal matters. However, not discussing this vital issue can lead to significant and irreversible problems in the future.
Today we live in an age where planning ahead makes all the difference. The older generation who was taught to save every penny is now experiencing considerable wealth due to burgeoning real estate and smart investments. In turn, they need to preserve those assets to plan for future life changes.
Adult children can play an important role in making sure their parents’ estate is in order, as well as ensuring they are financially capable to take care of themselves for the remainder of their lives.
The American Health Care Association estimates that the cost of a nursing home can exceed $50,000 a year, while assisted-living facilities average $24,000 annually. If elderly parents are not prepared financially for that care, the burden may rest on their children. According to the 2001 “Retirement Reality Check” survey by Allstate Financial, one in six (16 percent) baby boomers currently assists elderly parents or in-laws financially.
The following tips should help to make that conversation easier and more productive.
1. Pick the right time to talk. You want to make sure to have the conversation when you won’t be interrupted and when everyone is relaxed.
2. Maintain a sensitive stance. Remember, this is a difficult subject for them to discuss. You may not agree with their decisions, but keep in mind they are competent adults. A good way to set the right tone is by saying, “It’s important for me to understand your finances in case I need to help you in the future.”
3. Involve an expert if needed. There are many resources available, such as financial planners and certified public accountants, that can help manage later life decisions and financial issues for families.
4. Make a list of assets and liabilities. This is an important place to begin once the conversation starts. You’ll want to note the date and cost of assets, as this information will be needed for tax purposes if any assets are sold.
5. Establish arrangements for financial management. Your parents will want to consider establishing a durable power of attorney.
6. Know where important documents are kept. Make a list of all important documents, including birth and marriage certificates, wills and trust agreements, Social Security records, burial instructions, insurance policies, bank and investment statements, mortgage and real estate deeds and auto ownership records.
7. Review estate planning and investments. If they haven’t done so already, encourage your parents to develop a plan to maximize their legacy for their heirs. Also be sure to discuss their investment strategy so you have an understanding of their financial well-being.
8. Understand your parents’ healthcare wishes. You’ll need to know where your parents stand on healthcare issues should they ever become incapacitated.
It’s difficult thinking of the possibility of needing care in our elder years – not only when thinking of parents, but also when thinking of ourselves. What is most important to think about is how to plan ahead to avoid disagreements over care and finances. The rewards are endless and the experience will help you prepare for your own future.
About the Author
Eric Heckman is president of Heckman Financial & Ins. Services, Inc. Eric is a CFP®, ChFC, CLU and brings over 13 years of experience to the field of financial planning. You can contact Eric at (408) 297-9800.