Five Financial Sanctuaries that Place your Retirement in Jeopardy.

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Originally appeared in MarketWatch’s Retirement Weekly.

In the AMC smash-hit television drama “The Walking Dead,” a group of road-hardened survivors of a zombie apocalypse seek protection from the undead (and the living who pose greater dangers than cannibalistic walking corpses.)

The fifth-season opener finds the weary characters fighting for their lives against a community of cannibals who lured them to a so-called safe zone called “Terminus.”

terminus

Handwritten signs and maps along roads and rails of rural Georgia guided the crew to a final destination, sanctuary was promised for all who arrived.

Sanctuary

On the surface, it appeared to be a dream come true. Warm smiles, comforting words, hot food.

Underneath, Terminus was nothing as promised or perceived. Victims were lured in to be placed in rail cars like cattle and eventually slaughtered.

rail car

As there is a fine line between fact and fiction, this harrowing situation got me thinking about portfolios in retirement.

 Stay with me.

Think sanctuary and think safety. A false tranquility can disarm and open the gates to great risks without your awareness. What lurks underneath your financial safe havens may eventually place your money and retirement lifestyle in jeopardy.

When making financial decisions and monitoring progress based on those decisions, you need to accept when the environment changes; make a move when safe havens turn to Terminus.

Here are five financial sanctuaries that can place a secure retirement at risk right now.

 Random Thoughts:

1). Stocks. Market sanctuaries can turn unrecognizable and hostile very fast. As the stock market reaches new highs there’s an ominous feeling of complacency among investors. It’s been over three years since the S&P 500 hit an official correction or greater than a 10% drop from a previous closing high.

Consider October’s volatility a wake-up call as early in the month, the S&P 500 was rapidly moving into correction, small-company stocks and international stocks were officially there and bond yields moved lower (100% of economists predicted that bond yields would be higher by fourth quarter 2014). October concluded much different than it started – with domestic markets headed to new highs.

Underneath the surface of stocks it looks nothing like a sanctuary – Large and mega-cap indexes have outperformed, a sign of a late-stage bull market phase, small-company stocks are recovering but underperforming, which points to risk abatement. It shouldn’t be ignored how cyclical stocks like energy, or those considered beneficiaries of economic expansion, are lagging defensive stocks (think utilities, consumer staples), currently. The outperformance in defensive sectors is usually indicative of market tops and economic peaks.

The Federal Reserve’s conclusion of quantitative easing  (bond purchase) program in October signifies a reduction of central bank liquidity that can increase volatility as investors and traders seek to figure out what the next tailwind for stocks is going to be.

The S&P 500 is 24.5% above its three-year moving average (36 months) -one of the widest dispersions from the moving average since fourth quarter 2007. Like a rubber band, over time market returns will stretch far above and below long-term moving averages. Although it’s impossible to know when the band will snap back to the moving average, historical downside going back to 2000 shows when the market does contract, the process is damaging. The worst contractions were 38% and 40% in 2002 and 2009, respectively.

Stocks are protection against inflation until they’re not and you’ve lost 5 years making back what you lost and inflation becomes the least of your problems. By then, you’ll feel trapped and look to re-pave the path of retirement. Whether it’s returning to work, reducing household expenses, cutting how much you withdraw from investment accounts – you’ll be prepared to do whatever’s necessary to preserve capital and slow the bleeding of investment assets.

Create an allocation to stocks that won’t cause you to panic when the bear market arrives (and it will). Don’t be overconfident. Remain vigilant and make sure to follow rules-based rebalancing where you trim gains on a periodic basis. The fourth quarter of the year is a good time to tax harvest – sell positions with capital losses in brokerage accounts to offset capital gains.

2). Index funds. It appears that index fund enthusiasts will stand strong and proudly absorb the blow as their stock sanctuary turns against them. Indexers believe that losses are temporary because in the long-term, stock markets always recover; paper losses aren’t real, they’re perceived as a bump along the path, par for the course. Like the befallen travelers who arrive at Terminus, they are not in touch with the reality of the situation they’re up against.

behead

A sequence of anemic returns or losses in the face of periodic withdrawals can dramatically decrease the longevity of a retirement portfolio. In other words, index funds are no protection against increased drawdown and market risks. At least fees make the losses less painful (or do they?).

The battle among “passive” indexers and “active” fund advocates is growing more heated as the fourth longest bull market in history continues.  I consider most of the discussion noise; the headlines are a distraction from the real perspective investors in retirement should maintain:

No matter what you hear out of most financial professionals, stock index funds are not passive. Every investment should be treated as active as soon as it is added to a portfolio.

Look beyond the attributes of stock index funds (and there are quite a few) like low fees, wide industry and company representation, tax efficiencies, and face the traps that will eventually put you in a position to fight or perish.

For example, index funds will experience the full brunt of a bear market attack (because generally they represent the market) which means you as the manager must decide the degree of loss you’re willing to accept. Staying invested is an action; reducing exposure to a losing index investment is an active decision. You are always in control, you always have a choice.

The preachers of passive seem willing to stand by and hope for the best. After all, you can’t control or predict the direction markets. That’s true. However, the amount of capital destruction you’re willing to absorb, is in your control. Consider the potential damage and recovery rate. Your back is against the wall. Are you ready to fight? If your portfolio suffers a 20% drawdown you’ll require 33.33% to break even.

Specific purchase and sell rules must be attached to each investment under consideration. Risk management never ensures against all portfolio losses, it minimizes the damage so you can come back and fight another day. It’s all about survival when it comes to the end of world (and your money).

Also, when you invest, depending on stock market valuations, is extremely relevant to future returns.

According to market historian and writer Doug Short, $1,000 invested at the peak of the market in the S&P 500 on March 24, 2000 would be worth $1,248 (adjusted for inflation) as of November 2, 2014, which equates to a 1.53% annualized real return.

Despite the mainstream marketing message (especially among indexers) designed to convince you that “time in the market” is a sanctuary, there have been many periods in history where you simply “ran out of time.” When adjusted for inflation, there are several 20-year periods in history where market returns have resulted in either low or negative outcomes.

Index funds have most likely outperformed your managed investments on the upside during this bull market; that doesn’t mean they’ll hold up better through market declines. And when you buy, based on market price/earnings, has a significant impact on future returns. At nearly 26 times earnings based on the cyclically-adjusted P/E ratio, “time in the market” may not be as beneficial over the next 20-years. It just may be a Terminus for your portfolio.

3). Retirement account withdrawals. The 4% withdrawal strategy is too generic to be effective yet it’s treated like a universal rule and preached in mass to new retirees seeking comfort after a long journey of employment. It’s as worn as the warped, wooden signs guiding The Walking Dead survivors to a place they perceive as refuge, but really is a trap.

Based on work by Sam Pittman Ph.D. and Rod Greenshields, CFA of Russell Investments, the first step to creating a retirement withdrawal that protects against longevity risk, is to calculate the ratio of current assets to the present value of forecasted retirement spending. This is called your current funded ratio. It’s a popular method pension administrators use to determine the fiscal health of their expected payouts for participants. Few advisers will consider this method and go straight to a withdrawal rate calculation that doesn’t account for an individual’s overall financial situation or household balance sheet.

The current-funded ratio method requires matching assets to liabilities to determine whether there’s adequate coverage over living expenses and inflation throughout retirement. A ratio of 100% or greater, especially during the first decade of retirement, is indicative of a greater chance of avoiding outliving a nest egg. If the present-value funded ratio is estimated to be less than 100% in ten years, adjustments to withdrawal rates or living expenses can be made before withdrawals occur. The ratio should be calculated every three years or after a sequence of below-average portfolio returns.

The strategy is called adaptive investing. Ask your financial partner about it to see if makes sense as part of your retirement planning process.

4). Company stock concentration at the beginning of retirement. Many retirees are hesitant to manage their net worth tied up in company stock, especially in the early years of retirement. Their human capital may have left the company and enjoyed the retirement party but the emotional attachment to the stock continues strong, and is possibly dangerous.

More than 25% of liquid net worth in company stock, leaves a retiree either “the butcher or the cattle,” a philosophy the tenured residents of Terminus believe. It’s a great tailwind to net worth and retiree psychology when an overconcentration to company stock is performing well hence the butcher. When the investment is performing poorly, a vulnerability to the retirement plan arises which becomes an emotional and financial drain to the retiree and others in the household.

A formal plan should include an exit strategy for company stock within 5 years of retirement. Work down to a 10% allocation which will satisfy your attachment need but won’t derail the early years of retirement. In addition, it can allow you greater diversification potential and liquidity to meet living expenses.

5). Your broker. Someone asked me once – “Are you a broker?” I replied – “No. I’m not here to break anything, I’m here to help.” Joking aside, you may be very comfortable with your current financial relationship; consider if you have an understanding of the motives behind your adviser’s employer. Perhaps you never gave it a thought.

 Ask this question: “What is your sales goal and how do I fit in?”

Yes, most in the financial services business are salespeople. Nothing wrong with it as long as your needs are met and full disclosures are made. However, maybe you’re looking for something more. I believe this question gets to the heart of a financial firm’s true motivation. Then ask: “How do you feel about your sales goals?” Are they perceived as fair by your financial partner? Ask another: “How much time will you spend with me, my planning needs and investment accounts?”

Get specifics. Ponder the answers, then consider: Are you a one-time sale or an ongoing relationship, or a bit of both?

In a recent podcast interview with self-help author and investor James Altucher, success coach Anthony Robbins shared candid insights from the experiences writing his new book, “MONEY Master the Game: 7 Simple Steps to Financial Freedom.” He explains how the financial system is designed to prosper the needs of shareholders, not investors.  My take: A key is to know what questions to ask and seek answers that are simple and transparent.

“There are 312 names for brokers, today,” Tony mentions. “I’m so supportive of people that are fiduciaries, people that are trained and who are legally required to look out for you. I’m looking for people who are fiduciaries and sophisticated.”

I believe disclosure of sales goals is important. Understanding if your adviser is a fiduciary and focuses on your interests first, or a broker that has his or her employer’s objectives as a primary focus, will help you find the right long-term partner or clarify a relationship you currently enjoy (or question).

The investing climate for retirees can be scarier than fleeing from flesh-eating zombies.

Even worse are times you believe you’re safe; conditions change, you fail to acknowledge the shifting environment or realize that a financial sanctuary has turned hostile.

 It’s always better to be the butcher than the cattle.

butcher or cattle

Perhaps that fiendish Terminus crew were on to something after all.

 

 

 

Six Money Habits Of Unhappy Couples.

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We’ve all heard the horror stories of couples suffering in a toxic money mix.

Married or unmarried – it doesn’t matter.

screaming married

Financial harmony is crucial to a couple’s long-term synergy with money.

From my experience, the ones with cohesive financial strategies are the most successful.

Over the years, I’ve documented several unfavorable money behaviors exhibited by couples. In greater than 95% of the cases observed, the relationships ended on bad terms.

The top six:

1). They disrespect each other’s credit. One of the worst fiscal violations I’ve witnessed is how credit is misused in a relationship which causes a party’s credit score to falter as credit card balances are increased leaving the trusting partner in a relationship, on the hook for the bills. I have seen otherwise smart individuals allow a partner to use their credit and turn a blind eye to misuse. Until it’s too late and they’re in a hole financially – spending years paying back big debts.

Rule: Never permit a loved one, including a marriage partner to take advantage of your available credit and perhaps ruin your credit score, whether it’s intentional or not. It’s not a matter of trust; it’s a matter of control. You must be the steadfast gatekeeper of your available credit and scores. If it’s true love, the other party will appreciate your discipline. If you do share credit, make sure to carefully examine all credit card statements and access credit reports annually for free at www.annualcreditreport.com.

2). Lack of communication. Especially when it comes to life-changing financial decisions or big purchases. It’s ok if you fail to mention lunches or an occasional discretionary purchase. When it comes to large expenditures like expensive durable goods or making big decisions that may affect both parties like a new job offer or decision related to retirement, it’s best to share all relevant information with a partner or spouse before moving forward. Even if it’s a wise decision, the action of sharing and receiving feedback is crucial to the health of a relationship you cherish.

Rule: Before financial decisions bigger than $100 bucks are executed, think twice and open up beforehand. Take to heart information shared through open dialogue. Get an objective third party involved in the mix to listen to both sides and weigh the evidence.

3). Little consideration for the blueprint. Deep in you is a money DNA. Since a small child, you have handled money based on experiences. You also learned from observation and communication – parents, grandparents. If your money mindset conflicts with a partner, that’s ok. There are methods of compromise. If your money mindset is disregarded or even ridiculed, then it’s time to question the viability of the relationship.

Rule: Whether you’re a deep saver or big spender, be receptive to the manner you’re treated if your partner disagrees with your money DNA. The couples who endure are the ones who find a working medium or a hybrid DNA strategy. The key is to watch for language of judgment and money behavior that jeopardizes the current situation or the health of the future household balance sheet.

4). Multiple bailouts are acceptable. You know the type. They mess up with money and then seek others to bail them out like parents or partners. Then the same reckless behaviors are repeated and bailouts continued. It’s bad news. Rarely do I observe couples last long traveling this endless loop. Usually, an observant partner is suckered in more than once and leaves the relationship financially and emotionally fragile.

Rule: A one-time bailout, depending on your financial situation is acceptable. No excuses or money provided when similar mishaps are repeated. It’s a hard rule and it will save you financially. Perhaps you leave with your self-esteem intact, too.

5). Financial success is resented. According to a Pew Research Study from May 2013, a record 40% of all households with children under the age of 18 include mothers who are either the sole or primary source of income for the family. To keep it in perspective, the share was 11% in 1960.

Since the financial crisis I have witnessed women taking additional charge of their finances (and the families) and men in the relationship growing increasingly resentful.

I have worked with couples where women have become increasingly unhappy when partners have taken on additional work responsibilities and time away from their personal activities.

Resentment is poison to any close relationship and detrimental to elevating finances to the next level.

Rule: A resentful attitude over a partner’s success requires thorough and truthful self-reflection. Instead of wasting precious energy on negative emotions, objectively witness and attempt to find ways to mirror the good habits of a successful partner. Ask for guidance. Be open to criticism if it’s positive and leads to self-improvement.

6). Fractured retirement planning and savings goals. Couples who are hesitant to blend retirement goals and fail to align their efforts to meet jointly-created goals, ostensibly fall behind or at the least, miss out on the synergies that accompany working together toward a comfortable retirement.

Rule: Retirement planning is a partnership objective. Coordinating retirement account salary deferrals, examining company retirement plan allocations as one and periodically reviewing progress together must be mandatory for couples who are serious about the quality of their retirement years.

Random Thought:

Couples can be a galvanized force to greater wealth or rapidly deteriorate their combined net worth.

Ongoing financial drama can ruin a relationship.

Be open to the signs, fix them.

walking away

 

Or walk…

Four Ways To Overcome Financial Inertia.

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Five years after the financial crisis and those who cross my path tell me it feels like the recession never ended. They are stressed over personal finance, investing and debt management.

I get it.

dear ki

The concerns are valid. The stock market is up close to 200% since March 2009 so who wants to chase it; housing is sloppy but recovering. In several pockets of the country, real estate is expensive and prices are out of reach for many individual investors. Wage growth is dead (you receive a raise, lately?), we are spending more time in our death cubicles and missing soccer games. The masses burned out three years ago and saunter around today like the living dead hoping they can make it home to collapse in front of the television.

Sort of blows.

burn out

However, there are ways to take smart steps and overcome fear and procrastination:

To feel alive and in control again (remember that?)

Random Thoughts:

1). Go beneath the fears. Sure, I bet you can banter on about what concerns you. Until you use pen and paper to list what’s heavy on your mind, you’ll never completely weigh the implications of doing nothing. You may be surprised to discover that what really frightens you is merely a misunderstanding.

For example, I have a friend who was hesitant to save for retirement but his true dilemma was frustration over the limited choices in his current employer’s retirement plan; he failed to understand other retirement account choices were available outside his job.

Documenting fear will narrow down to issues you may explore with professionals or confidantes. An action plan outlining milestones will provide a sense of accomplishment and embolden you to accelerate positive behaviors.

2). Push ahead mentally 20 years to feel the pain enough to make one move. Who says you need to walk huge steps at once? Take small steps and move already. A way to create a urgency is to imagine what your life will be like two decades into the future if you remain in finance neutral.

What will your life be like 20 years from now if you don’t begin saving for retirement? Forget all the financial industry bull that makes you feel like if you don’t start socking away money from the age of 25, you’re permanently doomed to a life of poverty. It’s like me saying – “Hey, you’re 40. Too late to improve your health through diet and exercise, so just forget it. “

fat guy eating

I’ve worked with many accumulators who have hit their stride late, made changes to reduce debts and increase savings at a time when they believed – “why bother?” Along with an investing strategy they have caught up. They’re in a better place, financially.

So you’re late getting off your ass: Big deal. Just start.

3). Do some research. Knowledge is power. As you learn, fear will fade as you engage. A lack of knowledge will stir up uncertainty and freeze you in place. Sort of like what happened to us immediately after the Great Recession. Who the heck thought we could suffer another devastating economic collapse?

Don’t succumb. Dig in, a piece at a time until you feel less uneasy about the topic. Nobody expects you to be an expert; don’t be too hard on yourself. Gather opinions from professionals. Know the rewards AND risks.

Be wary of too much knowledge. Yes, you read that right. In other words, those who immerse in a subject begin to feel invincible. It’s at that point, dumb mistakes are made. You must remain humble in your quest to avoid overconfidence bias. Pompous asses usually don’t win. Don’t be a pompous ass. It takes too much energy for nothing. And nobody will want to help you reach your goals.

pompous

4). A little fear is healthy.  When it comes to money I find fear to be a motivator if used in controlled doses. Slight discomfort is healthy and will push you ahead. It’s through time and experience that fear will be perceived as friend. You should never get too comfortable when it comes to handling your finances. Discomfort breeds curiosity. Curiosity leads to awareness, especially of risk.

Eventually, inertia will be a memory; it will no longer prevent you from making improvements, seeking opinions and basking in accomplishment.

Household financial stagnation is still with us.

Doing nothing is detrimental to your long-term accumulation of wealth.

It’s time to get off the pot.

And unlock the potential.

Who knows?

You may even make new friends, get dates.

And reduce inertia, gain energy, in several areas of your life.

And get your head out of the urinal.

toilet guy

 

 

 

 

 

 

 

 

 

 

 

Baby Boomers and Their Spending: Four Things Retirees are Thinking Now.

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Baby Boomers are known for their penchant for spending. They were not hesitant to take on debt to enhance their lifestyles as they built successful careers and accumulated assets.

The post-financial crisis Baby Boomer retiree is constantly rethinking how to direct discretionary dollars or their “fun” money.

I recognize and document the changes I observe: There’s a deliberate thought process behind discretionary spending. The mindset is a clear path to personal enrichment and a generous nature when it comes to providing knowledge and positive experiences to those they love.

Here are a few of the more interesting random observations:

“We crave memories.”

dog hump

A majority of Baby Boomers are directing discretionary dollars toward experiences, especially with close friends and former business associates.  They would rather focus on creating memories. The desire to make large-scale expensive purchases is on a very noticeable decrease.

There’s a passion for atypical trips – wine tours in exotic locations, extended-stay vacation spots, off the beaten-path locales where time is made for conversation. Physical and mental challenges are important, too. Hiking, skiing, scuba diving, mountain climbing are high up on the bucket list. Learning new skills like painting or ethnic cooking have replaced a desire to own goods. If anything, Baby Boomers are releasing the shackles of material goods and downsizing.

And they’re on to something:  Research by Elizabeth Dunn and Michael Norton, authors of the book “Happy Money: The Science of Smarter Spending,” outline how spending money on experiences can stretch “happiness bucks.” Memories outlive the short-term excitement of a purchase like new automobile.

An emerging trend has been the growing demand for off-site wine storage venues. Here, Boomers with a passion for wine can house their inventory in a climate-controlled environment and have access to comfortable lounges to share their collections with friends and others who share their passion. Those who participate in this activity advise me it’s more about socializing and the overall experience than the wine.

“We seek self-awareness.”

disturbing

Baby Boomers are passionate about learning more about themselves and willing to spend money to do it. Much of their mental resources and daily hours were spent building long, stressful careers and raising families. Several have expressed to me how much they regret not spending more time going further down a spiritual path. An increasing share of the discretionary budget is being directed toward classes, books and travel that result in methods of heightened self-awareness and inner wellness.

Boomers have experienced hardship within their households; they know of immediate family members and close friends who have gone through difficult financial episodes. Striving for inner peace and ostensibly communicating what they’ve learned with others is of greater important than showing off new, expensive toys.

“We want to share with family.”

horsey

The Boomer desire to leave a big inheritance is not a priority. The trend is to share the wealth in retirement, especially through activities that include family. The addition of travel with children and grandchildren is a popular goal and from a financial planning perspective, has morphed from a want or wish to a strong need.

They’re called “multigenerational vacations.” Whether cruises, theme parks, or scenic road trips, a strong desire exists for Baby Boomers to be travel partners with loved ones.  And picking up the tab for the group is not a concern. They possess a desire to etch good memories in the minds of their families and to actively participate in the fun. They seek to leave a strong presence after death. A living legacy.

Boomers are readily sharing newfound hobbies with family. For those on a more limited budget in retirement, pre-scheduled gatherings to show off cooking skills are popular. Any activity that creates an opportunity to bond with family (and they don’t need to be over-the-top expensive) is approached with the same energy retired Boomers applied to building careers and businesses.

“We are collectors of unique items.”

GI Joe funny

Unique collectables are popular with Boomers. Scouting resale shops and antique stores have become a formidable leisure activity in retirement. The most popular collections are tied to vintage pop culture products owned or remembered as children.

Baby Boomers are diligent when they purchase collectables. They’re patient and will wait until the “perfect” item crosses their path. Since they disdain clutter, homework is important, and they’re extremely selective. Budgeting for these purchases is important, too.

Toys, magazines, comics and vintage books from the 1950s through the 1970s are the most prominent collectables.

Roughly 25% of discretionary budgets are allocated to unique items -up 30% from five years ago.

The spending behaviors of Baby Boomers in retirement are fascinating to observe and document.  They’ve changed over the last five years.

As a Boomer retiree said to me recently: “I’m focused on my return on life.

If I can maximize that all the rest will fall into place.”

falling flat

 

Happy Financial New Year – Five Different Paths to Money Success.

Media is flooded with pundits spouting 2014 financial resolutions. Heck, I’m on radio and television talking up the same.

talking head

Increase savings in retirement accounts, pay down credit card debt, check your insurance coverage for gaps – all good advice.

But.

We already know this stuff. It’s drilled into our heads.

Every year.

It’s fine to be reminded of the healthy financial actions we should take.

Yet, what stops us from following through?

Before you ponder money improvements for 2014, think outside the box – deviate from the worn financial paths you have attempted to walk before.

This time you’ll succeed if you take five different paths.

1). Don’t save everything for retirement. You read it right. It’s been drummed into you how a secure financial future depends on maximizing contributions to tax-deferred options like 401(k) accounts.  But how important is it, really?

A.J Leon, writer, motivator, world explorer, big thinker, in his book, “The Life and Times of A Remarkable Misfit,” outlines 16 simple steps to make money and lose respect – Step 4 is: “Never invest in yourself. Instead sock every last penny in a 401(k) that may or may not be there to greet you when you turn 65.”

Many employers have a difficult time understanding retirement plans. From the hundreds of plans examined, I notice an overwhelming trend of bland choices coupled with high fees.

For some it’s best to settle on government-approved choices called “target-date” funds. They’re the prevalent cookie-cutter choices in your company retirement plan. Basically, they’re an all-in-one mix of mutual funds packaged and wrapped in another mutual fund, thus called a “fund of funds.” The mix of stocks, bonds and cash is designed to match up to the year you decide to re­tire.

For example, it’s 2012 and you’re 40 years old. You are planning to retire at 65 (good luck). You decide on the “BlahBlah Fund 2037.” Easy.

The logic behind a target date fund is simple even though underneath, the design is com­plicated and investment philosophies can deviate dramatically depending on the mutual fund family your employer utilizes. In other words, the returns of the Blah-Blah Fund 2037 compared to the returns of your buddy’s La-La Fund 2037 will most likely differ, some­times radically.

Let me clarify: Each fund creates a “glide path,” which means the blend of investments should gradually become less aggressive the closer one gets to retirement or the target year.

Per research by Zvi Bodie, the Norman and Adele Barron Professor of Management and Jonathan Truessard, Lecturer, both at Boston University in a 2007 paper “Making Investment Choices as Simple as Possible: An Analysis of Target Date Retirement Funds,” target date funds are approximately following the well-known rule of “100 minus your age,” for the stock portion of the mix. And this smelly piece of financial dogma needs to be abolished. Now.

Target-date funds require refinement. For those who invested their tax-deferred dollars in 2008 target-date options, hoping to begin withdrawing the money in 2008, were in for a rude awakening when their accounts suffered by over 21%.

Consult an objective financial advisor; select a balanced fund. If your choices are limited to the target-date variety, cut the “maturity” date in half.  Your estimated retirement date is 2020. That’s six years away.  Go for fund 2017. Be prepared for a 2008 surprise.

Contribute up to the employer match. Don’t leave free money on the table regardless of choices, either.

According to Federal Reserve data, the average U.S. household maintains an outstanding credit card balance of over $7,000. Based on numbers provided by www.bankrate.com, the average annual percentage rate or APR for variable-rate credit cards stands at 15.37%; fixed-rate cards stand at 13.02%.

Maybe, just maybe, your 401(k) account returns exceeded 13-15% in 2013 so it was worth carrying a credit card balance. Long term, it’s a bad financial choice. Instead of maxing out saving for retirement right now direct financial resources to pay credit card debt off in full.

2). Consider your human capital. Quantify your worth. You are your greatest investment. I know it’s tough to think this way, to choose yourself, but it’s true.  Return on self-investment is wealth yet to be achieved.

How will you increase your value in a challenging marketplace? Perhaps it’s a new skill necessary to move ahead and above a nascent U.S. economic recovery.

If a continuing education opportunity exists or improvement options are available to increase your income, do it. You’re probably never going to retire anyway and when you do decide, it’ll be much later than age 65 so maximize the ROY (return on you) today.

Check out a Human Capital Calculator here.

3). Get your head straight.  My friend Shanna and I discussed this topic, recently.  If you are jealous of those who have prospered financially and you communicate negative sentiment to others, you’re digging a toxic mindset hole that will be tough to escape.

Don’t talk yourself out of empowering money habits. It’s the lazy way out. Jealousy is an energy sucker, a cash drainer. Change your mind set in 2014. Your brain will believe what you repeat to yourself, to others.  Ask more questions of those you “envy:” How did you meet your goals? What are the daily habits you follow to gain greater financial independence? What did you learn from your mistakes? Learn from others, don’t push them away.

jealousy

Teacher, mentor, investor, best-selling author James Altucher advises:

“You have a house. You need to keep the house clean so the right guests can arrive and feel comfortable. If you clutter it with anger or envy or scarcity or fear then abundance won’t feel comfortable moving in. I say this not from a position of comfort but because when i was dead and buried, i had to clean the clutter to make my life work. And it was hard because when the house is cluttered, your mind gets depressed and lazy.”

4). Stocks are not an end-all investment. Don’t be pushed into believing stocks are the panacea the financial industry tells you they are when it comes to fighting inflation. According to Jim Otar, creator of the Retirement Optimizer and author of several books on retirement planning expanded on this topic for a recent interview:

“Many advisors are under the assumption that stocks always beat inflation. This is not true. Equities beat inflation only during the long-term bullish trends, which occupied 43% of the last century. During the remaining 57% of the time, equities did not beat inflation.”

Rental properties, oil & gas interests, angel investing (can be RISKY), inflation-linked securities, deferred-income annuities can also battle inflation and diversify a stock portfolio.

5). Stop the competition.  I hear it often: My friends are the same age and they have: More cars, more savings, more stuff.

Stop.

First, friends embellish.

It’s called the endowment effect.

Second, your best financial life begins today.

Don’t look back.

It’s never too late.

Third, forget the stuff.

Travel lighter.

Down five alternate paths.

And discover long-lasting financial success.

financial success

World War C (Campy): Zombieland Rules to Survive By.

I just read about Max Brooks, the writer of “World War Z” and son of Mel Brooks and Anne B. The fascination with zombies never ceases. It’s been with me since 1973. Every now and then I can feel a  rotting biter close by.

I never miss an opportunity to see the living dead: Return of them, Day of, Dawn, Shaun, a couple of “Night” remakes and ostensibly, the comedic genius of Zombieland.

As I’ve been watching Zombieland lately, I realize how incredibly clever this movie remains, although like Max Brooks and other “zombie zealots” I do not dig nor do I want to believe in, the fast zombies. The ones who can run faster than me scare me the most. Zombieland is four years old and the wit is timeless.

Years ago, I created several rules of my own to survive a zombie holocaust. Little did
I know we all would find credible guidelines in action on the big screen. I should have
turned my love for those decaying creatures into something lucrative a long time ago but no,

I wanted to work with money.

That’s such zombie thinking! This zombie biz brings in like $6 billion a year. Not too shabby for rotting, maggot-infested moving corpses.

Anyway..

The character Columbus in Zombieland was always prepared. He was a meticulous planner.

A young man I respect. A geek for bleak times. A man-boy I’d be honored to travel alongside on blighted, zombie-infested highways. Why? Because not only was Columbus (nicknamed after his hometown, Columbus, Ohio), smart. He was funny. He was a fatalist with a passion to get laid, he had an irritable bowel (been there). He always accepted the dark, yet underneath was a flame of once was. A desire to live. A desire to see a hot brunette naked. Sigh.

columbus shit

Columbus was so human in zombie-infested world. 

So in honor of you, Columbus and the opening of the movie “World War Z” I present the money rules of Zombieland (which are also worthwhile to consider while some of us prepare with alacrity for the zombie invasion. Apocalypse overused lately):

Rule #1 Cardio: The new breed of zombies doesn’t saunter (thank director Zack Snyder who brought back speed from the dead with his respectable remake of Dawn of the Dead). They run. Fast. You must stay in tip-top shape to survive in Zombieland. If you’re overweight in Zombieland, well, you’re done. Just done. 

fat zombieland

Take note of the humor of Zombieland as soon-to-be chubby victim is chased by zombie stripper with dollars secured in panties! Brilliant. So brilliant. Love you guys. 

Saving money takes incredible endurance. Your ability to save is going to take some sweat (and blood, possibly tears). To compensate for lower future investment returns, your  savings discipline will need to be robust for another decade. And as long as you’re attempting to be steps ahead of the “running” dead, aerobic exercise is just plain good for you.

Based on credible studies you’ll need to command a pot of money in excess of $250,000 in today’s dollars to fund healthcare costs in retirement.And we’re not even talking how much you’ll need if you spend three years drooling all over yourself in a swanky assisted care facility.

Why not work harder now to combat high healthcare expenses later? Preventative action through exercise and a clean diet will pay off regardless of whether a zombie rising occurs or not. So..

Remember:

cardio

Rule #2 Double Tap: In Zombieland, this is the “insurance” rule; one shot usually isn’t enough to kill a zombie. Be on the safe side and insure the dead is dead by taking a second shot. Contact your insurance company and double-check coverage especially home and auto to make certain you’re covered in case of disaster. Check out the insurance hub at http://www.bankrate.com. Information about homeowners and auto insurance can be found at http://www.iii.org, the Insurance Information Institute.

Investigate an umbrella insurance policy which is an extra layer of protection against lawsuits resulting from damage to someone else’s property or injuries in case of accident. It can also protect you from false claims such as libel and slander. For roughly $400 annually, the coverage is downright cheap and worth a look. Think of it as extra bullets. And in Zombieland, you can never have enough bullets.

Rule #3 Beware of Bathrooms: Ok – a tough one you think, however this is really an overarching statement about being stuck in an awkward position at the worst possible time. You don’t want to be caught on the bowl when the living dead target you!

Don’t get caught with your pants down when emergencies arise. Make sure to maintain
six months of living expenses in a savings or money market account. Just as I always wear a belt so it’s tougher to get the pants down, I recommend six months as a bare minimum to be safe.

Three months of emergency savings as a rule, is a financial zombie that must be shot in the head. There still remains a good chance that your new job will pay less than the one you lost, so an adequate buffer is mandatory.

Rule #4 Seatbelts: Taking creative routes, stopping short, driving fast? It’s all normal in Zombieland and occasionally in Financialworld too. When it comes to investing, your
emotions are driven by fear and greed. They’ll take you on a breathtaking ride more often than you think.

Successful investors learn to manage their emotions. In disciplined doses you must be strong and sell into greed and buy into fear. The seatbelts of rules and disciplines will keep you secured.

As Zombieland’s Chairman Ben Bernanke roils every asset market, you just don’t feel safe. Gold is a shit storm, bonds are down, stocks are down. Cash appears to be the only automatic weapon with endless bullets available.

During these times in markets you feel like you’re standing in a parking lot. Naked. Coated in BBQ sauce. Holding a sign above your head that spells out “EAT ME.” Oh, and you’re screaming at a hoard of zombies to come and get it.

Sit with your financial pro now. Or find one who can help you outline specific portfolio buy and sell guidelines and master the greatest enemy of investment returns – YOUR BRAIN. And zombies LOVE BRAINS!

zombies eat brains

Rule #5 Travel Light: Zombies seemingly pop up anywhere-they’re eerily stealth. In Zombieland you don’t want to be lugging all kinds of junk when you need to be nimble at all times.

When it comes to money be sensitive to investment, credit and insurance expenses. Make certain to read the fine print and realize all choices have expenses. The key to success is to know what you’re getting for the hard-earned money you spend or invest.

For example, term life insurance is a lot cheaper than variable life; maintaining or using a credit card is convenient however realize you’ll pay on average 16% interest for the luxury. Fair and lighter fees mean more money in your pocket over the long term.

Rule #6 Don’t (DO) Be a Hero: Columbus eventually realized that sometimes you need to be a hero in Zombieland. Be sensitive enough to know yourself and realize when you must admit a mistake, change a rule and move on. It’s never too late to change a bad behavior.

According to several academic behavioral finance studies, most investors will hold on to
losing investments way too long and sell winners too quickly. Men especially have a difficult time admitting mistakes and changing strategies. Being close-minded to new ideas or holding on to losing investments until they “return from the dead,” is a sure fire path to bloody future returns.

Rule #7 Limber Up: Before working through an unchartered or questionable area it’s best to warm up. In Zombieland a pulled muscle can slow you down and before you know it you’re on the menu!

People I meet and many I talk with are seeking some form of investment to get them rich quick. It all sounds exciting but getting rich quick is a sexy fairy tale destined to pull the money muscle right out from under you. There is no excuse for homework and discipline. If you dig deep enough into get-rich quick schemes they’re surprisingly easy to unravel.

Rule #8 When in Doubt Know your Way Out: Perhaps one of Columbus’ best. You must have an exit strategy when entering a building in Zombieland. Precious time can be wasted by surprises or attempting to unblock an exit.

Know your rules of exit before you own any investment. Individuals should check their
investments at least semi-annually as they ebb, flow and change and occasionally not for the better.

It’s important to also make certain your beneficiaries are updated on company retirement plans, IRAs and life insurance policies to make certain those you don’t desire to receive the assets, are removed. You wouldn’t believe how common it is for ex-spouses to be unintentional recipients of assets you meant for others. And this shit is ironclad. Once you die, the wrong people will receive your money.

Rule #9 The Buddy System: It’s crucial for a friend to have your back to clear an area or help you out of a sticky undead situation. There’s nothing wrong with having another set of eyes to help you review your financial situation as long as the person is qualified, objective and has your best interest in mind. Heck, as long as the person you confide in has your back it’s worth gaining an opinion, right?

Oh, and if you do hire a professional it’s important to understand how they receive payment and divulge any conflicts of interest up front. Ask the critical question: “How do you get paid?” You want specifics.

Rule #10 Check the Back Seat: Heck, it’s necessary to do this whether the living or dead are hiding back there! Your financial situation must be able to withstand unwelcomed surprises.

A disability can devastate a financial plan, even if it’s short term in nature. Do not overlook the need for disability insurance coverage; don’t be tempted to play the odds. Most companies will provide short and long-term disability coverage as part of a benefits package. Consult your current insurance professional and secure coverage as
soon as possible.

Random Thoughts:

I write a lot. I keep a red Moleskine notebook with me all times. Yesterday, I wrote,spilled out the answers to these five questions. Happy to share them with you. Because at the end of the world, you want to make sure you have your shit in order emotionally. No regrets.

Here we go. But before we do that..One more Zombieland photo:

zombie clown

God I hate clowns. Zombie clowns? I can’t even go there.

1). Who would you say “I love you” to first in case zombies rained down on your neighborhood? My girl Haley. So why wait?  If you love someone tell them. Today. Now. Wake them up. They’ll be pissed off but do it. A zombie drop is scheduled in your vicinity, within the hour.

2) What would you take with you in case you needed to leave in a hurry? I keep with me an old letter. Almost 20 years old. It was written about my dying dad. From his doctor at the time. It explained how amazed this doc was at my dad’s mental ability to fight the cancer eating him alive at the time. “I never had a patient fight for life like this. I am in awe of him.” I’m thinking I would need to read this frayed note. Many times.

3). If you had to pick a female to be stuck with during the World War Z, who would it be? Hands down – Maria Molina from Fox News. I’m not even going to discuss or argue with you over this. It is what it is.

maria molina three

Sigh.

4). What are you grateful for in the present? Like it’s one year into Zombieland, you’re behind a barricade. What are you missing? I’m missing the smell of cinnamon, conversation with several close friends, anything written by James Altucher, a triple-cheeseburger from Red Robin. Live in the now. Step back and consider the texture, smell, presence of what/who you appreciate. I think I’ll have a milkshake today.

5). What would be your last words in the case (it’s inevitable) you become a buffet item at a zombie Golden Corral? I was thinking something funny like “I hope you die from all the fat you’re eating,” or just an “oh shit!” I need to work on this one. What would be your last words if you knew you were going to die today? The words you use will shape the reasons you’re still alive.

You’re not dead.

You’re not zombie chow.

Act every day like the dead are coming and you’ll live more than ever before.

zombie lady

Wake Up Parents! The Kids Don’t Want Your House!

 

Some houses are more legacy-worthy than others?

It was an ongoing conversation between a mom and adult daughter and me (in the middle).  Moving slowly to what I call the “legacy awareness,” stage where we begin to explore mom’s legacy, a loving daughter’s inheritance expectations (or lack of) and possible living benefits (my carefully-chosen words for gifting valuables) for both.

The dialogue flowed innocent enough, until one simple, direct question left my lips:

                   “Carol, if mom dies what would you do with the house?”

I do these things on purpose. It got real quiet. Then.

Carol: “Well, I don’t want that!”

Mom:  “It’s a great house; it was our house, mine and your father’s. You lived there too didn’t you like it?”

Carol: “Of course, but I have my own place, and all that ____,” I mean stuff.” But the word had slipped out. The “J” word.

                              Junk? That’s not junk. It’s my entire life!!

 Most likely that 3,000 square-foot albatross with shingles is not a cherished heirloom in the eyes of your kids. In fact, they would prefer you deal with the house and its contents as soon as possible – I mean while you’re alive and well enough to handle daunting tasks that come with downsizing into a more humble abode.  

Want to see the kids reduce to the behavior of a two-year old, flailing arms and legs tantrum style? Die and leave them to deal with your dwelling and its dusty contents.

Deep attachment to a house is understandable – plenty of wonderful moments were created within those walls; most likely you’ve accumulated plenty of items through the decades and haven’t parted with much in a very long time.

Parents are still storing their parent’s stuff too. There’s multigenerational hoarding going on everywhere. And I don’t see many families doing anything about this affliction.

Frankly, many retirees would rather stay put; moving is stressful. I don’t care how old you are. It’s less trouble to remain in a place that’s outgrown you and choose to live in what I call “the house within the house,” which usually is reduced to two rooms and a bath.

To make it worse, it feels wrong to upset contents that have settled deep into memories. It feels right to leave everything as is – let the next generation handle it. But do they truly want to?

Your kids are busy with their kids, careers, and still coping with the financial distress that comes with a mediocre economic recovery. A majority of households are dealing with too much debt, skyrocketing college costs, underemployment, and now this? Do the kids want an inheritance? Sure. Do they want the house? No.

As we age, memories start to weigh a hell of a lot more than brass antiques or hardly used bedroom suites. An elderly widow was ashamed to tell me she hadn’t used her fireplace since 1987 – the year her husband passed away in a chair in front of it. The old lounger hadn’t been utilized either except recently by Tiger her new tabby cat.  

In 1993, my father passed away in his home. Nineteen years later, I still find myself using Google Maps to cyber-visit the location to see how it’s changed and praying nothing hadn’t. I was the kid who wanted desperately to hold on to the house. I was so afraid I’d forget or disrespect his memory if it didn’t stay in the family. It was a sacred place to me. A real-life example of how housing can get messy. Unlike other purchases, a house gets deeply imbedded in the threads of our emotions.

 A close friend said holding on to the death house was “creepy,” and my thinking macabre. Why? After all, he was my dad. I found nothing weird about the situation. In fact, wasn’t it actually normal to feel this way? Eventually, I did drop the idea. When my head cleared, I realized it wasn’t bricks and stucco I was after. I longed for flesh and blood (dad) back.

Currently, retirees are ravaged by the Federal Reserve’s ongoing decision to transform safe money into dead money by cementing short-term interest rates at zero and artificially suppressing intermediate-term yields.  The result is a dismal level of income generated (after inflation/taxes many yields are negative) and little hope for a respectable income from high-quality bond investments. Those in the “golden years” are ravaged by austerity even though they will ostensibly live more years than their parents and should be more active doing it too. Oh the joy of longevity.

Since low (no) rates on money markets, certificates of deposit, savings accounts and corporate and government bonds will be around for a longer period than any of us originally anticipated, (thus the word cementing) retirees must think creatively about the utilization of additional resources available to them like the house.

                                        Don’t be scared. Free the cash!

I know this may sound taboo, but desperate times call for some “out of the box,” thinking – Why not consider squeezing your greatest illiquid asset?  I’m referring to – you know: The albatross with the bay windows. If you play your cards right, the house your kids don’t want can be a boost to retirement cash flow.  Would this be so wrong to consider if done responsibly?

When consulting with pre and current retirees about income planning, I notice how reluctant they are to consider the house as a future source of cash flow. I’m always the one who initiates the idea. And the faces I get when I do! The topic is horribly taboo. Why? My job is, at the right moment, to bring up sensitive topics. Part of what I do is to place myself in less-than-desirable circumstances as a first step to awareness.

Admittedly it’s an uncomfortable conversation in the beginning, however when you consider how tough (impossible) it is to earn interest on conservative investments and how challenging it is to save for retirement, strategically utilizing home equity may be the only choice available for those looking to eke out some sort of comfortable existence in retirement.

Those close to retirement are afraid of misusing home equity. We’ve all read about or knew homeowners who considered their houses as never-ending money fountains splashing cash for new televisions, cars or expensive vacations. Even seniors or retirees willing to investigate the option of utilizing home equity have been reluctant due to declining or stagnant house values and the unattractive fees associated with reverse mortgage products.

Retirees appear to be more receptive to home equity extraction later in life, especially for long-term care expenses, when instead they could mindfully draw from equity along with other income sources starting earlier and thereby enjoy a more fulfilling lifestyle.

Instead, many have resorted to re-entering the work force (if 55 or older, it appears you’re working more years than originally anticipated, too) and remaining vigilant about cutting household expenses. But how much cost cutting can you do before you need to hit the big stuff?

I call seriously considering the big stuff  “Code Red Moments.”  “And they ain’t fun,” as I’ve been told repeatedly. Let me be clear: Code Red is and never will be “fun.” These moments are accompanied by the stark realization that drastic measures must be taken to survive financially.

At the least, thinking outside the box (or the house) a discussion with family, and a strategy session with a qualified financial professional on how to go about taking the right steps is warranted.

According to a July 2012 Center for Retirement Research at Boston College Report with information from the Federal Reserve’s Survey of Consumer Finances, the average balance of a household with head (of household)  age 55-64 in 401(k) & IRAs was $42,000 in 2010 which was lower than the $45,000 held in retirement plans back in 2004.

Thank goodness for Social Security otherwise most of us would be sunk. A select few are still eligible for defined benefit (pension) plans; the number of workers lucky enough to know what pensions are continues to decrease markedly since the early 1980’s. 

            Wealth of Typical Household with Head Age 55-64, 2010                                                                                   Source of wealth
Financial assets 18,300 3%
401(k)/IRAsa 42,000 7
Defined benefit 131,300 23
Social Security 287,200 49
Primary house 82,600 14
Business assets 7,600 1
Other non-financial assets 13,100 2
Total 582,100 100

a Includes thrift savings plans and other defined contribu­tion plans.

Note: The amounts are for the mean of the middle 10 per­cent based on net worth.

Source: Author’s calculations based on U.S. Board of Gov­ernors of the Federal Reserve System, Survey of Consumer Finances (SCF), 2010.

Chart courtesy of July 2012, Number 12-13 Center for Retirement Research: 401k Plans in 2010: An Update from the SCF by Alicia H. Munnell.

At $82,000 the primary house represents an asset with cash-flow potential. And don’t feel guilty: The kids prefer you consider your needs first.

Isn’t that right?

Random Thoughts:

1). Spark a Dialogue. Granted – sounds obvious enough. In practice though, not easy. Conversations about legacies, estate plans, inheritances are difficult. Don’t be afraid to enlist a “fire starter,” like your financial advisor if he or she is objective enough and possesses a semblance of EQ or emotional intelligence. Empathy and respect are important here.

 At the least, kids should be willing to assist parents with the overwhelming tasks that go with the relocation process. Families just don’t talk enough (or at all), about inheritance matters until forced to or a life event triggers it. It’s time for this conversation to begin as soon as possible. If only so the parents are aware of your preferences.    

Grandchildren are surprisingly effective at easing the pain of regret even if their intent is limited to the excitement of spending time in a different environment or rolling toy trucks over carpet in a new location.

Recently, a grandmother of three shared with me how she decided to sell her large home and move to a more modest apartment in a suburban retirement community. She was remorseful even though the children were very communicative and supportive of the move. When her grandson’s face lit up at the feel of new carpet and a balcony and shared how excited overall he was about the new place, her remorse turned to joy. She was instantly relieved and satisfied with her decision.

2). Outright downsizing is an effective method to lower living costs. Why continue to remain in the smaller “house within the house,” situation especially if the children are willing to help?

On occasion, the death of a spouse or other life-changing episode can jump start actions.  It’s best to contemplate “going smaller”, before forced to hit the code-red button.

So, sell the big house. Let it go. Based on recent reports, it appears to be an opportune time. Use the cash to purchase a smaller place in full (no mortgage if possible). Release the shackles of the material goods you haven’t dusted in years and get them to a consignment shop. Better yet, open the door to gifting cherished items to the children while you’re still alive.

Think seriously about renting. Why not? Yes, rental rates have increased in several markets so you should examine the tradeoff between buying and selling on a case-by-case basis. First, you’ll need to gather information about the area you’re looking to reside. For example, gaining a handle on annual home price changes vs. annual percentage of rent increases or decreases would be important. From there, one of the best calculators on the internet is available for free from the New York Times at http://www.nytimes.com/interactive/business/buy-rent-calculator.html.

Keep the extra cash you would have used to purchase a residence (or at the least as a down payment) liquid in a low-cost, no-load mutual fund that invests in ultra-short bonds which will generate a small monthly addition to cash flow.  And think about splurging on a nice vacation.  After all, you’re liquid now.

3). Consider a Home Equity Conversion Mortgage Saver. I understand the concerns about the closing costs and fees that go along with reverse mortgages, but hear me out.

Data released by the National Reverse Mortgage Lenders Association (NRMLA) shows senior home equity increased by $30 billion in the fourth quarter of 2011. Seniors have $3.22 trillion in home equity available according to the most recent NRMLA/Risk Span Reverse Mortgage Market Index (RMMI) report. That’s unlocked potential you can’t ignore if tapped strategically. Remember, you must be 62 years old to consider any reverse mortgage option.

Although you’re limited by the amount you can borrow, the HECM Saver is more cost effective than a standard reverse mortgage option. For example, the HECM Saver has an upfront premium (cost) of .01 percent of your property’s value compared to two percent for a standard reverse mortgage. Also, those who utilize the HECM Saver are limited to borrow roughly 10 to 18 percent less than for the Standard reverse mortgage.

Instead of withdrawing in the form of a lump-sum cash payout, it’s best to retain a line of credit that can be used only when necessary. Work with a knowledgeable financial adviser who can assist you with establishing clear rules to trigger and monitor credit line usage. The decision should be based on a thorough examination of cash-flow needs, your overall portfolio mix and current market conditions.  The goal is to have a readily available source of funds to draw from when warranted. 

The debt associated with a reverse mortgage (or HECM Saver) must be paid in full when the borrower dies, moves out permanently, or elects to pay it off voluntarily. Any equity remaining belongs to the borrower or the borrower’s estate. If the debt exceeds the property value, the FHA (Federal Housing Association) bears the loss, not the borrower or the borrower’s estate.

One of my favorite websites designed to educate mortgage and reverse mortgage borrowers is The Mortgage Professor, www.mtgprofessor.com  operated by Jack M. Guttentag, Professor of Finance Emeritus at the Wharton School of the University of Pennsylvania. You can access, free of charge, a series of articles about reverse mortgages including Using a HECM to Strengthen Retirement Plans.

Use the recent, positive news about housing to get the thought process rolling.

It’s ok parents, really – the kids don’t need your house.  Have faith that the memories within will always be worth a small fortune to them no matter what.

                             And that is exactly  what the kids want.