Saving for Retirement at 60

Are you sixty years old?  If you are, you may be preparing for retirement.  As excited as you may be about no longer have to work, can you really afford the transition?  If you haven’t been preparing for retirement, it isn’t too late to get started, but you need to get started now.

The first thing you will want to do is start contributing to your retirement plan.  At this point in your life, any contributions that you can make, you should.  At the very least, contribute 5% of your income.  However, know that many employers will match contributions made by their employees.  There is a minimum amount that you must contribute to receive this matching.  If you do, you can essentially get free money for your retirement.

Next, you will want to examine your retirement wants and needs.  Typically, this is the first step that you take.  However, if you haven’t been saving for retirement, it is imperative that you get started soon.  Depositing any extra money that you have right from the start can help you get ahead in your goal to save for retirement.

Returning back to your retirement needs, examine your housing.  Is your house costly to maintain?  If it is and if there isn’t much sentimental value attached to your home, consider relocating to a more affordable housing option.  In fact, you may want to closely examine retirement communities.  Most are affordable to live in and you are automatically paired with neighbors that are your age, many of which will share your interests.

It is also important to examine your retirement wants.  What do you see yourself doing when you retire?  If you are like most retirees, you will likely want to do things other than stay at home watching television.  Do you want to travel?  Do you want to start your own business?  Are there other activities that you want to enjoy, such as camping, boating, or fishing?  If so, it is important to examine these costs and add them to the estimated amount of money you need to save to retire comfortably.

Next, it is important to learn to cut corners.  Do you live on a fixed income?  If not, it is time for you to start. When in retirement, most men and women are on a fixed income.  For example, if you were to spend your retirement savings before you pass away, you are essentially left with nothing.  Is this really how you want to live?  It is important to practice living on a fixed income.  If you find that you cannot do so, you have a small amount of time left to increase your retirement savings by working longer.

Now is also the time to examine your debt.  Do you have any?  To see, request a copy of your credit report.  Usually, the companies that you owe money to will try to collect.  This may involve a request to appear in small claims court.  Should this happen to you, you may be court ordered to pay the money.  This can put a damper on your retirement savings and plans.  Eliminating this from happening by making sure that all your debts are paid off before you retire.

One question that many individuals in their sixties have involves paying off that debt.  Many wonder how they can pay off their debt when they are also supposed to be saving for retirement.  The two actually go hand-in-hand.  When you pay off your debt, you should have more money for retirement in the long-run.  Also, you can work to save money by eliminating unnecessary purchases or temporarily supplementing your income with a second, part-time job.  A good approach to take is dividing the money into two.  Some money can go towards your unpaid debt and the rest can go into a retirement account.

Saving for Retirement at 50

Are you fifty years of age?  If so, are you prepared for retirement?  For many, retirement is just around the corner, about at the age of sixty.  While some individuals will find themselves in good financial standing, many more see just how unprepared for retirement they are.

If you are unprepared for retirement, there is good news.  That good news is that it isn’t too late to start saving.  If you just turned fifty, you likely have a little bit more than ten years to save.  While it won’t be as easy as it was when you were twenty, thirty, or forty, it is still possible.

The first step in planning for retirement at the age of fifty is determining how much money you need to save.  On average, financial experts state that most individuals need at least 70% of their current income to financially survive through retirement.  A small percentage of that, around 30% to 40%, may come from social security benefits.  It is also stated that you should prepare to spend thirty years in retirement.  

If you have been contributing to a 401(k) plan at work, you are a step ahead.  You likely have a few thousand dollars or more saved.  You will want to keep on contributing.  Be sure to meet the requirements that your company has for matching.  When you do so, your company will match the contributions that you made.  This money can go a long way, especially if you are finding yourself unprepared for retirement.

If you are employed, it is also important to examine pension plans.  Pension plans are advised for long-term employees.  Now is the best time to get one, as you are less likely to leave your job.  There are some companies that have rules and restrictions, such as you lose your pension if you switch jobs.  

It is also important to examine Retirement plans such as the IRA in the US or the RRSP in Canada.  Do you already have one?  If not, now is the time to start.  Both give you numerous tax benefits and they are a much better approach than traditional savings accounts.  Why?  Because many individuals find it easier to dip into their savings accounts and spend their money.  Whether you use that money for yourself or give it to family members, it reduces the amount of money that you have for retirement.  It is also important to note that the rules for both as you hit 50.

As previously stated, most individuals will receive social security benefits that account for about 30 to 40% of income needed during retirement.  This is, however, just an average figure.  You can request a statement that outlines your benefits.  This statement can give you an idea of how much in social security benefits you will receive overtime.  With that said, this is also just an estimate; therefore, it is not a figure that you should rely heavily upon.

Now it also the time to start living on a fixed income.  There are two benefits to doing so.  When in retirement, you will be on a fixed income. You will run into trouble if your money runs out too soon.  Starting to live on a fixed income now can give you practice for when you truly do depend on it.  Also, when living on a fixed income, you are able to reduce your expenses.  Any money that you save can be put towards your retirement.

If worse comes to worse and you are truly worried about retirement, now is the time to supplement your income.  A second job may be the last thing you want or need, but it may help you considerably.  If you do opt for a second part-time job, place any money that you make into a retirement account, whether it be a Retirement Account or a savings account.  Working a second job when you are fifty is much better than doing so when you are sixty.

Saving for Retirement at 40

Are you in your forties?  If you are, retirement may be something that you occasionally think about.  After all, you have been in the workforce long enough to wish you could get out of it.  With the right retirement plan, you may be able to do so a little bit sooner than originally planned.

Of course, retiring a year or two early sounds nice, but it isn’t as easy as you may have thought.  The good news is that you are at the right time in your life.  The amount of money that you are able to save and put towards retirement in your forties can have a significant impact on when you are able to retire.  

If you have been putting aside a little bit of money in a Retirement Account or if you have been contributing to your RRSP or your 401(k), there is a good chance that you sat down and set retirement goals for yourself.  This may include where you want to live and what activities you want to enjoy.  Since your goals may have since changed, they should be reexamined.  This is important in the event of a cost increase.  If the costs of your retirement goals have increased, you need to work on saving more money.

It is also important to look at your spending. If you are a parent, now may be the time when your children are getting ready for college.  Are you footing the college bills?  If you wish to do so, first make sure that you can.  As important as it is for your children to get an education, do not go into debt and do not dip into your retirement savings to pay for that education.  Instead, examine other avenues of financing, which may include student loans for your children, scholarships, and grants.

If you have any debt, now is the time to get it paid off.  Request a copy of your credit report.  If any bills are marked as unpaid, work on getting them paid off.  You cannot comfortably and securely retire if you are suffering from debt.  The average consumer debt can be quite high. If yours is high, you may need to spend five to ten years paying it.  That is why you should start now.  

As it was previously stated, most individuals start contributing to their 401(k) plans or open a Retirement Account in their late twenties or thirties.  If this is a step that you have yet to take, do so.  The sooner, the better.  On average, experts recommend contributing at least 5% of your income to be put in a 401(k) or a Retirement Account.  With that said, if you are just getting started now, at least 10% of your income should be contributed.  

Now is also the time to look at how retirement works.  For example, most financial advisors state you will need at least 70% of your income to comfortably retire.  Do you have this money?  Can you reasonably come up with it?  If not, now is the time to take further action.  You do not want to rely on social security payments, as they are only able to provide most retirees with an average of 40% of needed income.  

To make it so that you are able to relax and enjoy life in retirement, as opposed to working through it, it is a wise idea to start cutting corners now.  Are there any unnecessary purchases that you can eliminate to help you save money?  Can you reduce the packages for your television, internet, or cable?  Are there ways for you to reduce your car insurance payments?  If so, do so.  Any money that you save can be put into a checking account or deposited into your IRA.

The above-mentioned steps are just a few of the many that you, a person around the age of forty, can take to prepare for retirement.  Remember, each year that passes by is one less year for you to save money for your retirement.  Don’t be left out in the cold or be unable to enjoy your favorite activities later on in life because you didn’t start planning for retirement when you should of.

List of associations helping seniors in BC

I was thinking it might be a good exercise and perhaps some fun to prepare a list of associations that help seniors, in BC. I started to put together a list and realized that it was close to Mission Impossible. Helping seniors is a growing business and there are many organizations and businesses that proport to held or advocate on behalf of seniors. Far too many to list and to make sense of in the time that I wanted to allocate to this task.  Here are a few of the organizations I found with a little information on them from the web.

The Office of the Seniors Advocate monitors and analyzes seniors’ services and issues in B.C. and makes recommendations to government and service providers to address systemic issues. The OSA was established in 2014 and is the first office of its kind in Canada.

COSCO BC - Seniors’ Health and Wellness Institute The COSCO Health and Wellness Institute provides free workshops to senior groups throughout BC. We currently have 41 workshops available for presentation by trained facilitators which provide practical information but are not intended to provide specific legal, medical or financial advice.

COSCOBC.org  Established in 1950, the Council of Senior Citizens’ Organization (COSCO) is an umbrella organization made up of many seniors’ organizations and individual associate members.   Registered under the Societies Act since 1981, COSCO has grown and now represents approximately 80,000 seniors in British Columbia.

COSCO is run by volunteers, with activities coordinated through an elected Board of Directors.

COSCO BC Connects people with the help they need. Community, social or government services.

The following organizations, and many others, are part of the Council of Senior Citizen Organizations in British Columbia (COSCO). This umbrella organization brings together over 75 senior organizations operating in the province, in addition to individual members who facilitate the process. COSCO is privately run by a board of directors and aims to improve the programs and advocacy efforts targeting seniors in the province.

           

The Public Guardian and Trustee (PGT)            

The Public Guardian and Trustee (PGT) is a corporation sole established under the Public Guardian and Trustee Act.

          

Nidus Personal Planning Resource Centre and Registry            

Nidus Personal Planning Resource Centre and Registry is a non-government, charitable society.

           

The New Vista Society            

The New Vista Society is a non-profit society and registered charity dedicated to providing care, support and housing for seniors.

           

The Canadian Centre for Policy Alternatives           

The Canadian Centre for Policy Alternatives is an independent, non-partisan research institute concerned with issues of social and economic justice. Founded in 1980, the CCPA is one of Canada's leading progressive voices in public policy debates.         

           

BC Network for Aging Research           

Our goal to provide opportunities for these researchers to collaborate in generating innovative aging research.

            

BC Centre for Elder Advocacy and Support            

An online resource for advocates, people on welfare, and community groups and individuals involved in anti-poverty work.         

           

British Columbia Public Interest Advocacy Centre           

The British Columbia Public Interest Advocacy Centre (BCPIAC) is a non-profit, public interest law office. Its creation in 1981 reflected the fundamental belief that it should not only be the rich and powerful that are represented before our courts
            

BC Health Coalition           

The BC Health Coalition champions the protection and expansion of a universal public health care system. We are a democratic, inclusive and consensus-based network of individuals and organizations that span the province of British Columbia.

BC Forum  British Columbia Federation of Retired Union members            

BC FORUM, established in 1995, is the recognized voice of senior trade unionists in British Columbia and is a registered non-profit society dedicated to representing the interests and well-being of retired union members (and active union members age 50 and over), their families and spouses, and to continue into retirement the relationship, they have enjoyed with the trade union movement.

           

B.C. Retired Teachers' Association           

The BCRTA is committed to improving pension, medical and dental benefits for its members.

            

BCIT Retirees' Association           

This website is mainly for the enjoyment and use of BCITRA members, but comments are welcome from those interested in our aims and activities, or in the concerns and welfare of seniors.

            

Canadian Centre for Policy Alternatives           

The Canadian Centre for Policy Alternatives is an independent, non-partisan research institute concerned with issues of social and economic justice. Founded in 1980, the CCPA is one of Canada's leading progressive voices in public policy debates.

            

British Columbia Government Retired Employees Association           

BCGREA promotes the welfare of all persons receiving a superannuation allowance under the Pension (Public Service) Act of British Columbia      

           

British Columbia Pensioners' and Seniors' Organization            

B.C. Pensioners' and Seniors' Organization is a non-partisan organization instituted in 1932 for the purpose if identifying and supporting issues of importance to seniors.

         

The British Columbia Old Age Pensioners’ Organization

The BCOPA is a nonpartisan organization dedicated to providing support to pensioners and to address issues that affect senior citizens in BC. The organization is particularly useful in helping retirees retain their pensions. The BCOPA also provides help and support to access Medicare and Pharmacare in the province. The BCOPA additionally offers seniors help with regards to taxation, housing and social programs. The organization is also politically active and promotes issues important to the wellbeing on seniors in the province, such as ensuring equality in consultation and improving health services. The BCOPA has numerous branches scattered throughout the province.

The Seniors Citizens Association of British Columbia

The SCABC is an organization “for and by” senior citizens of British Columbia. The entity aims to protect the rights of seniors and rally for social programs and welfare support that improve the living conditions of senior citizens in the province. The SCABC promotes the pensioner movement in the province in association with pensioner organizations

SeniorsBC.ca The SeniorsBC website provides information on programs and services for seniors offered by the B.C. and federal governments and non-profit organizations. The website includes information on health, finances, benefits, housing, transportation, tips for healthy living and other topics of importance to seniors. The website also includes online versions of this guide (the BC Seniors’ Guide) in English, French, Chinese and Punjabi, as well as the BC Elders’ Guide, which has been culturally adapted for First Nations and Aboriginal older adults.

SeniorsofBC.com is the website of the Senior Citizens Association of BC. We are an umbrella organization for and about seniors in British Columbia.

(a)          To stimulate public interest in the welfare of the Senior Citizens of Canada.  To advocate for pensions and a social security entitlement that provides the means to ensure housing and living conditions that meet the seniors’ needs for comfort and security.

(b)         To protect the rights and interest of pensioners under the Old Age Security and Assistance Acts.

http://seniorsfirstbc.ca/ Seniors First BC is a community-based, non-profit organization incorporated as a society in 1994 as the BC Coalition to Eliminate Abuse of Seniors. Following an extensive needs assessment to establish the first Elder Law Clinic in BC, we changed our name in 2008 to the BC Centre for Elder Advocacy and Support.

Alliance for a National Seniors Strategy  Close to 17% of Canada’s population is 65 or older. By 2031, Statistics Canada projects that one in four Canadians will be seniors.

With Canada’s population ageing, maintaining the status quo for seniors' health care is not an option. Our health care system was designed a half-century ago, and it has not kept pace with the issues of the elderly in Canada. Today, seniors need better solutions, services and support.

We need more voices to be heard if we want a national seniors strategy. We need the voices of today’s seniors, as well as the voices of tomorrow’s seniors. You can be part of the journey to a new system of care for all of Canada’s seniors. Help make change happen.

National Pensioners Federation  National Pensioners Federation is a national, not for profit, non-partisan non-sectarian organization of 350 seniors’ chapters, clubs, groups, organizations and individual supporters across Canada with a collective membership of 1,000,000 seniors and retirees devoted entirely to the welfare and best interests of ageing Canadians. Our mission is to stimulate public interest in the welfare of ageing Canadians. Our goal is to help seniors and retirees have a life of dignity, independence and financial security.

Frugal Rules

If you want to have a retirement where you do not need to worry about money, there are two ways to do so. First, save enough money to continue your lifestyle. The reality is that not many of us have done this or are doing this well. The second way is to start to live within or below your means by being frugal. Frugal living is something that you undertake for the long haul.  It isn't something you can pick and choose to do one day and not the next-that is, not if you expect to see progress toward your goal. You do have a goal, don't you? If not, read the final tip here first.  Below are several things you need to keep in mind if you are considering a frugal lifestyle. Not every frugal idea is workable for everyone.

1.   There is a balance between frugality and time that is unique for each person. Some people have time to grind their own wheat into flour and make their own pasta from scratch. Some people only have the time to do simple things.  You don't have to use every idea you hear about.

2.    Start saving your savings.

When you save money, you need to go ahead and put the money in a jar until you have enough to put it in the bank. If you save $20 on a shirt you didn't buy, put that $20 in your jar. If you save $1.59 on groceries, put that money in the jar. Many grocery stores receipts will even tell you how much you save. That makes it easier for you. Spending money you save in one place on something else is still spent money.

3.    Set your goals and stick with them.

You have to have a reason to be frugal. Whether you want to learn to live on a reduced income, get out of debt or go on a cruise, you have to have a goal. Don't just leave it vague. Write down the specific steps you are going to take. Look at your goal every day. Keep it at the forefront of your money thinking. When you consider whether or not you will buy something, look at how it affects your goal.

Empowered Age

In a previous post, I talked about people continue to want to work after they retire. Well since we live in an entrepreneurial society, where there is a need/want there will be those eager and willing to fill that need.

I came across the website Empowered Age on a blog I read called Retirement-Only the Beginning in a guest post.  The Guest Post was by Joseph Byrne, Founder and CEO of EmpoweredAge.com, a service that connects highly-skilled retirees to part-time or short-term consulting projects in various industries.

The concept is not a new one, but I think his approach is unique, his focus is clear and he has a good understanding of the concerns of Boomers. I know that there are many websites that cater to Boomers looking to work. These services offer part-time manual labour jobs and not many services that require a more consultative approach.

Empowered Age has a focus Boomers with highly skilled experience who can provide value to a growing firm. Many growing firms have projects or would love to start projects to help launch a new product, oversee a new office opening, or advise on a new sales strategy but they cannot afford the time or people to do these important tasks Empowered Age, can provide the skills and people needed who can help. In the final paragraph of his post, Mr Byrne says, “Whatever your idea of retirement may be, planning will be an important part. Whether that be financially, geographically, professionally, or socially, be aware to engage in activities that provide value to you. Look for opportunities that benefit your intellectual as well as your physical health. Wherever your journey takes you, we wish you health and success. If part-time consulting work is in that journey, Empowered Age will help you along the way. Visit us at Empowered Age for more information.”

So, I did, I like what how his site is set up and the simplicity of providing your information and some of the resources offered (there could be more, but what they have are interesting). Empowered Age is a service that appears to be only offered to those living in the United States, but I am sure there will be similar offerings in other countries where Boomers are retiring in large numbers. I look forward to the time someone in Canada offers this service.

Should you assist adult children 1

My thanks to A Satisfying Retirement for the idea. When I was growing up, my grandfather helped his children (my mom, and her brother and sister)  many times by unexpected gifts of money. The money he gave, I believe helped my parents buy their first home. So the idea of helping family is not new to me or to my family.

My brother in law helped his new adopted daughter by taking in and raising her two children from about age one, when she was unable to cope.   I have helped my son and daughter when they have called on us, which is not that often. I have a friend who helps his adult children by taking care of his grandchildren about 35 hours a week when the parents are working. He loves it, but the children are young and it is taking a toll on his energy and his health.

The  issue of helping adult children either with cash or time is a concern for many of us. The Australian government did a report on this issue and some of the information is interesting:

Researchers in the United States have found that a third of children under the age of six receive up to 10 hours of care a week and that 47% of all grandparents with grandchildren (under 13 years) living nearby provide some childcare (Guzman, 2004). Although more grandmothers (54%) provided child care it was found that grandfathers (38%) also made a significant contribution. 

In the United Kingdom it has been estimated that up to half of working parents rely on grandparent care for their children. It was also found that although grandparents were prepared to provide some child care, and at times even reduced their working hours to provide it, they did not want to give up their jobs (Mooney, Statham, & Simon, 2002; Phillips, Bernard, & Chittenden, 2002).

Like my friend, who is experiencing health concerns, Grandparents bringing up grandchildren also experience changes in their own lifestyle, health and well-being. The following are issues of concern to grandparents in these circumstances:

• isolation from friends and peers because they are not free to take part in activities with their own age group;
• friends and family may not help them out because they do not understand the situation;
• fewer opportunities to enjoy and indulge their grandchildren because they are responsible for discipline and other parenting tasks;
• affects on health due to the additional work and stress involved in caring for often difficult children and they may neglect their own health; and
• being tired and overworked (Fitzpatrick, 2004; Jendrek, 1993).

Providing extensive care for grandchildren has also been linked with a higher level of depression and other declines in the health of grandparents such as increased risk of coronary heart disease, even after taking into account the effects of age (Lee, Colditz, Berkman & Kawachi, 2003; Minkler & Fuller-Thompson, 1999). Grandparents who are parenting grandchildren are less optimistic about the future than other grandparents. They worry about their own health and what will happen to the grandchildren if they die or become incapacitated. Many grandparents worry about money, and how they will make ends meet as the grandchildren get older and their daily expenses are greater.  

We all want to help our children, if we can, but there is a price to be paid for that help. If we understand some of the risks of helping to us, then we are in a better position to make a decision that is best for us and best for our children. In the next post, I will outline some of the resources, from the Australian report, for grandparents who have taken on the responsibility of raising a grandchild.

Do couples save for retirement? Surprise 1/3 don't

An online survey conducted by Arielle O’Shea at NerdWallet, a personal finance website, found that many twosomes don’t take advantage of the benefits. 

A Harris Poll recently surveyed more than 1,800 Americans in a relationship — defined as married or living with a partner — for NerdWallet, and a third of respondents said neither they nor their partner is saving for retirement, according to the survey. Here are three of the most worrisome missteps:

When couples save, they often are doing it in the wrong accounts

Here’s the general order when it comes to where you should save for retirement: Contribute to your 401(k) or other employer-sponsored plan, at least to the point where you earn all possible matching contributions. Then turn to a traditional or Roth individual retirement account. If you max that out, you can add more money to the 401(k).

Unfortunately, many Americans in a relationship who are saving for retirement have somehow worked into that hierarchy a savings account, which showed up in the NerdWallet survey as the second most common home for retirement savings.

2. Couples are letting one partner shoulder the retirement responsibility

It’s not unusual to have an income gap in a relationship; the wage gap actually widens with marriage and expands more when children come into play. According to salary comparison site Payscale, married women without children make 21% less than married men without children. That gap widens to 31% when you compare married women with children to their male counterparts.

So it’s not surprising that in the NerdWallet survey, only 24% of Americans in a relationship said both they and their partner are saving for retirement, or that men in a relationship were more likely to report saving for retirement than women in a relationship (65% versus 46%).

Saving for retirement is a solo game until you’re married. After that, it should be a shared effort. That’s not because the non-saver could be left with nothing in a divorce — how retirement assets are split depends on your state, but they do get split — but because that person could be giving up tax advantages and employer-matching dollars.

Even if one spouse earns less, the couple should be planning retirement account choices together. If only one of you has access to an employer match, use your shared retirement savings to contribute enough to catch that match, which is free money and a guaranteed return on your investment. If you both have an employer match, you should each contribute enough to take advantage of it.

Couples are not putting a dollar sign on their dreams

It isn’t hard to talk about the fun parts of retirement, like how and where you’re going to spend it. I’m not saying these chats aren’t important — my husband should know that I’m out if he ever buys an RV — but how you’re going to pay for those dreams should also be part of the conversation.

The trouble is that, according to the NerdWallet report, almost a third of Americans in a relationship who are saving for retirement haven’t discussed how much they need to save. This isn’t a fun part, but it also isn’t hard: An effective retirement calculator can shoulder some of the work.

How much you save makes all the difference in retirement. It means you can live in a beach house instead of a sandcastle. It’s what gives you a choice about how you’ll spend retirement; without savings, you could spend it working, and that’s if you’re lucky. Nearly half of retirees left work earlier than planned, most commonly due to health issues, according to a recent survey by the Employee Benefit Research Institute.

When you plan for your future, you can hope for the best while being prepared for the worst.

Do you worry about your investments?

I used to review my investment portfolio at least once or twice a week and when it fell, I became concerned about losing money, and when it gained, I was happy about making money. A conversation with my advisor helped me understand that I was investing for the long term, not the short term, and that the market today is volatile. 

I am not alone in my obsession with my investments. One of the greatest challenges retirement planners face is relieving the anxiety their retired clients experience during market drops and other events that may affect their portfolios and potentially their income.

Because I understand that markets can be volatile, and I am investing for the longer term, I do not react with panic when the market goes down. Market volatility is the primary catalyst behind many bad financial behaviors retired investors engage in under stress, such as buying high and selling low, or divesting a portion of their equities to invest in stocks.

Understanding behavioral and cognitive psychological theory and conventional economics, we can use behavioral finance strategies to identify triggers that cause individuals to make certain—usually bad—financial decisions, and recognize past financial mistakes in order to avoid repeating them and putting their retirement income at risk. Here are some behavioral finance behaviors that you should be aware of as you think about your investments

·      People tend to view the possibility of recouping a loss as more important than the possibility of greater gain.

·      Investors tend to place too much worth on judgments derived from small samples of data or from single sources. For instance, investors are known to attribute skill rather than luck to an analyst that picks a winning stock

·      We have the tendency to attach or "anchor" our thoughts to a reference point - even though it may have no logical relevance to the decision at hand. For example, some investors invest in the stocks of companies that have fallen considerably in a very short amount of time. In this case, the investor is anchoring on a recent "high" that the stock has achieved and consequently believes that the drop in price provides an opportunity to buy the stock at a discount

·      We use mental accounting. Mental accounting refers to the tendency for people to separate our money into separate accounts based on a variety of subjective criteria, like the source of the money and intent for each account. According to the theory, individuals assign different functions to each asset group, which has an often irrational and detrimental effect on their consumption decisions and other behaviors.

·      Although many people use mental accounting, they may not realize how illogical this line of thinking really is. For example, people often have a special "money jar" or fund set aside for a vacation or a new home, while still carrying substantial credit card debt

·      The reason we do this lies with the personal value that people place on particular assets. For instance, people may feel that money saved for a new house or their children's college fund is too "important" to relinquish. As a result, this "important" account may not be touched at all, even if doing so would provide added financial benefit.

As we age, we should be seeking less risking investments, so that we can generate income, because having high risk investments, may be destructive in the long term

I know that I am uneasy when my investments earn low or show no gains in a flat economy, which can activate some of my behavioral finance actions (see above) that may also lead to bad financial behaviors. My advisor suggested to me that I could minimize losses by merely staying the course and resisting the compulsion to take on risk.

I assume that all of us who are retired experience heightened anxiety over their financial security at one time or another. A recent American College survey (pdf file) showed that more than 60 percent of us are concerned with market volatility significantly impacting their retirement income stream.

In a discussion with another investment consultant, I was told that the biggest problem faced by retired people is that many of us often over-estimate how far into retirement their savings will last, and don’t plan for unexpected expenses such medical care that accompany retirement. Minimizing risk and establishing a financial plan that meets one’s retirement goals without draining their savings prematurely requires planning and flexibility, as this is not always an easy transition for retirees

It is important to understand that until we begin withdrawing money from our savings, there is no impact on our portfolio. However, selling stocks right after a significant market downturn can lock in lower returns, which can negatively impact the longevity of a retirement portfolio.

If flexibility with retirement income is not possible, you can consider securing enough guaranteed income sources to cover your basic retirement needs—a strategy often referred to as flooring, which is usually accomplished through a combination of investments and insurance products such as bonds and annuities that can help provide a predictable amount of income each month in retirement to meet expenses.

Coordinating annuity or bond purchases with other consistent income sources, such as pensions, Social Security, or rental income can help provide reassurance during volatile markets, and allow retirees to focus on enjoying their golden years instead of worrying about meeting expenses.

Are you prepared? 1

Climate change is not just about getting warmer, it is about severe weather, more storms, more upheaval, and more emergencies. I live on the West Coast and one day, we will have a major earthquake, but as I write it has not happened yet, however, there is a major storm raging outside. I have not lost power or the trees haven’t blown over in my yard. However, my neighbour had a tree come down, just missing is roof but it landed on his patio. In addition, there has been a rash of house fires in the area, so all of this started me thinking about being prepared in an emergency.

What is an emergency? According to The BC Emergency Program Act an emergency is defined as “a present or imminent event or circumstance that is caused by accident, fire, explosion, technical failure or the forces of nature and requires prompt coordination of action or special regulation of persons or property to protect the health, safety or welfare of a person or to limit damage to property”

The dictionary definition of emergency is:

A serious situation or occurrence that happens unexpectedly and demands immediate action to limit damage to property and/or people.

Every jurisdiction will have their own definition of the word emergency, because if an emergency is called special procedures, laws and assistance can kick in to help the individuals and community affected. So the officials are very careful about declaring a state of emergency, as an individual you should be prepared. For any type of emergencies.

Generally speaking, emergencies can be grouped into three types. The first are Natural disasters such as earthquakes, floods, hurricanes, tsunamis, tornados, volcanos, blizzards and forest fires. The second type of emergencies are man-made disasters such as fires, terrorist attacks, chemical spills, transportation accidents, etc. The third type of emergencies are public health issues such as infectious diseases, SARS, influenza, tuberculosis, polio and plague.

It is important for all of us to be prepared, but if you live on your own, and many seniors do, it is more important to be prepared because, an emergency or disaster often strikes quickly and without warning – like the Boy Scouts, you must be prepared. You may have to evacuate your neighborhood or be confined to your home. If a disaster strikes in your community, it may take some time for emergency workers to help you. On average, it is recommended that you should be prepared to cope on your own for a minimum of 72 hours. There is help however, during an emergency, your safety is of utmost importance and ultimately your responsibility

There are four principles of being prepared, they are:

·       Be informed - knowing the risks within your community

·       Make a plan

·       Prepare an emergency kit

·       Maintain your kit)

Know the risks and hazards specific to your community and home in BC we have the following risks:

·       Earthquakes. Forest fires, Hazardous goods spills, Water contamination, Severe weather, Rain and wind storms, Blizzards, Mud slides, Flooding, Tsunamis (off shore or near shore

Every region has its own risks, some risks are greater than others, it is important that you know the risks and that you have a way to stay updated during an emergency.

Tomorrow, I will look at what is involved in preparing an emergency plan.

Financial fraud

As we age, we are more vulnerable to financial fraud attempts. We have worked hard to make sure we will not run out of money as we wander through retirement. Remember, the world is a vast place, filled with billions of people and just as many opportunities. However, occasionally, you will run into a con artist who will try to take you for everything you have. You may be especially vulnerable when you are venturing into unfamiliar territory – like the stock market. Of course, fear of being scammed is no reason to cower in your bedroom. Use these five recommendations to keep you – and your money – safe from crooks.

Keep your eyes open. Using an ounce of prevention will prevent you from incurring some large losses later. For instance, always ignore unsolicited e-mails and Internet chat-room messages thaturge you to buy a particular stock now. At best, a con artist could be pumping up the stock price before dumping shares. At worst, the recommendation might be for a completely worthless stock.

Keep your distance from aggressive salespeople. You should also avoid buying from salespeople who promise high returns,demand an immediate response, or press for personal financial information. If you do run into a salesperson pushing you to make an investment, ask for a prospectus and other written information before you agree to buy. This will not only give you more time to make an educated, thoughtful decision, it will also show fraudulent salespeople that you’re not someone to be trifled with.

Be realistic. Just because other investors have gotten big returns doesn’t assure that you will, too. In one con called a Ponzi scheme, early investors are repaid with money from later investors, who ultimately lose their money.

Be on the lookout for multilevel marketing scams. In these scams, 

distributors or sales agents earn money for recruiting other distributors or agents. Not only is this type of scheme doomed to failure (eventually, you’ll be unable to recruit more new members) – it’s also illegal. Before signing up for anything, print out all the information you can find on the company. Then contact your state or local consumer protection agency to find out if the company is legitimate.

Stick to what you know. If you’re new to a particular industry, then research the industry and individual companies before you invest. Be very wary of stocks that aren’t listed in respected publications or on major exchanges. Be very suspicious if you encounter a salesperson who is trying to push such a stock you. If you think that someone is trying to scam you, you can report him to the Securities and Exchange Commission in your area.

If a salesperson still will not relent, you can tell him that you never make investment decisions without involving your attorney. Give him your attorney’s contact information and request that he make a presentation to your attorney. Dishonest salespeople will generally turn tail at this strategy, leaving you and your cash unharmed.

All the world

Returning to my high school reunion, got me thinking about a bunch of stuff that is important to all of us as we start on this new journey on the final stages of our life. Shakespeare said in his powerful poem The Seven Ages of Man, from the play “As You Like It”
All the world's a stage,
And all the men and women merely players,
They have their exits and entrances,
And one man in his time plays many parts,
His acts being seven ages. At first the infant,
Mewling and puking in the nurse's arms.
Then, the whining schoolboy with his satchel
And shining morning face, creeping like snail
Unwillingly to school. And then the lover,
Sighing like furnace, with a woeful ballad
Made to his mistress' eyebrow. Then a soldier,
Full of strange oaths, and bearded like the pard,
Jealous in honour, sudden, and quick in quarrel,
Seeking the bubble reputation
Even in the cannon's mouth. And then the justice
In fair round belly, with good capon lin'd,
With eyes severe, and beard of formal cut,
Full of wise saws, and modern instances,
And so he plays his part. The sixth age shifts
Into the lean and slipper'd pantaloon,
With spectacles on nose, and pouch on side,
His youthful hose well sav'd, a world too wide,
For his shrunk shank, and his big manly voice,
Turning again towards childish treble, pipes
And whistles in his sound. Last scene of all,
That ends this strange eventful history,
Is second childishness and mere oblivion,
Sans teeth, sans eyes, sans taste, sans everything

My fellow Boomers, are of course in the Last scene of all, in second childhood and we need to plan for the end when we are sans teeth, sans eyes, sans taste, sans everything. One way to do this is to have an estate plan. When preparing a plan, always talk to a trusted advisor, or a legal expert, this step is too important to be done by yourself.

Estate planning is another word for putting one’s personal affairs in order. People do estate planning all along life’s journey, but especially when reaching the doorstep of retirement.
That is a time in life when thoughts naturally turn to leaving a legacy after one’s death.

The estate plan includes wills, powers of attorney, health care proxies, and other documents relating to end-of-life decisions. The objective is to spell out how people want to be cared for in their last days and also how they want their assets and other possessions distributed once they die. If they do not have an estate plan, the government will make decisions for them, but the outcome may not be what they or their loved ones would want.

Wills and Trusts
A good place to start is to draft a will. Dying without a will can lead to assets being distributed in unintended ways. As noted earlier, the government will step in and make decisions on behalf of the deceased in case the executor predeceases or is not available for some other reason. This may lead to family disputes, excessive legal costs, and delays in disposing of the estate.
Bookstores and Internet outlets offer do-it-yourself will kits. However, to ensure that the deceased’s wishes will be implemented as desired, it makes sense to have an attorney draw up a proper will that is witnessed and signed in a legal manner.

Part of the will-making process involves designating an executor of the estate and a backup for the executor. Many people appoint a trusted family member. This may work out if the appointed individual is capable of handling administrative/paperwork matters effectively and if the family functions well. If a qualified family member is not available, however, appointing an independent third party such as an attorney may be the best alternative.

In many instances, a will adequately covers the disposition of assets after death. But some retirees may need one or more trusts as well.

A trust is a legal document that names a person or entity—a trustee—who then manages and controls what happens to the assets. To set up a trust, it is best to consult with an experienced trust attorney who is up-to-date on the latest laws.

The basic difference between a will and a trust is that a will simply hands assets over to beneficiaries while a trust can be much more specific about managing and paying out the assets.

Trusts may also be used to:
• Establish care arrangements for minor grandchildren for whom the grandparents are legally responsible.

A living trust is a trust that a person sets up and funds while still alive.
A testamentary trust is a trust that a person—the testator—establishes in his or her will; the funding occurs at the time of the testator’s death.
• Provide oversight on spending by an adult child who has problems handling money.
• Specify bequests when the heirs may be from previous marriages.
The downside of using trusts is the time and expense involved and the need, in many instances, to hire a professional trustee. In addition, some people “overuse” trusts in the sense that they try to use the trust to “micro-manage from the grave.”