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Lauren's Blog

Lauren’s blog covers topics that impact your finances, your family, and your future. Is there a topic you’d like Lauren to tackle? We’d love your suggestions and feedback.

A little plain speak about investing

A little plain speak about investing

I’m continually amazed by the mixed messages that investors are hit with daily—mostly from the media, but the media is not the only culprit. At Klein Financial Advisors, American Century Investments is the manager for many of our fixed income funds (also known as bond funds). Of course, I pay close attention to their market commentary. In their most recent note, The Bull vs. Bear Battle in 2019, Rick Weiss, a skilled investment manager, writes that he’s “not predicting a recession this year,” but that he’s “taking note of some signals.” Yet, in the same section of their website, investment manager Cleo Chang presents a different view. “Let’s take the emotion out of [the volatility],” she writes, “because we often get too caught-up in the real-time emotion of market selloffs.”  She then goes on to give facts and figures to support her perspective.

Here’s my take: Weiss is ‘mansplaining’ investments, while Chang is refocusing the attention on investors’ reactions. If that’s not a muddled message, I don’t know what is! This is a pervasive problem I see in the investment world. When I sit back and listen to the chatter around the table at investment committee meetings, the language and attitude about the markets, the economy, the Fed, and all the rest begins to sound more like a conversation about the Superbowl than about something as significant as investing for growth and security. It’s a problem that inevitably impacts the thinking of individual investors as well.

This past summer, I met with Ed. He and his wife Ann had been clients of mine for years. After Ann’s death in June, Ed was forced to take an active role in the financial planning process—something Ann had managed mostly on her own. In Ed and my first meeting one on one, it became clear that our work together would have a vastly different tone than my work with Ann.

As a key executive at a large corporation, Ed has participated in many investment committee meetings, and he has often sat through the inevitable ‘dog and pony shows.’ If you’ve never witnessed one yourself, investment committee meetings have a pretty standard agenda. The portfolio manager presents how the market performed in the past quarter, what their analysts predict will happen in the future, the status of your portfolio, and, last but not least, the “brilliant moves” they are planning to make your portfolio better than ever. Once they’ve offered their brilliant solutions, they welcome the audience’s brilliant questions—which usually sound something like this: Who do you think is going to come out on top? What is the Fed’s next move? How will the trade war with China/Canada/Mexico affect tariffs? (I always find myself wondering: if we were talking about a sports team, would the questions be any different? Everyone wants to know who will win the next game, what ‘management’ will do to improve their team’s odds, and what outside factors might impact their success. Same game, different playing field.)

At the end of my meeting with Ed, I asked what he would like to have more of in future meetings. Ed’s reply: he wants more ‘Weiss’ and less ‘Chang.’ In other words, he wants to talk sports. He wants the full dog and pony show, including charts, graphs, and prognostications so I can prove I am a ‘brilliant’ investment manager.

But why? Why play that game when I could be spending my time doing the right things to help him protect his financial security? Do I have market perspective, a high conviction portfolio, a deep understanding of economics and investment theory, a reliable investing process, a research capability, and the skill to employ these things to deliver a successful investment experience? Yes, I do. So why do I need to suit up, put on my game face, and sit in the press box to opine on the markets?

As an advisor, I get it. For certain investors, I have to to pull out my script and get to ‘work.’ Harumph. The last thing I want to do is talk about investing (to Ed, to you, or to anyone!) in an overconfident and condescending manner. If I need to demonstrate my investing chops, I prefer to do it in honest language. I’d rather show the projection of the long-term plan and walk through how that plan is structured to protect and grow assets over time. I’d rather focus on what matters most.

Another interesting thing about investment committees is that, in my experience, they are mostly (almost solely) attended by men, and so the language spoken there is inherently male oriented. Why? Do men really know more about investments, or are these meetings simply designed for a male audience—another symptom of the ‘good ‘ol boys network’ that has dominated the business world for years?

The March 2019 cover of Rolling Stone magazine features a photo of U.S. Congresswomen Jahana Hayes, Alexandria Ocasio-Cortez, and Ilhan Omar, along with House Speaker Nancy Pelosi. The title: “Women Shaping the Future.” The focus is all about the new and boldly female voices that are helping to lead the country. Perhaps it’s about time we start accepting new voices in the investment world as well and, indeed, inject a little plain speak about investing using language that's more than just talk.

I remember a time when news reporters were only men. Back then, the audience (me included) had a cognitive dissonance when listening to a woman’s voice reading news. Times have changed on TV news. Times are changing in Congress. Maybe one day soon, it will change in investment review meetings, too. I plan to be here to help make it happen.

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Facing divorce? Take these 5 steps to find your inner power

Facing divorce? Take these 5 steps to find your inner power

Anyone who has divorced knows how long and difficult the process can be. From the decision to divorce, through the separation and judgment, and on to the new normal, the process is fraught with details, meetings, and compromises. Divorce rocks your world, and a late-in-life or gray divorce disrupts decades of expectations and plans. The key to a successful transition—in divorce and other shattering experiences—is finding your power.

Easier said than done? Perhaps. But it can be done. Many wise women have gone through the transition and set inspiring examples of transformation. Their examples show us the way to move through change with grace and strength, and with our eyes laser-focused on building a happier future.

My friend Janet is one example. When she was in her late 40s, her husband walked out and left her with two teenage boys, a handful of unexplained debt, and her own recent diagnosis of MS. It wasn’t easy shifting from her initial rage at the situation to acceptance and, eventually, a good life for herself. But she did it. How? Armed with friends, family, professional advisors, and a skill at making lists, she broke down what she needed to do into small, manageable steps. The smaller the step, the better. Here’s what helped her find her inner power and take the first baby steps towards her new life:

  1. She got help from her closest friends.
    First, she reached out to her inner circle of friends. Sharing your reality can help you face the truth, and even your shame. Luckily for Janet, she had more than a few women ready to support her, including old college friends, other parents she’d met through her kids’ activities, and a circle of friends from her book club. “I was floored by the support they offered—not only from day one,” remembers Janet, “but for what seemed to me like the endless months that followed.” I believe women who have friends that are more than ‘pals who want to socialize’ are particularly fortunate. Our true friends can become our fiercest defenders, our most honest critics, and the people we can count on for a kind word or a strong hug. No matter how young or old you are, or how large or small your challenges may be, look around and treasure your circle of friends.

  2. She hired a (great) attorney.
    And not just any attorney. She found a family law specialist with skill, experience, and strength. He helped her achieve a fair settlement, wrote up the judgment, and then went the extra mile (or two) to follow up with all the post-judgment details. That’s where the magic happens. For example, the marital settlement agreement stated that the house was to be sold and the proceeds used to equalize the financial settlement, but with her ex on the title, Janet needed his signature to move forward. The ex tried to nickel and dime her in the transfer of assets. Her attorney stepped in to enforce the judgment and facilitate the process. (I recently sent him a personal thank you for using his “super powers” to help Janet with the most finite details. He was amazing!) That level of dedication and support made a world of difference.

  3. She hired a financial advisor who specializes in divorce.
    Yes, that’s me. (Though I was thrilled to learn that her attorney had made certain she was working with a good advisor… and a good therapist. He definitely gets it!) Together, we went through our financial checklist to be sure she was on her feet financially, taking care to break down each step into manageable, bite-sized pieces. I’ve been through my own divorce, and I know just how disempowering it can be. I also know how amazing it feels on the other side! An advisor who specializes in divorce can help you navigate the unique challenges of this transition—emotionally and financially—to get you back on your feet and moving forward.

  4. She tackled her cash flow.
    Janet had been a stay-at-home mom for more than fifteen years, so to begin to earn an income was a major hurdle. We immediately looked at her cash flow to identify what bills needed to be paid in the first six months and the resources on hand to cover them. Next, we looked at where she might live after the house was sold and discussed rent versus buy, and how much rent or mortgage was prudent. Cash management is the foundation of all financial decisions—whether for a pack of lifesavers or for real estate purchases. Knowing what resources would be available long term helped her gain her confidence and feel less like the whims of her ex were dictating her life.

  5. She looked beyond today.
    After a divorce, life starts anew. With any plan or journey, the starting point is precisely where you are today. Janet had a Gavron order, which meant that in a few years she would have to begin to earn a living. At the moment, however, her primary source of income would be spousal support, so she needed to insure that income via a life insurance policy on her ex. Together we looked at these and other important pieces of her financial puzzle, including updating her estate plan, deciding what kind of mortgage would be best, and investing her marital assets, as well as analyzing her income, protection, debt, and more. The millennials call all this holistic planning ‘adulting.’ After a divorce, gray or otherwise, ‘adulting’ starts anew with baby steps. Janet’s MS diagnosis required some specialized planning, so we made some assumptions about her health and her future. Step-by-step, the myriad details necessary to reestablish her financial future were addressed, and life went on.

A good two years after Janet’s divorce, she told me that she could remember the moment she began to feel confident and in control again. In her words, “I’d found my inner power that had been missing for years, and the moment I did, I could tell my kids could sense it too. Because when I’d found my power, they suddenly felt safe. That was the biggest payoff of all.”

If you are facing divorce, I urge you to take the first steps toward finding your inner power today. If it feels impossible or overwhelming, break it into smaller, manageable actions. One tiny action is to ask for help. Or tinier yet, decide you need help. You can build your new normal… step by step by step.

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To help the next generation, equip them for a ‘hero’s journey’

To help the next generation, equip them for a ‘hero’s journey’

Have you ever heard of a ‘hero’s journey’? Years ago, I read Joseph Campbell’s classic The Hero with a Thousand Faces, which discusses a path of personal growthshared across time and cultures. In it, a hero leaves home, goes on an adventure, encounters a crisis, is taught by a mentor, wins a victory, and comes home transformed. As parents and grandparents, it’s an important reminder that simply offering a helping hand (or an open checkbook) to the next generation isn’t always the best path forward. Instead, it’s often wiser to give them the tools they need to take their own ‘hero’s journey’ and return with a lifetime of wisdom.

I’ve been in practice for many years. As a result, the majority of my clients are older. With age often comes a complex set of financial challenges—retirement income planning, tax-advantaged charitable giving, risk management, and health issues. At the same time, we see our children and grandchildren experiencing their own challenges. Just as their parents did a generation earlier, those in their 30s and 40s and beyond are building a foundation and pursuing careers. If married, they must manage financial realities with a partner (rarely an easy task!). They may have kids of their own to raise and educate. Perhaps they’re struggling to buy their first home. Yet their journey is not like their parents’ was. In many ways, it is wildly different.

For starters, they have more college debt than any previous generation (an average of about $33,000), and more credit card debt (an average of about $42,000[1]—far above the national average of $5,700). They’re also born entrepreneurs (a study by the American Small Business Development Center found that 59% of Millennials say that with the right idea and resources they would start a business within the next year). Many have grown up with the Internet at their fingertips and a smart phone in their hands. And perhaps because they felt the impact of the financial crisis as kids, they understand the importance of saving for the future; 45% of millennials are actively saving for emergencies, 41% are setting money aside for retirement, and 41% are actively saving to buy a home[2].

But knowing the importance of saving isn’t enough. To reach their financial goals, they need a mentor or guide. According to a recent study by Broadridge Financial Solutions, they’re not getting the advice they need. Sixty-nine percent of millennials reported that they are not working with a financial advisor. Among those who are managing to save and invest, most don’t know what they don’t know, putting their future at risk. For this generation, the time for a financial hero’s journey has come. As parents and grandparents, our role is not to step in and fix their problems, but to prepare them for the journey. It’s time to teach them to fish.

Give a man a fish, and you feed him for a day.
Teach a man to fish, and you feed him for a lifetime.

A few weeks ago, my client Gina put me in touch with her daughter and son-in-law who need help kick-starting a financial plan. In their early 30s, they’re late starters to financial planning. Like many people their age, they have a negative net worth and spend more than they earn. Rather than having someone their mother’s age (yes, that’s me!) work with them, I asked Brittany, our Associate Financial Planner, to step in. Brittany is their age, and she brings lots of financial planning skills to the table (she is a CFP® with degrees in finance, financial planning, and taxation). It was an even wiser decision than I could have guessed. When I handed her their file, her first question was this: “Do you mind if I recommend some Millennial strategies to them?”  My answer: “I don’t mind one bit!” (Honestly, I didn’t even know what she was talking about!)

She elaborated before I had to ask. To help them manage their debt, she wanted to set them up on a personal financial management app like Digit, which tracks spending and analyzes income and then uses that data to determine the right amount of money to save, even transferring the amount into savings automatically. To help them supplement their income, she wanted to recommend a tool like Gigwalk, an app that allows users to earn up to $100 a project by matching their skills with the needs of local businesses on a one-off basis. I was thrilled. Brittany had the right tools to offer—tools a younger couple would appreciate and, most importantly, use to their advantage. By showing them how to catch up financially, set long-term goals, and build a wiser path forward, she is teaching them how to fish. She is the ideal mentor to guide them through their ‘hero’s journey.’

When you want to help your next generation succeed financially, resist offering your gems of parental wisdom (no matter how great they may be!). Don’t offer your assets to fund a ‘solution’ (for more on this tricky topic, read my blog post MoneyRules). Instead, allow them to take their hero’s journey of discovery and arm them with tools and resources to help them pave their own path forward—even when it hurts to watch them suffer.

One place to start is William J. Bernstein’s great little handbook If You Can. (It’s free on Kindle, or This email address is being protected from spambots. You need JavaScript enabled to view it. , and we’ll happily send you a copy to share!). It’s a quick and easy read that offers a simple approach to tackling some of the biggest hurdles to financial success, including cutting back on unnecessary spending, sticking to long-term saving and investing plans, and recognizing bad financial advice before it’s too late. Of course, our team is always here to help as well. The key to success is to give the next generation what they need today to create a strong, confident financial future. Whether that resource is a peer mentor or a little booklet that is packed with great advice, make it your mission to “teach them to fish” so they won’t be, as Bernstein says, “living under a bridge” at our age. 


[1]According to Northwestern Mutual’s 2018 Planning & Progress Study

[2]According to data from Ally Financial, Business Insider, January 22, 2019


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To reach your goals, it’s time to think (really, really) big!

To reach your goals, it’s time to think (really, really) big!

It’s mid-January—that time of year when, at least for most of us, New Year’s resolutions begin to fall by the wayside. The surge of gym-goers and dieters has faded, and we’re back to the same old routine. My question today is this: are you taking steps to get a clearer picture of your financial life? If not, then now is a perfect time to begin changing how you think about your money.

Two years ago, in January 2017, I introduced Jonathan Clements’s book How to Think About Money. Since then, I’ve shared three of the five steps in his approach to what has been called “financial feng shui.” Step Number One: Buy More Happiness. Step Number Two: Bet on a Long Life. Step Number Three: Rewire Your Brain. At long last, it’s time for Step Number Four: Think (Really, Really) Big. As we kick off a new year, there couldn’t be a better time to be sure you’re not only thinking big, but thinking big in ways that can help you build a stronger, more confident financial life that lasts not just the next 12 months, but a lifetime.

Clements suggests (and I have witnessed this time and time again, so I wholeheartedly agree!) that the reason most people struggle to think big about their finances is that we’re programmed to view our financial lives as a series of disconnected pieces. Insurance. Property. Debt. Investments. Cash. Because we rarely talk about how all of these pieces fit together, we end up making decisions that make no financial sense at all. We over-insure our cars but under-insure our lives. We carry credit card debt (an average of more than $8,000, according to a recent study by WalletHub) while “saving” money in low-interest savings accounts. We struggle to save for retirement but don’t hesitate to claim Social Security as early as possible—sacrificing a guaranteed opportunity to nearly double the monthly benefit in retirement. (Read more in my post, Social Security and Women: Tackling the Challenges.) We buy lottery tickets with the hope of getting rich quick but balk at investing in a “risky” stock market (which has returned a compound annual rate of return of 11% since 1980, despite multiple downturns and the 2008 financial crisis).

Of course, “we” doesn’t mean “you” or “I.” Or does it? Chances are that at least one or two of these examples resonates with you. If it does, it’s time to start thinking really, really big about your money.

Where should you start? With your paycheck. Your lifetime earnings is the primary source of every dollar you spend, save, or invest from your first job through your first day of retirement. According to Clements, over a 40-year career, our “human capital” is the source of more than $2 million (in today’s dollars). That’s a big number! And the younger you are today, the higher that number will be. To think big, begin by considering and carefully planning what you want to do with those millions. It can suddenly feel a whole lot like winning the lottery after all!

While Clements offers lots of excellent guidance (I highly recommend reading his book cover to cover), here are the most important takeaways from his Step Number Four:

  1. Consider the tradeoffs.
    Even when retirement is in the distant future, funding retirement should be everyone’s first goal. It’s daunting, it’s far off, and it’s not fun. Plus, it absolutely must be done using current income. But during our working years, other immediate goals often take priority. Buying a home. Educating your kids. Keeping up with the Joneses (and the Jones’s kids). Suddenly that 50th birthday rolls around, you’re nowhere near your goals, and time is no longer on your side.

    To gain perspective, start by taking a look at your net worth. (Check out this net worth primer from Yahoo! Finance.) Add up your assets, subtract your liabilities, and you have your total net worth. Next, look at your short- and long-term goals to determine how much of your $2 million paycheck should go to each one. In most cases, retirement and housing will top the list. (Notice that retirement is #1, always!)

  2. Remember that all debt is debt!
    Almost every day someone asks me this: “If I can get 0% interest, isn’t it smart to buy the [fill in the blank]? It’s free money!” No. It isn’t. No. No. No. To stress the point, all I need to do is refer to net worth. A 0% loan may feel free, but that debt spent on consumption reduces your net worth. If the purchase is part of your long-term plan, it may be fine to take on new debt and “smooth consumption” by spreading out payments over time. If it doesn’t fit into your plan, it’s simply debt, and it is anything but free. Keep debt service within reasonable boundaries. Banks use 36% when qualifying borrowers for mortgages, and Clements recommends student loan payments shouldn’t exceed 10% of your expected income after graduation.

  3. Manage spending.
    At every age, one of the biggest financial levers at your disposal is the ability to vary your spending. If you’re retired and concerned about the recent market downturn, rather than toying with your investment strategy, look at how you can reduce your spending. Avoiding debt and living within your means allows for more discretionary spending. Keep your eyes on your biggest goals, and manage your spending to support the things that matter.

  4. Permit yourself to rethink retirement.
    It may be the case that funding all of your goals requires increasing your lifetime paycheck by working longer than planned. Working past the 65-year mark is more common today than ever, and that’s not necessarily a bad thing. The “greatest generation” may have retired with pensions at 65, but they also expected to live for only another 5 or 10 years. I imagine spending my next 20 or 30 years being as relevant and engaged as I am today. Read more on how rethinking retirement can work for you in my post, Is “retirement” the only answer? Take time to rethink the possibilities.

The New Year isn’t the only reason to focus on thinking big. Today’s stock market has newscasters and financial pundits making lots of noise about how to avoid losses and make the best moves in the face of an economic downturn. Remember that the market is cyclical. There will be ups and, yes, there will be downs. By planning based on your paycheck and goals, market volatility will not affect your financial big picture. Commit to thinking (really, really) big and start building a fantastic financial future today. 

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What will you be celebrating this time next year? It’s all about your focus

What will you be celebrating this time next year? It’s all about your focus

“Whatever you pay attention to will grow more important in your life.” It’s a Deepak Chopra quote that is apropos this time of year. It applies to everything from houseplants (which I definitely do not give the attention they need!), to relationships, to money. As you look back on 2018, what did you pay attention to? What grew more important in your life—and what took a back seat? Is that balance where you want it to be as you move into the year ahead?

I was chatting with a friend recently and, as I sometimes do, I said something that was a bit self-deprecating. I was mad at myself for not doing something “right”—at least in my own mind. My friend just smiled at me and said, “Don’t worry about it. You could have done it better if you’d chosen to. You just weren’t paying attention.” Her wisdom struck me to the core! How right she was. Had I been focused, I certainly would not have messed up! It was an insightful lesson for life and for things both large and small. It got me thinking…

What aspects of my life do I truly want to pay attention to? Am I focused on them the way I should be so that they will, as Deepak Chopra says, grow more important in my life?

I made my list. I wrote down the relationships I want to foster in the coming year, the physical goals I want to accomplish (my blog post Grandparenting…and striving to age in happiness and health offers insight into that line item!), the business goals I want to achieve, and yes, my financial goals too. I already feel empowered and charged up for 2019, and I have a pretty good picture of what I will be celebrating on New Year's Eve 2020.

If you’re inspired to make your list (and, oh, I hope you are!), be sure your financial goals make the cut—and be mindful of choosing the things that matter most.

I grew up with depression-era parents. As a result, my father was hyper-focused on what was happening with his investments. Every morning, his first task of the day was to open the paper, review the stock chart, and write down yesterday’s closing prices of his holdings so he could track what was up and what was down. Based on that information, he decided what to buy and what to sell, and he was always on edge about what might happen tomorrow.

In today’s world, checking the ‘stock market’ is easier and faster—and that’s not necessarily a good thing. Just this Monday, on December 24, stock indexes tumbled into bear market territory. As I write today, the day after markets closed for the Christmas holiday, it looks like we’re in a slight rebound. It can feel almost irresistable to pay attention to the daily ups and downs, especially when the market is dropping. But does that movement have any real impact on your financial security? If you have a solid financial and investment plan in place, it shouldn’t. Your investment plan is built to sustain ‘normal’ market cycles, including the impending bear market. Unlike my father whose only ‘plan’ was his self-constructed portfolio, if your plan includes a diversified mix of asset types and classes based on your goals, your time horizon, and your financial foundation (which I trust it does!), there’s no need to pay attention to temporary shifts in the market. (I have one client who tells me that when the market is down, she doesn’t even open her quarterly statements. Smart woman!)

Instead, try paying attention to the things that really can impact your financial security. If you’re in debt, create a plan to wipe it out by this time next year and create financial freedom. (Read my blog post Declare your financial freedom to learn how.) If you’ve been a bit Scrooge-like in the past, explore ways to embrace your generosity. If your spending feels out of control, examine what is really enough for you and change your habits to fit your needs. If you lack financial confidence, take the reins by creating a comprehensive financial plan and a solid, manageable budget (as always, we’re here to help!). If you have a singular goal, adopt a laser focus and tackle it—now.

A few years ago, I did just that. While mathematically, the return in the market beats paying down a low-interest mortgage, I knew that I would feel more secure at an (ahem) certain age if I didn’t have a house payment. So I laser-focused my attention on paying off my mortgage, and a few months ago I finally paid off my home, free and clear. At long last, I am really a homeowner, and it feels just as good I as I imagined it would! (As a reward, I treated myself to a business class ticket on my flight to visit my family for the holidays.)

Of course, everyone’s values and goals are different. It’s all about focusing on what will make you happier and more confident in the future. By paying close attention to that, whatever it may be, you can build a better, stronger path toward your goals—and have something truly meaningful to celebrate next New Year’s Eve. Cheers to that, and cheers to a happy, healthy, and financially confident 2019!

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September is the perfect time for a financial la rentrée!

September is the perfect time for a financial la rentrée!

I’ve been a Francophile for as long as I can remember. I’ve studied the French language (and used to be pretty darned good!). As I teenager, I spent two full summers as a student in the South of France in Aix-en-Provence and Grenoble. I fell in love with French culture, food, literature and, yes, even some cute French boys! When late August rolls around, I’m sure I’m not alone in wanting to emulate the French who, like the rest of Europe, almost completely shut down for a much needed (and completely un-American) two-week-long vacation. But there’s something new about France that I only recently discovered: the French tradition of la rentrée.

As you might expect, la rentrée does have some association with back-to-school season, but it’s about so much more than school children. La rentrée is a time when everyone—school children, yes, but also authors, politicians, and even newscasters—returns from the summer break filled with a nationwide sense of optimism for a fresh beginning. We may be thousands of miles away from Paris, but in the spirit of all things French, I’m on a mission to create our own financial la rentrée right here at home.

The best thing about la rentrée is that it doesn’t feel like a chore. There’s no word to describe it in English, but the closest I can come to putting it into my own words is that while there may be work to be done, each task is approached with hope and happiness and positive energy. Here are five simple steps to kick off your own financial la rentrée this month:

  1. Review your tax strategy.
    With autumn comes the final stretch of the tax year, which means that it’s your last chance to make changes that can have a real impact on your tax bill come April 15. While tax planning is important every year, the new Tax Law makes careful planning particularly important in 2018. As I wrote in my recent tax planning blog post, the current tax tables may understate your withholding, so now is the time to compare your actual withholding amounts with your projected tax bill, and to seek out other opportunities to optimize your taxes.

  2. Check your credit report.
    When is the last time you checked your credit report? Monitoring your account balances and financial transactions is very easy and it’s the best way to prevent identity theft and fraudulent use of your credit history. I recommend CreditKarma which offers unlimited and free access to your credit report, as well as a free credit monitoring service. I also like the idea of placing a credit freeze on your account which requires institutions to contact you before approving any new request for credit. Learn more about protecting your financial privacy in my blog post Getting personal about privacy.

  3. Weigh your cash balances.
    Cash planning is the foundation for any solid financial plan. If you don’t already have a sufficient “freedom fund” of cash, read why it matters and how to get started in my post There’s no such thing as an unexpected expense. If you do have your fund in place, take a look at how your balance has changed in the past year. If your balance is increasing significantly, you’re likely living below your means and may need to review your financial plan to be sure you are making your money work effectively. If your balance is decreasing, take a close look at why. If you’re living beyond your means or not saving appropriately for vacations, household purchases, and other “expected expenses,” an adjustment is in order.

  4. Review your long-term goals.
    Are your financial goals SMART: Specific, Measurable, Achievable, Relevant, and Timely? Are they in writing? As I wrote in my last blog post Am I on the right path?, whether you are investing your time, your money, or both, you need a plan. Reviewing that plan regularly to be sure you’re on track toward your vision of the future is a must. Sit down and spend some dedicated time to explore your goals today—alone or with your partner if you have one—and create a SMART plan to get there on time and on target.

  5. Get help with the details.
    When I was in my 20s, I was able to keep myself motivated and physically fit all on my own. These days, not so much. That’s precisely why I hired a personal trainer. Nancy S. knows how to get me in shape and how to keep me motivated throughout the process. Most importantly, she points out things I didn’t know about how to get and stay fit and healthy. When it comes to your finances personnelles, a Certified Financial Planner (CFP®) can be your dream coach. A CFP is trained to help you identify SMART goals and create a realistic plan to get you where you want to be when you want to be there. No matter where you are in your financial life, hiring a fiduciary advisor may be the best la rentrée activity there is.

La rentrée is all about optimism and creating a fresh start.My personal la rentrée this year has been focused on rediscovering my love for French. I’ve been brushing up on my vocabulary and grammar using the Duolingo app (if you want to discover or rediscover any language, I highly recommend it!), I’ve been nose-down in Martin Walker’s Périgord-based detective series Bruno: Chief of Police, and I just discovered a French-language podcast called Coffee Break French that I can’t wait to start. I’m on my way to better, more proficient French and having fun along the way. I hope you’ll join me by embarking on your own la rentrée to improve your finances. What a wonderful way to slip into autumn. And if you do need help to make it happen, you know where to find me. À bientôt!

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Am I on the right path? Rosh Hashanah is the perfect time to be sure you’re on track

Am I on the right path?
Rosh Hashanah is the perfect time to be sure you’re on track

I’ve been listening to the inspiring Rabbi Lord Jonathan Sacks recently. His blog and his podcasts are inspiring (it’s no surprise coming from a man who served as Chief Rabbi of the United Hebrew Congregations of the Commonwealth for 22 years, was awarded the 2016 Templeton Prize, has taught at Yeshiva University, King’s College London, and New York University, and is the author of more than 30 books). His latest blog post, Investing Time, resonated with me. As I sit here today after the long Labor Day weekend, I ask myself, “Am I on the right path?” It’s a weighty question. Perhaps that’s why, so often, we tend to avoid it altogether—including from a financial perspective.

Sacks's blog post is rooted in the festivals of Rosh Hashanah and Yom Kippur, the days when Jews stop for a period of self-reflection. As Sacks says, “Time is short…without a wakeup call, we can sleepwalk through life, wasting time on things that are urgent but not important, or that promise happiness but fail to deliver it.” It’s a message that keeps coming back to me, both in my own life and in the lives of so many of my clients.

Like Dominic and Paula. When they retired two years ago, they found themselves in an enviable financial position. They had sizable retirement accounts after saving and investing for decades. They had wisely waited until age 70 to claim Social Security to maximize their benefits. (For more on the benefits of delaying your claim, read my blog post How long do you plan to live? And are you planning for it?) Plus, they each have something that has become increasingly rare: a guaranteed pension. They were enjoying their journey and had enough income to live a very (very!) good life.

What they didn’t have was a plan.

For the past two years, I’ve watched Dominic and Paula take oodles of money out of savings—far more than a safe 4% withdrawal. Dominic’s gut tells him everything will be just fine, so they have been living the high life. Though Paula stresses about how they can sustain their lifestyle, it’s easier to go with the flow and pretend money is not a concern. They say the current spending is temporary, but without a plan, they have no way to know when they need to change direction.

Sheryl is the opposite extreme. When her husband died last January, she took control of her finances—something she’d never had to do. Jack had handled everything himself, so she had no visibility into how much they owned or owed. Sheryl came to me for help right away, but changing direction has proved to be a challenge. We put together a carefully constructed plan, yet her emotions make her unable to see or believe the numbers. Because she feels off balance and out of control, her finances feel that way too. The result: she continues to work and continues to worry about money, even though she is far under-spending her savings. My job now is to help her stop and take an honest look at where she is today so she can trust that her path—and her plan—is on track.

Sacks says, “Rosh Hashanah and Yom Kippur are festivals that ask us how we have lived thus far. Have we drifted? Have we been traveling to the wrong destination? Does the way we live give us a sense of purpose, meaning, and fulfillment?” How interesting that these are the same questions we ask when building a financial plan. What have you done so far to reach your goals? Moreover, what can we do to be sure you are traveling in the direction of your goals and creating the financial capacity to live your life with a sense of purpose, meaning, and fulfillment?

What I find beautiful about this time of year is that it offers us hope. Our time on earth is short and “unlike money, time lost can never be regained.” When we invest our time wisely following Rabbi Sacks’s Ten Life-Changing Principles, we focus on the things that truly matter. And whether you are investing your time, your money, or both, you need a plan. Which once again brings me back to the words of the wise Rabbi: “Without it, we can sleepwalk through life, wasting time on things that are urgent but not important, or that promise happiness but fail to deliver it.”

No matter your faith or beliefs, may the new year bring health, happiness, joy, and peace.
L’ Shana Tova U’Metuka.

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From smart homes to smart finances, it’s time to learn some new tricks!

From smart homes to smart finances, it’s time to learn some new tricks!

My recent trip to Amsterdam was great in many ways. I explored a new culture with an old friend and had time to reflect on how to live a great life here at home. My first step: to (finally!) get a ‘smart’ home. If you saw this blog post I wrote back in May, you know that I’ve been living in technology hell for quite a while. My tools were outdated and, quite honestly, I didn’t know what I didn’t know. I had a problem I knew I couldn’t solve alone.

Thankfully Jason, my tech guru, was just a phone call away. After I landed in Southern California, I scheduled time for him to come to my house and do some serious diagnostics. What he found was a collection of technology—some great, others not so great—that wasn’t even being put to use. I had an Alexa that I barely used. I had decade-old TVs that weren’t connected to the Internet. I had a fancy tuner that, while it was once all I needed for great sound quality, couldn’t do the job anymore. As technology had advanced, my trusted tuner had quickly become a dinosaur. While I listened to Jason explaining all of the things we could do to make my home smarter, I realized it was time for this old dog (me!) to learn some new tricks.

I gave Jason the green light to transform my house, and we had a blast doing it together. He installed three new Amazon Fire TVs that I control with a Firestick and an Alexa voice remote. I have a Nest thermostat to control the temperature in every room of my house and Lutron switches to control my lights. Jason used some of my old beloved equipment—my favorite speakers—to support the new technology, so now all I have to do is tell Alexa what to play, and I have better sound than ever. I’m finally on my way to achieving my dream of true technology nirvana.

Being me, I have to compare my own technology planning to my world of financial planning. Just as I resisted solving my technology problems, many people resist doing what’s necessary to transform their financial lives. Why? I hear the same reasons over and over again from our clients who finally took the plunge after years or even decades of procrastination:

"I was embarrassed to show someone else the details of my money.”

"I knew I had a problem, but I didn’t know the cause. I didn’t know what I didn’t know!”

"My brother told me I should do it myself.”

"I thought it was just about investing.”

"I had no idea what to expect from a financial advisor.”

"I didn’t know how to find a financial advisor I could trust.”

"I didn’t realize how much professional help could change my financial life.”

Every reason is valid. Luckily, they can all be solved with just a little bit of knowledge.

If you’re embarrassed about sharing your finances, know that financial advisors have seen it all! Our mission is to help you gain greater confidence and reach your goals—not chastise you for past mistakes. It’s okay to ask for help when you know you have a problem. Even better, ask for help when you see a financial opportunity… or expect there may be one lurking in the unknown. Yes, an advisor can help with that, too.

When working with a financial advisor, every firm’s approach is different. At Klein Financial Advisors, we use a consultative process that focuses on your own goals, priorities, and values, and gives you a clear roadmap to get you from where you are today to where you want to be tomorrow. Don’t be intimidated by the process. A good advisor will hold your hand every step of the way. Just know that we are here to do one thing: help.

If you don’t know how to find an advisor you can trust, I recommend reading the Pursuit of a Financial Advisor Field Guide from NAPFA, the National Association of Personal Financial Advisors. From decoding advisor credentials and walking through compensation models, to outlining the elements of financial planning and understanding the importance of the Fiduciary Standard, the Field Guide is packed with the information you need to select the right advisor for you.

How much can working with a professional help change your financial life? Just ask anyone who has taken the plunge. The change is often dramatic—sometimes in riches, and almost always in the newfound financial confidence that goes hand in hand with having a personalized, long-term plan.

Financial planning is vastly more important than creating a ‘smart home,’ but it can be just as fun and satisfying. Like any new venture, there will also be benefits you could never anticipate. My new smart home came with a bonus: a new friendship. Jason is a quintessential millennial, which makes him quite a contrast to my usual circle of friends. When Jason saw my scuba gear in the garage, he told me diving was something he’s always wanted to do, but never acted on. I shared the name and number of a great scuba coach in the area. In the 12+ hours we were planning, shopping, and working together, we shared great restaurants nearby, pondered the challenges of living alone, and even ‘tested’ out one of my new TVs by watching videos of dogs riding on Roombas (yes, that’s a thing, and yes, we laughed our heads off!). The experience made me realize how much I miss hanging out with younger people and how enriching those relationships can be.

Perhaps my next personal challenge will be to foster intergenerational relationships. (You can read more about how others are making it happen in this article in the Harvard Business Review.) If you’re not already working with a financial advisor, I hope you make that your own next mission. Trust me; an old dog really can learn new tricks. And the benefits are well worth the effort.

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From technology hell to financial nirvana, connecting the dots is the key

From technology hell to financial nirvana, connecting the dots is the key

I confess, I’ve been in technology hell for months. It’s not the first time. As a woman of a certain age, I wasn’t born into a tech-driven world like the Millennials. I don’t speak this language well— at best, I can converse with a thick accent, and I’m by no means fluent. Yes, I own an Alexa (Amazon’s allegedly life-changing device that can, according to my son Adam and my tech guy Jason, do just about anything I could ask). To date I’ve asked “her” to do two things for me: tell me the weather forecast, and set a timer for 10 minutes.I’m clearly missing the boat! But I just don’t get it.

I suppose that’s why I listened with a bit of guilty satisfaction when my friend Lily recently told me her saga of buying and installing a fancy new video doorbell and her own hell trying to get it installed. Long story short: it took 4 or 5 different people to help before Lily was able to see the person on the other side of her door. At least I know I’m not alone in my suffering and frustration! It does help, but it also has me wishing there were professional “technology planners” out there—someone to help me, Lily, and everyone else who doesn’t speak the language of technology get all of these potentially great tools to work together so we can, finally, use them to our advantage. That would be pure technology nirvana!

It makes me happy to realize that the role we play in most of our clients’ lives is to help connect the dots of their financial lives to create at least some level of financial nirvana. If you’re not yet there (or at least on your way), asking yourself these three questions may nudge you in the right direction:

  • Are you holding on to solutions that were great 5 years ago, but that aren’t adding value today?
    I have a box of “old technology” at home that I can’t get myself to throw away (that 5- pound laptop was wonderful in its day!), but deep down I know there’s no reason to keep it. In just a few years, everything in technology has changed. The same is often true in your financial life. Transitions—marriage, divorce, job change, retirement, losing a spouse, relocating—all of these things and more can have a dramatic impact on how you should be saving, spending, and investing. New financial products may be available today that didn’t exist five years ago. Are you using a Health Savings Account (HSA) to save for future medical expenses tax-free? Is your investment strategy aligned with your current goals and time horizon? Has your tax strategy changed to address the new tax law? Now is the time to let go of the old and bring in the new to connect all the right dots.

  • Do you understand the language of money?
    When we moved our office systems to the cloud, I wasn’t even sure what “cloud” meant. All I really knew was that it could protect client data and keep our software up to date with the latest versions. I drove our technology provider crazy. I asked a lot of questions so I could communicate in their language: the language of technology. Like technology, money has its own specialized vocabulary. Do you speak the language? Do you know the difference between good debt and bad debt? Do you understand compounding? Do you know what a CD is and its role in your portfolio? (If not, start by reading my blog When did it become ok to be financially illiterate?) The more you understand the language of money, the easier it will be to connect every aspect of your financial life.
  • Are you reaping the rewards of a fully connected financial life?
    Alexa can be used to manage your music, your thermostat, the lights in your house, and more—but only if the device is properly connected to everything else (or so they tell me!). Connecting all the pieces of your financial life is just as vital. Your investments, taxes, savings, budget, estate plan, and insurance are all interrelated. A “connected” strategy is the key to growing and protecting your assets over the long term. A great first step is to start connecting your financial life using an online app like eMoney. It’s a great tool that gives you a birds-eye-view of what you own and what you owe so you can both manage your finances and collaborate even better with your advisor.

I’m a firm believer in the importance of “knowing what I don’t know” and doing everything I can to learn more. To get there, I get help wherever I can find it. That includes hiring a professional to help me find a way out of my current technology hell. We may have moved everything to the cloud, but there are still some disconnects. Suddenly my scanner button isn’t working, two of my apps won’t open, and Skype thinks I don’t have a camera on my computer. Ugh! But I have a tech team coming to the office today, and I’m counting on them to fix what’s broken and to help me understand how to keep everything connected moving forward. We’ll be one step closer to technology nirvana.

I urge you to do the same when it comes to your finances. Ask questions. Get answers. And get the help you need to create a fully connected financial life that takes you one step closer to your financial nirvana—however you define it. That’s one thing I’m pretty certain Alexa can’t do for you… yet!


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When Breath Becomes Air: Building a values-based life

When Breath Becomes Air: Building a values-based life

I recently finished reading Paul Kalanithi’s posthumous memoir, When Breath Becomes AirIn it, he shares his personal journey of how, in an instant, he went from life as a highly acclaimed neurosurgeon to life as a terminally ill cancer patient. Perhaps one of the biggest lessons I learned from his tragic but beautifully shared experience is this: every decision we make should be based on our values. Not on statistics. Not on someone else’s expectations. And sometimes not even on our own expectations of ourselves.

As an avid reader, I’m sheepish to admit that I was a little late to the party on this one—the book was released in January 2016, became an instant bestseller, and was a finalist for the Pulitzer Prize (what was I waiting for?!).Now that I’ve finally read it, I find myself thinking about Kalanithi’s story constantly, and I am trying more than ever to view my life through the lens of my own values. It’s an idea that certainly makes me think—and rethink—about precisely what my values are and how they are reflected in my decisions every day.

Monday offered a perfect example. After decades of planning and working toward my goal, I was able to give myself a long-wished-for (and somewhat belated) birthday gift: I paid off my mortgage. Owning my home outright was a goal I’d had ever since my late husband, Ed, and I purchased it decades ago. Why? Because being able to stand on my own two feet was—and is—a deep-held personal value. Like many women, I think I’ve always had a hidden fear of becoming a bag lady. It’s a fear that’s so common there’s even a term for it: “bag lady syndrome.” No matter how irrational that scenario may be, owning my home gives me a much-needed sense of security. It’s what drove me to pay off my mortgage even when life threw me a long series of curveballs. Ed’s stroke. Getting laid off from my “stable” corporate job. Breast cancer. Widowhood. Life happens! And yet, because my goal was driven by my values, I kept my eyes on the ball. When I received a small inheritance from my uncle, I put it all toward the mortgage. Every month I paid a little bit extra to stay on track. Finally, my diligence paid off. The result: it feels amazing! I did it! I own my home, I won’t be a bag lady after all, and I did it all because I was clear about what I valued.

Being aware of that value helped me defend my decision to pay off my mortgage to colleagues who reacted with surprise. “Why would you do that? Interest rates are so low! Couldn’t you have made more by investing in the market?” “You have so much equity in your house! Why worry about paying it off?” While it’s true that paying off a mortgage may not always give the maximum return on investment, because it mattered to me, it was the optimal solution. That’s true whether you’re deciding to pay off your mortgage, leave a legacy for your kids, pay for college for your grandchildren, or start a new business. Yes, you want to be smart about your decisions, but knowing that your choices are values-based is the key to success.

Of course, as we grow and evolve, our values will change, which means aligning decisions with values is a dynamic process. Here’s how Kalanithi explains it:

“The tricky part of illness is that, as you go through it, your values are constantly changing. You try to figure out what matters to you, and then you keep figuring it out. It felt like someone had taken away my credit card and I was having to learn how to budget…. You may decide you want to spend your time working as a neurosurgeon, but two months later, you may feel differently. Death may be a one-time event, but living with terminal illness is a process.”

Life itself is dynamic. Even without a terminal diagnosis, our values are always changing. We are evolving. While our core values are likely to remain constant, we need to stay self-aware and continue to make decisions based on what matters most—today.

My core value of being able to stand on my own drove my decision to pay off my mortgage. It also steered me toward my career as an advisor. Helping others achieve that sense of security is my mission. Kalanithi writes, “The physician's duty is not to stave off death or return patients to their old lives, but to take into our arms a patient and family whose lives have disintegrated and work until they can stand back up and face—and make sense of—their own existence.” While my duty as an advisor may not be as weighty as a physician’s, I strive to do something very similar: to help each client to stand back up, identify what matters most today, and plan for a better tomorrow.

No matter where you are in life, I hope you, too, can take time to explore your core values and be sure you’re building a plan based on that strong foundation. If you do, your path is bound to be the right one for you—even when life throws those inevitable curveballs.

Want to read more on how to move forward when life happens? Read my blog Life happens. Plan today to make every transition easier.

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5 reasons to consider a Reverse Mortgage (even before you retire!)

5 reasons to consider a Reverse Mortgage (even before you retire!)

When you live in Southern California, the equity in your home is often one of the most valuable assets in your portfolio. Not only are property values above the national average, but also home prices have tended to rise quickly (just talk to anyone who bought a home even five years ago!). Yet, few people see home equity as a “spendable” asset. But if you’re looking for a reliable source of cash today or 10 years hence, a Reverse Mortgage can be an ideal tool to turn your home equity into a tax-efficient source of income—even if you still owe money on your home.

Surprised? So was Lucy when we talked last month. I had already done the research and knew that she could qualify for a Reverse Mortgage. It seemed like the perfect way to access the cash she needed to take care of a half dozen home repairs she had been putting off since her husband died two years ago. As a retired widow, paying the $2,000 mortgage was cutting deeply into her resources, and she felt too cash constrained to set herself up for more bills to pay.

I suggested a Reverse Mortgage because I knew it could give Lucy the financial comfort she needed to maintain her home—whether she decided to stay put for the next 15 years or sell—and that it would also allow her some much-needed financial freedom. When I mentioned the idea, her eyes got wide. She couldn’t believe her ears. “Before Jack died, he told me a Reverse Mortgage was the last thing he would do,” she told me. “He said they were a scam.” She went on to say that using a Reverse Mortgage wasn’t something she even wanted to consider. “It’s too much of a gamble. I don’t want to risk losing my home.”

I can’t blame Lucy (or Jack, for that matter) for being wary. In the early days of Reverse Mortgages, they earned a bad reputation for being a shady product used by slick salesmen to take advantage of desperate, cash-strapped seniors. Despite late-night television ads that make them sound too good to be true, Reverse Mortgages really can be an important part of your overall retirement income strategy. In fact, while a Reverse Mortgage isn’t right for everyone, when used correctly and strategically, it may be just the solutionyou need to manage cash flow and protect your portfolio in retirement. Here are 5 reasons why it makes sense to consider a Reverse Mortgage today:

  1. A Reverse Mortgage is similar to a Home Equity Line of Credit—but with no monthly payments.
    A Reverse Mortgage is similar to a HELOC in that it provides a line of credit based on your home equity. Like a HELOC, that line of credit can be taken as a lump sum, in scheduled monthly payments, or reserved for future draws. However, while a HELOC requires you to pay back the loan with monthly payments over a set period, a Reverse Mortgage requires no monthly payments to the bank. Instead, the loan balance and interest accrues over time. Payment to the bank can be delayed until12 months after you leave your home.

  2. You can use a Reverse Mortgage to pay off your current mortgage.
    For many retirees in our “high rent” part of Southern California, paying even a reasonable mortgage on a fixed income can be a struggle. What’s great about a Reverse Mortgage is that because it’s based on the actual value of your home, you can use the money to pay off your current loan amount, potentially increasing your cash flow by thousands of dollars each month. You can also use a Reverse Mortgage to finance the purchase of a new home.

  3. It’s relatively easy to qualify for a Reverse Mortgage.
    Applying for a traditional mortgage or HELOC can be a challenge, especially if your income is limited. To qualify for a Reverse Mortgage, you must be at least 62, your home must be your principal residence, and you must have sufficient income to pay property taxes, homeowners insurance, and basic home maintenance. That’s it. Since you aren’t responsible for making monthly loan payments, even a less-than-perfect credit score or limited assets should not impact your eligibility.

  4. A Reverse Mortgage can help protect your portfolio.
    If the bulk of your retirement savings is held in an IRA, withdrawing assets before age 70½ will result in a sizeable tax burden. Using a Reverse Mortgage is a highly tax-efficient way to supplement your income and manage your cash flow. Because the money is a line of credit based on the value of your home, there are no taxes to pay. It can also give you the funds you need to delay Social Security until age 70, allowing you to take advantage of the Delayed Retirement Credit that increases your Social Security payment by 8% for each year you delay and nearly doubling your monthly Social Security income. (For more on this, see my blog Social Security & Women: Tackling the Challenges.) Plus, an available line of credit can prevent you from being forced to sell stocks from your portfolio should you need additional cash during a down market.

  5. Reverse Mortgages are regulated to protect the borrower.
    Lucy’s fear of losing her home is not uncommon. With a traditional mortgage, if the loan exceeds the value of your home, the bank can foreclose on your property and force you out of your home. Luckily, Reverse Mortgages are designed and regulated to protect seniors from this very scenario. A Reverse Mortgage is a “non-recourse loan,” which means that if the value of your home drops dramatically (think 2008!) you will never owe the bank more than the value of the loan. That alone can be a great source of financial security in your later years.

Of course, no line of credit is completely free of costs. Like traditional mortgages and HELOCs, Reverse Mortgages charge fees such as interest payments, origination fees, and closing costs. Reverse Mortgages also require a government-mandated, upfront mortgage insurance premium equal to 2% of the value of your home, plus 0.5% of the loan balance. But because these costs are rolled up into the loan amount, you pay no out-of-pocket expenses.

For most borrowers, that 2% is a small price to pay for the flexibility of turning their home equity into a spendable cash resource. And if you use the Reverse Mortgage to pay off your existing mortgage, you may even offset this cost completely. Do keep in mind that a Reverse Mortgage is best if you plan to stay in your home for the next five or more years. Otherwise, the upfront costs may outweigh the benefit.

One last thing to remember is that the best time to get a Reverse Mortgage is before you need it. A Reverse Mortgage should never be used as a last resort when all of your other assets have been depleted. Instead, consider applying for your line of credit while interest rates are still low so you can lock in a great rate. Having this flexible resource available if and when you need it can help turn your home equity into a powerful and strategic financial planning tool for decades to come.

A Reverse Mortgage is a complex planning tool that should be used as part of a carefully constructed wealth management plan. If you need help deciding if a Reverse Mortgage makes sense for you, let’s talk. As always, we’re here to help! 


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Want a great financial plan? All you need are the clues

Want a great financial plan? All you need are the clues

Solving puzzles is in my blood.

Growing up, solving jigsaw puzzles was one of our favorite family activities, and there was always a puzzle in the works on our card table. Sometimes we would work on them together, huddled over the still-broken image as we searched for the right shape, the right color, or the perfect edge. Just as often, any one of us walking by would spot a perfect fit and happily pop a piece into its rightful place.

Sunday brought with it a different challenge: the delivery of the Sunday crossword. My parents would work on it together (always in pencil), and we’d all try to help—even if it took us days to get the answers right. Even today, the New York Times online crosswords are a bit of an obsession for me. I love the challenge. I love the form. And I love that I’m always learning something new. (Today’s tidbit: Napoleon died in exile on the island of St. Helena. Who knew?!)

I suppose it’s no wonder I became a financial advisor… and that I love what I do.

The exciting thing about financial planning (at least for a puzzle geek like me) is that, just like for jigsaw and crossword puzzles, the process is all about uncovering a solution based on a set of clues. The more clues you have, the more context. And the more context, the easier it is to find the solution.

Julia is in her mid-40s and owns a fast-growing small business in Laguna Beach. Julia was referred to me by one of my long-time clients, and I could tell from the moment I met her that she is a smart businesswoman. But like many busy business owners, she has never really focused on her personal finances. I was excited to sit down with her and dive into her first-ever financial plan and start solving her financial puzzle.

When we met in January, my first question was, “What do you spend your money on each month?” Like many first-timers, she didn’t have an easy answer. She knew her annual income. She knew how much she had in her current investments. But she didn’t have a real sense of her expenses, how much she had remaining to spend as she pleased each month, or what she could (or should) be doing with her excess cash. Luckily, she had done her homework for our meeting, including gathering together all of the fragments of her finances. Her tax returns, her bank and investment statements, and (most importantly) her goals and dreams for the future. With her file box on the table, we had all the clues and context we needed to move forward.

Fast-forward to March, and Julia’s financial picture looks a whole lot more complete than it did just 8 weeks ago. The pieces had been there, but she’d had no idea where to put them, how they worked as a whole, or (and this is a big one) how each piece impacted the others. By working with the clues, we were able to puzzle out solutions to her key challenges, including:

  • How her spending habits were impacting her ability to save for a long retirement—and the tradeoffs she needed to make in both areas.
  • How she could balance investments in her business with other investments to diversify her assets and ensure she won’t have to depend solely on income from her business in retirement.
  • How her investments could be restructured to leverage her savings and better protect her from risk.

Julia has already made a ton of progress, but she’s still “piecing together the edges.” There’s much more to be done, and we’re working together to discover new clues and uncover solutions to each challenge we see. She has clearly defined her goals and can see the path forward, and I am helping her understand how all the pieces work together—and how we can adjust them to fit when they don’t. I hope Julia is having just as much fun as I am.

Julia thought she needed to put off working with an advisor until she “had all the pieces in order.” I wish she hadn’t waited! Now she understands that, just like most other puzzles in life, sound financial planning doesn’t require having 100% of the facts to start making better, wiser decisions. All you need to start solving your puzzle is your own set of financial clues. An advisor’s job is to use her experience and knowledge to see clues through a different lens and, ultimately, create a step-by-step plan to help you reach your goals. For me, that’s (at least!) half the fun.

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Life happens. Plan today to make every transition easier.

Life happens. Plan today to make every transition easier.

Change. For some of us, the word alone can send a wave of panic. And it’s no wonder. Any change means transition, and any transition—whether happy or sad—begins with an ending. In all cases, something or someone fundamental in your life is gone. Marriage brings the end of complete independence. Retirement brings the end of decades of camaraderie, achievement, and a steady paycheck. Divorce brings the end of a relationship, and often years of hopes and dreams. Death of a loved one brings the end of companionship and a huge shift in how you live each day moving forward. Sending a child to school brings the end of one phase of parenting. While every stage of life has its own of transitions, for many women, it’s the 40s that seem to bring on the perfect storm.

In my own life, my 40s were an utter whirlwind. Jamie and Adam both graduated from high school and moved out of the house. Both of my parents died. My husband had a major stroke. And I lost my job. All in a tiny, 5-year window of my life. And like anyone facing such transitions, I didn’t know which way was up. In his seminal book Transitions: Making Sense of Life's Changes, Bill Bridges talks about the period following a significant life change as our “time in the wilderness.” I was the perfect example. As Bridges explains it, it’s a time when we’re forced to separate ourselves from the everyday and digest and respond to the immense change within us. And all of this must happen before we can return to the world, transformed.

While you’re in the wilderness, it’s normal to feel off-balance and uncertain. It can feel like survival is impossible, and the unending stream of questions won’t stop flooding every thought. How will I live? How will I pay the bills? How can I move on? While it may seem impossible at the time, it’s important to recognize that you will find your way. But even as you’re struggling, you must make sure the rest of the pieces of your life don’t fall apart.

I often say that when it comes to your money, there’s no such thing as an unexpected expense. The same is all too true when it comes to “unexpected” changes. Once you reach your 40s, 50s, and beyond, big changes come flying at you, fast and furious. Your children grow up. Your parents get elderly. Your aging body begins to throw you curve balls. You get sick. Your spouse gets sick. Life happens! The good news is that because you know all these things are going to happen, you can prepare for what’s to come—long before you’re thrown into the wilderness. Here’s how to start planning for tomorrow’s changes today:

  • Identify your “person.” In times of crisis, it’s vital to have someone who can give you an outside perspective and help guide your way. It may be an adult child, a colleague, a neighbor, a family member, or a best friend. Whoever you choose, your person is the one you know you can trust to be there when you need help and is the one who makes you feel safe—even when you’re in the wilderness.
  • Create a solid financial plan. All transitions create an imbalance in your life. By working with a trusted advisor now to create a solid financial plan that is stress tested for change, money will be one thing you don’t need to worry about when life happens. Even more, you won’t be starting from scratch after the storm. Instead, you’ll know precisely what your resources are moving forward. That alone can help breathe easier throughout the transition process.
  • Prepare for the inevitable. Like it or not, change is going to happen and your life will be filled with a series of transitions. The kids grow up, move out, get married, and have babies of their own. Parents get old and pass on. Jobs come and go. Marriages shift. Be honest with yourself about what changes you’ll face in the next decade… and the next… and prepare yourself emotionally and practically for what’s to come.
  • Create a community of friends. Emotionally you may feel isolated in the wilderness between the end of one thing and an eventual new beginning. Isolation leaves you vulnerable, so prepare now to engage in community by being a friend, a volunteer, or a member of a church, book club, or card group. The circle of friends you build will be your emotional life raft in the future.

Of course, you cannot anticipate every transition. The worst day of my life was when my first husband left me. My kids were three and five years old. I was a recent West Coast transplant and a stay-at-home mom. I had no job. I had no future. I couldn’t breathe. I couldn’t swallow. I had been thrown into the wilderness and trapped inside a bell jar. When my attorney Sheila Sonenshine told me to breathe, I listened. I inhaled. I exhaled. Again and again. She told me to get a haircut and get a job, and I did that too. Before I even realized it, I was putting one foot in front of the other and moving forward. With her guidance, I found my way out of my wilderness.

When the big changes hit—whether you’ve prepared for them or not—remember to make these your top three priorities:  

  1. Breathe. You’ll feel stuck. You’ll feel blinded. You’ll feel off-balance. But if you can remember to keep breathing, you can (and will) keep moving forward.
  2. Identify what’s urgent. Pay your bills. Be realistic about your finances. Take care of the necessities and put everything else on hold. And wait to make any irrevocable decisions until you’re able to see straight again.
  3. Get “up on the balcony. ”Count on “your person” to help you scan the environment, see the realities of your situation more clearly, and keep you rooted in what’s real. Don’t forget about your financial advisor. She can help you circle back to your plan so you can rise above your emotions and make rational decisions.

No matter what life throws at you—and no matter how unexpected the expected can feel—you too will find your way through the wilderness. The best thing you can do until you get to that next fork in the road is to put plans in place that help make even the toughest transitions easier. And when life happens and you need a guide to help find your way, we’re always here to help. 

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What’s today’s best investment? Here’s your answer.

What’s today’s best investment? Here’s your answer.

If you have investments in stocks (and I hope you do!), you know that the markets climbed in 2017. And climbed. With an incredible 71 new highs, the markets closed the year up 21% on average, with Emerging Market Stocks (MSCI EM index) leading the pack at 38%. For investors, it was a year to celebrate. But the question now is: where do we go from here?

If you listen to the media, the answers run the gamut from moving everything (yes, everything!) to cash to throwing everything you have (again, everything!) into the high-flying market and cashing in on the rewards. The reality is a lot less exciting. For long-term investors (which I hope you are!), excitement is rarely a good thing. Here’s why:

  • Investing should not be a thrill ride.
    If you want a thrill, go take a spin in a sports car. Let your investments be the reliable sedan that gets you where you want to be, when you need to be there. Investors are paid to take risks. Anticipate the ups and downs, but trust that your well-constructed portfolio will grow at an average of 5% to 7% over the long term. When your neighbor brags about her tremendous gains, don’t fret if yours aren’t quite so amazing. Chances are your portfolio is more conservatively allocated, which means that when the market does turn (which it will, eventually) you’ll continue to be reliably moving forward—with just the right amount of risk for you.

  • Toying with a portfolio does not deliver better results.
    On Monday, the news broke that Warren Buffet won his $1 million bet with a top hedge fund manager that he could do better than a hedge fund with a passive, low-cost stock index fund over 10 years. Instead of trying to time the market like his rival, he simply rode out the market—even during the depth of the recession. The result: Buffett’s stock fund achieved a 7.1% compound average return. The hedge fund return: just 2.2%. The US stock market has delivered positive returns in 29 of the last 38 years, delivering gains of more than 20% in 14 of those years. That’s the only information Warren Buffett needed to know to win the bet.

  • Even if the market does take a turn, a diversified portfolio won’t get very exciting.
    Again, that lack of excitement is a good thing. In 2017, the stock market saw amazingly low volatility—just 3% at its most volatile point. That’s shockingly low considering that most years, even great ones, usually see pullbacks of 10 to 15%. That means your diversified portfolio didn’t need to rely on its bond holdings last year to protect it from stock volatility. But while your bond holdings likely delivered portfolio returns that were under those of the S&P 500, they’ll be there to calm the waters when the cycle changes in the future.

You get it. A well-constructed, diversified portfolio delivers stable, reliable results over the long term. But what about new investments? With the market so high, what is today’s best investment?

My client Susan got quite the surprise this Christmas when her mother gifted her $14,000. Plus, she received an unexpected work bonus of $50,000. (Cheers to the improving economy!) She called me last week with the big question: “With the market where it is now, should I just hold $64,000 in cash? I don’t want to put it into a market that everyone says is about to turn.”

Susan is not alone. It’s easy to believe the headlines and assume that stocks can’t possibly continue to rise. And yet, historically, that’s precisely what they do. Market analysts and the media have been shouting about an inevitable downturn for years now, and while that grabs a lot of “eyeballs” (which publications both online and off need to sell advertising), they can predict the future as well as you or I can. In other words, they can’t. The one thing we can predict is that the market will continue to rise… over time.

So should Susan take the money that’s burning a hole in her pocket and invest it in stocks today? My answer was not that simple.

I told Susan that before we even began to think about investing, I wanted to review her overall finances. Susan and her husband have an emergency fund, so they have that fundamental element solidly in place. They’d had some home repairs in November and paid for them with a $10,000 check from her HELOC. Plus, they had racked up some holiday debt to the tune of $5,000. The total: just over $15,000 in debt on which she would have to pay interest until it was paid off. Plus, her daughter is a junior in college, and between tuition and room and board, those costs are putting a strain on the family budget.

My recommendation: use the money to pay off the debt entirely, and fully fund the remainder of her daughter’s college, minus what is now in her 529. Once all that was subtracted from the $64,000 windfall, $6,000 remained. Susan would be out of debt, and her daughter’s college expenses would be paid in full through graduation, eliminating that added financial stress each month. We agreed to invest the remaining $6,000 in her portfolio, allocating the money according to her existing strategy.

So what is today’s best investment? My answer is the same as it was for Susan. Your best investment is you.

You’re much more than an investor. You are living your own life. You have your own tax bracket, legacy wishes, and dreams for the future. Whether you have $5,000 to invest or $500,000, look at your financial big picture and make money decisions that help you live your best life—with greater financial confidence than ever. That’s a return the stock market will never, ever deliver. If you have questions or need guidance, know that no matter what the market brings tomorrow, we’re here to help today.

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Just for caregivers: 7 Dos and Don’ts to protect your financial future

Just for caregivers: 7 Dos and Don’ts to protect your financial future

Caregiving. It’s something I can speak to firsthand. When my late husband Ed suffered a severe stroke decades ago, I suddenly confronted a whirlwind of emotional, physical, and financial stress. It’s no wonder that I found myself having flashbacks when I read the results of a recent survey of 2,000 caregivers. The findings are frightening, but they tell a story that won’t surprise anyone who has been a caregiver for someone they love.

According to the survey, nearly three out of four respondents said that their personal financial situation causes them stress, and 92% said they help manage the finances of the person for whom they are providing care—from paying bills to handling insurance claims to dealing with debt. While struggling to manage another’s finances is certainly stressful, caregivers also tend to allow caring for a loved one to impact their own finances. Of those who help their family members financially, 30% said they’ve cut back on their living expenses to do so. Twenty-one percent have dipped into retirement savings. And 24% had trouble paying their own bills.

It’s a heavy burden. Financially and emotionally. The vast majority of caregivers—nearly 70% according to the National Center on Caregiving—are women. Since women as a group struggle more than men financially, this puts us in even greater peril to achieve financial security and confidence during our lifetimes.

I’ll tell you straight out that it is our giving nature—not our financial smarts—that puts us in that peril. My own story is a perfect example. There I was, a successful financial advisor, helping my clients make the best possible financial decisions. Yet, during Ed’s long disability, I was challenged by my new reality—being the sole earner while also being a caregiver. I was overwhelmed with the emotional side of the equation. As I was leaving the hospital to take Ed home, the case manager’s words filled my heart with even greater fear: “I guess it’s time to start spending down your assets.” And though I knew better, her chilling words cut me to the core. After all, my goal was to take care of my husband, but I was also a financial planner and swore not to put my financial security at risk.

Ed and I had been on track financially. Yet despite carefully managing spending (and feeling guilty every time I turned my focus to money), by the time Ed died, I had gone from financially comfortable to more than $80,000 in debt. Did I know what we were spending? Yes. But I simply couldn’t get myself to look at the numbers. As a result, I made some major financial missteps.

The good news: you can learn from my mistakes to avoid making them yourself. Here are my 10 “dos and don’ts” that can help every caregiver make better, smarter financial decisions—even when you’re in an emotional fog:

  1. DO recognize that your loved one may no longer have the ability to make wise decisions,financially or otherwise. Like caring for a child, you will need to make hard decisions—even when your loved one resists.
  2. DO have proper powers of attorney for healthcareand financial matters in place before a health issue arises—and use them when the time comes!
  3. DO have a written record and spending plan. Tracking expenses and knowing your budget is vital.
  4. DON’T confuse highest cost and what is best for your loved one. Consider the physical and mental needs of your loved one when choosing the best care option. A beautiful facility with extensive activities may not make sense for someone who is confined to a wheelchair or has advanced dementia.
  5. DON’T let your personal relationship with caregiver employees impact financial decisions. Be sure you’re paying the market rate for care, and maintain an arm’s length employer/employee relationship.
  6. DON’T give in to emotional blackmail.Make the best decisions based on your loved one’s current health and financial situation—not based on old promises to others or to yourself.
  7. DON’T neglect to keep your own financial house in order.Caring for a loved one can easily become your only focus, but caring for yourself and your future is just as important.

I learned the hard way what to do—and what not to do—when managing finances as a caregiver. Since then, I’ve focused my practice on helping women make smarter financial decisions, especially in situations when emotions can lead to disastrous results. One of the most important things you can do to help keep your finances afloat is recognize that your own emotional biases can lead to poor financial decisions—no matter how smart you are. To help stay on track, work with a financial advisor who can help you step back and look at the big picture.

As they say before every flight, in case of emergency, put your own oxygen mask on first so you’re able to help others. The same is true when you’re serving as a caregiver. By making your own financial security a priority, you can increase your capacity to care for your loved one—without sacrificing your own future.

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Ready to shift your relationship with money? It’s time for some BRAVING

Ready to shift your relationship with money? It’s time for some BRAVING

I joke that I discovered Brené Brown in much the same way Columbus discovered America: I simply stumbled into the right place at the right time. And boy, am I glad I did. In just one Ted Talk and as much of her newest book as I’ve had the time to read (I’m not quite through, but I’m cherishing every word), this researcher and storyteller has me thinking deeply about vulnerability and bravery and how to build the courage to be “enough” for myself and others in order to live the fullest life possible.

What’s fascinating to me as a financial advisor is how much all of these ideas play into what I see every day with my clients—and how vulnerability, bravery, and courage impact each person’s sense of financial “success.”

If you’ve never heard of Brené Brown, I highly recommend taking some time out of your day to check her out. A social science researcher, she is a stickler for data and a mid-life convert to the power of vulnerability (listen to her Ted Talk for more on her journey). Through her research, Brown has studied people—mostly women—who experience love and belonging in their lives and those who don’t. What’s the difference? It’s shockingly simple. People who have love and belonging believe they are worthy of it. Those who don’t, don’t. Even more, it seems that what empowers people to achieve that state of worthiness—of believing they can be and deserve to be loved—is the courage to be vulnerable.

Courage and vulnerability resonate with me. In my life, I’ve observed that many of us seem to have lost our ability to be vulnerable. Perhaps it’s because we spend too much time in our bubbles. Alone and watching other people’s lives on social media or television. Alone commuting in our cars. Alone walking in a crowd with headphones in our ears, shutting out the world around us. Being alone has become our safe place where we are not judged or confronted or questioned. And it’s where we can choose specifically not to feel.

I think Brown hits the crux of it when she speculates that the reason we’re the most in debt, obese, and medicated adult population in history is because we’ve become completely uncomfortable with our vulnerability. When we feel exposed or conflicted or anxious, we choose to numb our feelings through food, alcohol or Facebook. Further, her research shows that there’s another way we numb our vulnerability, and that is to make everything in our lives certain. We no longer leave room in our public and private lives for reflection or uncertainty about our faith, our politics, and our preferences. It’s created an unsavory divisiveness in which everything is black or white. We’re labeled, and we label others in all-too-certain terms. We blame others as a way of discharging our fears. We use certainty as just one more tool to numb our vulnerability. As a result, we feel more judged, and, indeed, more vulnerable.

Perhaps the most important idea Brown presents is that numbing our feelings of vulnerability has an unintended consequence. Because we’re not capable of being selective about which feelings we numb, when we numb our vulnerability, we also numb joy, happiness, love—all of the feelings that make us happy and content as human beings. If there’s ever been a reason to nurture our vulnerability, this is certainly it!

As these ideas are all swimming around in my head, I keep coming back to how important it is to invite vulnerability into the financial planning process. If vulnerability is the key to more fulfilling relationships, it follows that it can have a dramatic impact on our relationships with money which, just like every other relationship, can come with a whole lot of baggage. Love. Fear. Anxiety. Shame. Obsession. The list goes on.

In Brown’s new book Braving the Wilderness: The Quest for True Belonging and the Courage to Stand Alone, she uses the word “BRAVING” as an acronym for the seven rules for building more connected relationships rooted in trust and vulnerability. It’s amazing to me how each of these statements can relate directly to every relationship—including our relationship with money:

  • Boundaries: I trust you if you are clear about your boundaries and you hold them, and I am clear about my boundaries, and you respect them.
  • Reliability: I trust you if you do what you say you are going to do. Not once, but over and over again.
  • Accountability: I trust you if, when you make a mistake, you are willing to own it, apologize for it, and make amends. And when I make a mistake I am allowed to do the same.
  • VaultWhat I share with you, you will hold in confidence, and what you share with me, I will hold in confidence.
  • Integrity: Choosing courage over comfort, choosing what is right over what is fun, fast, and easy. And practicing your morals, not just preaching them.
  • Non-judgement: You can fall apart and ask for help and not be judged by me.
  • Generosity: If I mess up, say something, or forget something, you will make the most generous assumption and check in with me.

I have strived to foster and live up to each of these values when I work with clients, but Brown has brought some valuable clarity to my thinking. I wonder if BRAVING may just be the key to help shift not just how we interact with each other, but also how we look at and feel about money. Brown says that when we are vulnerable, “We feel the deepest connection to our true self and to what matters most.” What a wonderful foundation on which to create a Brave New Financial Plan.


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Security vs. Freedom (and the magnificent merits of flying business class)

Security vs. Freedom (and the magnificent merits of flying business class)

I’m writing today swimming in jet lag after a week spent (literally) swimming with the fish in Fiji. And while it may be true that every vacation creates a mental shift of sorts (if for no other reason than that it takes us away from our daily routines), this particular trip was unprecedented in the impact of that shift. What was this dramatic change? After decades of helping others as a financial advisor, I’ve finally found my own internal abundance. I’ve finally been able to rise above the very basic need for financial security and embrace the ultimate goal: financial freedom.

Before you jump ahead and think I won the lottery during my travels (I didn’t!), let me take a step back to clarify.

Whenever I sit down with a client to begin the financial planning process, one of the first questions I ask is this: “What is important about money, to you?” In most cases, I receive one of two responses. The majority of people, regardless of income level or accumulated wealth, will begin with “security.” A small percentage (who admittedly tend to seem unusually at ease) will name “freedom” as their fundamental goal. For all the years I’ve been asking this question, I’ve always understood the need for security more. After all, who in her right mind wants to end up being a bag lady with no resources and no financial security to save her from the abyss?

I come to this scarcity perspective honestly. Raised by depression-era parents who saved everything from used tin foil to pennies, the fear of “not enough” was drilled into me from day one. Our family was frugal to a fault. Then, after becoming a single mother in my 20s, saving my pennies mattered more than ever. The responsibility to have enough to give my children was a heavy weight to bear. I expect this is why I was drawn to my career when I was. After all, the more I knew about money, the more security I could control, right? And though I’ve worked hard to have the skills and knowledge to help my clients plan for their financial security, I realize that I was never completely at ease with money myself. Did I have enough? Certainly. But whenever I saw friends spending on what seemed to be frivolous purchases, I caught myself asking, “How can you spend that money today when you might need it tomorrow?”

Fast-forward to two weeks ago when I boarded my flight to Fiji. For the first time, I had allowed myself to splurge on the luxury of a business-class ticket. Even as I walked onto the plane, I questioned what prompted me to spend a big chunk of my budget on a bit more leg room, a personal sleep kit (as if I don’t already have eye shades), and real food and drinks. But when I settled into my relatively monstrous seat, I had to confess it felt pretty darned good! When the flight attendant handed me a warm scented towel and invited me to “sit back, relax, and enjoy your flight,” I thought that, for once, I might actually do just that.

And I did. When we landed in Fiji more than 11 hours later, I was refreshed and ready to go. While I am sometimes apprehensive about meeting new people, especially an assigned roommate on a dive trip (Will I like her? Will she like me?), this time I felt light and almost giddy. More than anything, at the end of that flight, I felt empowered.

Once I settled in at the hotel, I learned that out of a group of ten, only three of us were planning to dive. The rest of our group were there to snorkel and enjoy the sights above sea level. So our band of three became fast and close friends, and in everything we did together, I felt more buoyant than ever—physically, mentally, and even spiritually—both in and out of the water. When we were diving, my buoyancy was amazing. I was breathing easily (not gulping air in fear of not having enough) and in my relaxed state, I found myself just hanging in the water—not sinking to the bottom or floating to the surface, but balanced and at ease. I was more present, more observant, and more at peace than I can remember. I felt completely free.

As I boarded my flight home on Saturday, I felt something that, until then, I’d only seen in others and never really understood. After years of careful planning and fearing scarcity, I was finally giving myself the freedom to overfill my glass a little. It felt fantastic.

The best part about financial freedom is that anyone can get it. Yes, as Jonathan Clements says, “Growing wealthy is embarrassingly simple: We save as much as we reasonably can, take on debt cautiously, limit our exposure to major financial risks, and try not to be too clever with our investing.” (Read my blog Money really can buy happiness for more on that great topic.) That’s why having a solid financial plan is vital for anyone. There’s no doubt that there’s a fine balance between knowing that you’ve planned to achieve abundance and trusting your plan will deliver what you need for the future. But achieving financial freedom—that buoyancy that enables you to trust in your own abundance—is as much about a mindset as it is about finance.

For years I’ve preached the value of striving for financial freedom to anyone who would listen. Today I can say I finally have that freedom myself. In the ocean, I now trust that I have enough air to sustain me for the duration of my dive. Back on land (or up in the air in business-class!), I now trust that I have enough resources to sustain me for the rest of my life—even if I allow myself to overfill my glass now and then. That is true financial freedom. I hope you can meet me there!

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New parents: Know the true costs before choosing to stay at home

New parents: Know the true costs before choosing to stay at home

Gail Hicks is a senior financial advisor at Klein Financial Advisors. She is this week’s guest blogger while Lauren is away on vacation.

It’s a question almost every soon-to-be parent ponders: should I stay at home after the baby is born? And if so, for how long? Even for the most career-driven parent, it can be a very emotional decision. To come up with the right answer for you, step beyond a basic pros-and-cons list. Be certain you’re considering every piece of the puzzle before making a choice—and do all you can to be sure that choice balances your emotions with what’s best for the long-term financial stability of your family.

If you think that puzzle is a simple one, think again. It’s easy to look at the high cost of childcare and assume that those costs, combined with the savings on everything from dry cleaning to taxes to eating out after a long day at the office, make staying at home the most cost-effective option. That’s rarely the case.The truth is in the data. According to a recent study by the think tank Center for American Progress (CAP), the average 26-year-old woman who takes a 5-year break from her career will lose much more than five years of her salary. In fact, when considering lost income, wage growth, and retirement assets and benefits during just five years, she’ll lose a whopping $467,000 over her lifetime. A man of the same age will lose even more: just under $600,000. To make those numbers more personal (especially knowing that Orange County is one of the most expensive places to live in the US) assume that staying at home will cost up to five times your annual salary for every year you’re out of the workforce. According to the latest U.S. Department of Agriculture’s Expenditures on Children by Families report, households with income over $105,000 should be prepared to spend at least $400,000 to raise a child to age 18. With that price tag in mind, it’s a challenge to make staying at home an affordable option!

Of course for some parents, the math isn’t enough to sway the emotional desire to stay home with children. For others, there are family and cultural biases that strongly influence the decision. But it’s vital to look closely at the reality of your choice before opting to leave the workforce. As someone who has been there myself, I know the real-world challenges all too well.

When my husband and I were contemplating expanding our family from one child to two, we remembered the toll my job took on my health during my first pregnancy, including a very frightening pre-term labor that resulted in being put on bed rest at seven months. The high cost of childcare and the fact that we had no family in the area to help out were also factors to consider as we considered our options. We did the math (it’s what I do, after all!), and determined that with our savings and the extra income from my husband’s side business, we could make it work. We knew there would be sacrifices, but it was an important—and yes, emotional—decision for us both. So I walked away from a high-paying corporate job and walked into stay-at-home parenthood.

Unfortunately, the decision didn’t play out in real life as well as it had on paper. First, our second son was born with a mild disability. That alone tipped the financial and emotional scales. Jumping through hoops to get a diagnosis and then therapy two or three times a week was hard. Soon afterward, the recession hit, and with it came the end of the consulting income we had counted on to help replace my salary. Even worse, my husband didn’t want to add any more stress to an already high-stress situation, so he postponed admitting that his side business had completely dried up. Our plan of just breaking even quickly turned into the reality of taking on debt. Now the numbers didn’t make sense. How could I go back to work when my younger son needed me at home and my older son had grown accustomed to having me at home with him too?

At the same time, I was in a world of the unknown. I’d been a businesswoman my entire life. I was home with a special-needs child, I knew only a handful of my neighbors, and the few stay-at-home moms I was able to meet had never worked, so our experiences were completely different. I felt isolated and alone. And while it was a difficult choice to go back to work, money was just one piece of the equation. I was confident my choice would be best for our whole family, and it truly was. Within months of going back to work, I felt we had found balance again. Yes, I missed the time with my sons, but I knew I was a better mother when we were together as I watched the financial and emotional stresses wash away.

Everyone’s situation is different. The key to making the best choice for you is to understand the true financial impact of staying at home, and then to decide what makes sense for you and your family—both today and over the long term. How can you be sure your emotions aren’t overriding your common sense? Work with a professional advisor to help you crunch the numbers and be sure you’re really considering every piece of the puzzle.

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Are you ready to become an investing Wonder Woman?

Are you ready to become an investing Wonder Woman?

The new Wonder Woman movie broke every box office record last weekend, and critics and audiences continue to shout praises, calling it one of the most entertaining—and empowering—movies this year. I had a great time seeing it myself, and while I’m no critic, I thought it was the perfect summer treat: a big, noisy movie with a woman super hero. What could be better?!

But while yes, having the power to win the battle of evil in the “war to end all wars” would be pretty great, what I really wish is that I could give every woman Diana-level confidence in a superpower she already has today. That superpower, of course, is investing.

Here’s the great news for all you warriors out there: Another study just came out that showed that women are better at investing than men. That’s something to celebrate! As a group, we plan better, we take less risk, and (this should be no news to anyone!) we’re more patient—and these are all factors that add up to larger returns in the world of investing. But here’s the not-so-good news: we lack the confidence of Diana. Despite the data, women continue to see men as better, smarter investors. Among 1,500 women polled last December, only 9% thought women would earn a bigger year-end return than men. That’s a disconnect that matters. After all, if we don’t see ourselves as smart investors, how can we ever overcome the earnings gap and finally take control of our own finances?

Whether you’re one of the doubters or you have complete confidence on your investing skills, here are five things every woman can do today to become an investing Wonder Woman:

  1. Own the fact that you have the mindset to be a wise investor.
    Diana has the skills to fight evil. You have what it takes to be a great investor. Know this. Research shows that when women take the helm for our own retirement planning, we tend to be smarter, more levelheaded investors. And yet in most families, men have the trusted relationship with a financial advisor, while women take on the role of a “financial child” in the household. It’s time to take a different path. Trust that you have what it takes to make smart investment decisions, and talk to your advisor yourself to be sure your investments address your own needs and are aligned with your own values. And if you need to build up your knowledge of the basics, start with my blog post When did it become ok to be financially illiterate?
  2. Make retirement planning your number-one priority.
    Longevity is a huge issue for women. According to the Centers for Disease Control and Prevention, women can expect to live about five years longer than men. At the same time, between taking time off to care for children and our own aging parents, a persistent wage gap that reduces our take-home pay as well as our future Social Security payments, and a historically lower pay rate, we typically have fewer resources to fund our longer lives. That means it’s critical that you start planning for retirement as early as possible. While you may not be able to overcome some of the gender barriers that can haunt any woman’s account balance, the combination of persistence and compounding can help close that gap.
  3. Pay your future self first.
    If you’re like most women, it’s easy to put saving for retirement on the back burner. But let’s face it: there will always be bills to pay and extra expenses to manage. To be sure your retirement doesn’t get lost in the financial shuffle, work with your advisor to determine how much you need to save, and then set a schedule to pay yourself first—every month. The more automated your contributions can be, the better. And rather than feeling deprived, think of that savings as a “freedom fund” for your future self. A June 2016 studyshowed that 83% of women in the US aren't saving enough for retirement. Don’t represent that statistic! By being diligent now, you can create your own financial freedom—no matter how you choose to spend your time later in life.
  4. Make conscious decisions about 'image' purchases.
    As a professional woman and business owner, I know all too well how expensive the societal pressures can be for women to spend on our images. We are judged by appearances much more than men, so the cost of a wardrobe, manicures, haircuts, and more can take a very real bite out of every paycheck—which is already smaller than a man's. (Just ask Hillary Clinton, who has said she was thrilled to put away her makeup after losing her Presidential bid last year; I doubt any male candidates felt the same relief!) It's a double standard, and whether you are paying your bill at Nordstrom or the plastic surgeon, it all adds up. Remember: your image is important, but that doesn't mean you need a Prada suit to look your best. Decide which purchases are necessities, which are optional, and be honest about what you can really afford.
  5. Fight like a superhero for equal pay!
    Women still earn less than 100% of a man’s dollar, and that will likely never change without pay visibility. For decades, corporations have promoted a culture of secrecy about pay. This reality puts women and minorities at a distinct disadvantage. After all, how can we advocate for ourselves if we don’t even know what our co-workers earn? By removing the taboos around pay transparency, we can end this inequality once and for all. At the same time, we need to start placing a real, tangible economic value on caring for children and aging parents—work that is largely taken on by women. By offering benefits such as disability insurance, health insurance, and Social Security credits for this very real and necessary work, we can finally begin to recognize that the care being provided is a valuable part of the fabric of our community and our society as a whole.

Women can be great investors, but our mindset alone isn’t enough to change our trajectory. Just like Diana, Princess of the Amazon, we need to take real action. We need to see ourselves as the smart investors we are, focus on saving for our own futures, and balance our need to create a great image with our need to gain a greater financial advantage. And we need to fight the good fight for equal pay—even if it takes Diana’s God-killer Sword and Lasso of Truth to spur on salary transparency! Lastly, even Wonder Woman counts on the rest of the Justice League to help her succeed. Find a team you trust, and start taking control of your financial life today. Your future self will thank you for taking your job as an investing Wonder Woman seriously—no shield required.

Photo: TM © 2017 DC Comics

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What would you change if you were rich?

What would you change if you were rich?

I’m a theatre lover, so it won’t surprise you that I know the lyrics to “If I Were a Rich Man” from the classic musical Fiddler on the Roof by heart. In the song, Tevye sings about how his life would change if he were, indeed, a rich man. For the peasant Tevye, his dreams are pretty simple. But have you ever asked yourself how you would change your life if you were rich?

I sat down with Jack and Mary last week and asked this very question. Both recently retired, they’re financially fortunate. They have been very careful with their money, have saved a significant amount and, as icing on the cake, five years ago they received a large family inheritance. Logic would say that they should be able to relax now and simply enjoy the benefits of a well-planned, well-funded retirement. But when it comes to money, logic doesn’t always prevail. Instead of enjoying their assets, they focus on being frugal—to an extreme. And because Jack is even less comfortable spending money than Mary is, it’s a source of tension in their relationship.

To help de-stress the situation, I gave Jack a little homework: I asked him to simply write down what he’d do differently if he felt rich. When I read his answers, I couldn’t help but think of Tevye’s simple dreams. Why? Because while they aren’t the dreams of a fictional peasant, Jack’s dreams are almost as simple., Jack said that if he felt rich, he would eat more sushi, buy more books on his Kindle, and eat out at nice restaurants more often. If he felt really wealthy, he said he would think about replacing his 10-year-old car, fly first-class on an airplane (at least once!), and treat himself to a new camera. Even in his wildest dreams, Jack is anything but a spendthrift!

My good friend Ava is another example of someone who has turned frugality into an art form. Divorced when her children were still small, she was determined to create a financially sound life for herself and her family. She spent as little as possible, saving every penny she could in jars labeled as “lunch money.” Today Ava’s “lunch money” amounts to tens of thousands of dollars. She may not be rich (yet), but she’s well on her way to a very comfortable retirement. The problem? She rarely lets her frugal mindset—or herself—take a luxury vacation. Over the years, I’ve done everything I can to persuade her to use some of her savings to do things that will make her happy today.

Happily, we’ve made great progress. I’ve had more than a few calls lately that burst with excitement: “Lauren, you’ll be so proud of me!” Ava is finally remodeling her home (something we’ve talked about for over a decade!), and she’s now planning to go to a yoga retreat… in Hawaii. I couldn’t be happier for her. She’ll never overspend, but at least she’s allowing herself to enjoy the fruits of her labor—and her “lunch money.”

If you’ve built your life around saving, it can be quite a challenge to suddenly change your mindset, no matter what the numbers tell you. As an advisor, I know that I can’t solve internal problems with external solutions. You can look at all the charts and projections in the world, but that won’t change how you feel on the inside, and that’s what matters most when it comes to financial confidence and peace of mind. So what’s the answer?

Start by recognizing that the process is different for everyone, and that it takes time. Just as it can be difficult for someone who has overspent their entire life to put boundaries on their spending habits, if you’ve never let yourself feel comfortable spending—even when you have the money to spend—it can be difficult to open your wallet without feeling those old pangs of guilt.

The next step is to take a close look at your assets and your budget. Are you under-spending? If so, do you know why? Are you scared of outliving your money? Did your parents teach you that saving was “right” and spending was “wrong”? Perhaps start by journaling about it to get to your essential truth. Ask yourself why you have trouble spending. And if you’re ready to have some fun, ask yourself the Tevye question: How you would change your life if you were rich? Your answers may surprise you!

Of course, finding the level of spending that’s right for you is a balancing act, and very few of us have such unlimited assets that we can completely forget about budgeting. A trusted advisor can help you understand how much money you have today, establish a realistic budget based on your cash flow, and help you start to internalize your boundaries moving forward. It can be a freeing experience, but it has to come from the inside.

My friend Donna is newly widowed, and understanding how to set her spending boundaries is a learning process. She calls me often for help. “Can I buy this?” she asks. My reply is always the same: “I don’t know… tell me, exactly how long are you going to live?” We both laugh, and then we move on to the reality of helping her find her new balance. It will come. Until then, I just keep reminding her that she does have assets. Her real challenge is to gain the confidence and peace of mind to know she’s not overspending, while still being generous to herself. Donna deserves it. Don’t you?

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There’s no such thing as an unexpected expense!

There’s no such thing as an unexpected expense!

When I met Carolyn for the first time in January, she was distraught. What finally got her to pick up the phone and get financial help was this year’s extreme rainy season—and a big financial surprise. “I didn’t even realize how old my roof was, or that it needed repair, until the water started coming in!” And come in it did. Carolyn had been out of town on business when the leaks opened up, and her home was a mess by the time she found it three days later. Her homeowner's insurance was covering the interior damage (minus a hefty deductible), but she was told she needed a whole new roof. The cost: $22,000. A high-earning corporate executive, Carolyn had lots of credit, but her emergency fund was non-existent, and a new roof was one thing she couldn’t put on a credit card and pay off over the next few months. She needed cash, and she needed it now. “I thought I was in great shape financially,” she told me. “Who knew I’d need so much cash with no notice?”

The answer? I knew. Or at least I could have provided a pretty close estimate, even though I’d never met Carolyn until she walked through my office door that afternoon. I’m no psychic (if I were, there’d be no need for financial planning!). How did I know Carolyn would need that much cash for a home repair? It’s all in the numbers. It’s all in the budget. I repeat: There’s no such thing as an unexpected expense!

All I needed to know was this: Carolyn owns a home in Newport Beach. If her home is worth anything close to the median price of about $2M, a 1-percent rule tells me that her home maintenance will average about 1% of the purchase price of her home—or $20,000—per year. Suddenly $22,000 doesn’t sound that surprising at all! But without a budget, every expense was unexpected. Without a budget, Carolyn didn’t have a clue.

The 1-percent “rule” means that when you purchase a large, illiquid, expensive-to-own asset like a personal residence, almost everything will have to be repaired or replaced eventually. I guide people to set aside a replacement fund of 1% of the purchase price each year for these very predictable costs. The work may not occur each year. It could be a roof, a kitchen, a driveway, plumbing… but it will be something. It always is.

The new roof is just a drop in the bucket (pun intended) when it comes to Carolyn’s money challenges. She was earning a substantial income but wasn’t setting aside cash for irregular discretionary expenses. She had no revolving debt, and she was saving for retirement. But her cash flow planning was a non-starter. In hindsight, maybe her leaking roof was a good thing; it was just the wake-up call she needed to get her to take action.

We began by finding the cash she needed to fix her roof (thank goodness for her good credit and a good chunk of home equity!). But we didn’t stop there. Next, we worked together to create a budget so she knows what she earns, what she spends, and what she can afford. She began to use eMoney (my favorite personal financial management software) to be sure she stays on track. She’s now building an emergency fund rather than relying on credit cards, and she’s earmarking cash reserves for those not-so-surprising expenses such as car replacements, home repairs, annual vacations, and even a planned future nip-and-tuck. The next time a large expense hits her, I have no doubt she’ll have the funds in place to cover the bill.

What Carolyn has discovered is that cash planning is the foundation for a solid financial plan. A cash budget creates a wonderful sense of financial freedom. “I always thought budgeting was like dieting—that I’d always feel deprived—so I just didn't look at how I was spending,” she told me. “Now, I feel the exact opposite. Because I know how much I have and where I want to use it, I don’t get stressed about an expensive dinner that I know is in the budget. Even better, I know I’ll never have surprises, and I don’t worry when I see my credit card statement arrive!” She’s also building a “freedom fund” to be sure she has the funds to support her dreams down the road, whatever they may be. (Read my blog Celebrate Retirement Planning Week: Create a “freedom fund” to learn more!)

Like many of my clients, Carolyn has discovered one of the great financial secrets: cash planning is empowering. Remember, there’s no such thing as an unexpected expense! Making intentional, conscious choices about when, where, and how to spend your hard-earned dollars is key. Align what you want with what you need and (finally!) relax about your finances.

Ready to get started? Check out 7 Steps to a Budget Made Easyor use NAPFA’s find an advisor guideto find a fee-only financial advisor near you.

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How to Win Big in Retirement (and Life)

How to Win Big in Retirement (and Life)

Picture this: a group of a dozen women and men; most are retired or semi-retired, diving together for seven full days in a tropical paradise. Every person in this “older crowd” is not only healthy enough to get themselves to the Gulf of Mexico to enjoy an activity they love, but they’ve also achieved a level of financial security that, while it may not have them swimming in money, at least has them swimming with the fish. No matter what challenges they have faced in the past, these are people who are truly succeeding at retirement.

How did they achieve the Holy Grail and “win big” in retirement? That’s what I found myself asking as I enjoyed my days with this great group in Cozumel last week. As a financial advisor, this type of winning is my goal for all of my clients, and I wanted to understand how this group had gotten where they are today. So I listened to their stories.

My friend Chantal (my travel companion and dive buddy for this trip) told me that, for her, “retirement is freedom.” After years or hard work, she wanted to be free to enjoy life on her terms. To make it happen, she decided to retire but to continue to do some part-time work as an expert witness (she has a Ph.D. in Pharmacology). The rest of her time is her own. Chantal looks at the world as an opportunity, and even when things go a bit sideways, she has a way of always looking at the sunny side of the situation. (It’s no wonder I love having her by my side as a fellow traveler!)

When Ken, our travel leader in Cozumel, was ready to leave the corporate world, he started thinking about what would make him happiest. He had been the leader of his dive club for years, and diving was and is his passion. He decided to semi-retire and turn his passion into a business. Channel Island Dive Adventures was born, and Ken (and all the rest of us) couldn’t be happier!

Chantal, Ken, and others I chatted with on the trip have something other than diving in common. (While it may sound like an easy fix, I don’t think diving is the key to a successful retirement!) Interestingly, what they share seemed to jump straight from the pages of the book I was reading during the trip: How to Fail at Almost Everything and Still Win Big (Kind of the Story of my Life) by Dilbert cartoonist Scott Adams. This semi-memoir isn’t a great piece of literature, but it’s a fun, inspiring read, and it drove home everything I was seeing and hearing during my weeklong adventure. What I realized is that nearly everyone in our group followed what Adams lays out as his steps for “winning big.” They worked for Adams, who opened—and soon closed—two restaurants, was fired from multiple jobs, and who managed to leverage his failures into fame and fortune as a successful cartoonist. And they worked for my fellow divers, all of whom seem to be living their retirement dreams—on their terms. Here are the three common keys to success: 

  1. Make fitness and sleep a priority. No matter how much money we have to spend in retirement, none of that will do any good unless we’re healthy enough to enjoy life! Keep your body moving. Walk. Do yoga. Lift weights. Do whatever you can to keep your body fit and active. And while there are never enough hours in the day, most people need to spend about 8 hours sleeping to function at their best. According to this article in AgingCare.com by the National Institutes of Health (NIH), “older adults need about the same amount of sleep as younger adults—seven to nine hours of sleep per night.” Not getting enough? The article also offers tips to help make it happen.
  2. Reduce stress. Easier said than done, I know, but the impacts of stress on your body and your mind are many. It’s one reason I began a dedicated meditation routine last year. And while there are many approaches to help reduce stress, remember that stress is caused by the things you don’t do. Take care of the things that increase your stress levels first.
  3. Have a positive attitude. Scott Adams’ stories about his life are great examples of turning lemons into lemonade. Corny as it is, that kind of positive attitude can change how you see the world—and how the world sees you in return. According to this great article in the Huffington Post, “positive thinking” is no longer a fluffy term that is easy to dismiss. In fact, research shows that “positive thoughts can create real value in your life and help you build skills that last much longer than a smile.”

How can you win big in retirement? Start with these three steps. Of course, getting your financial ducks in a row is also key. Work with an advisor you trust, and be sure to look at every aspect of your financial life—including your retirement goals. Stress really is caused by the things you don’t do. By planning well for your future, you can reduce stress, increase happiness and, indeed, win big in retirement. 

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Money really can buy happiness!

Money really can buy happiness!

We’ve all heard it said a million times: money can’t buy happiness. Well, I’m here to tell you some great news! It seems money can buy happiness after all. There’s a catch, though. It doesn’t happen in the way you might think. But stop. Let me back up for a minute to share with you how all this started swimming around in my head, and why I can’t stop thinking about it.

Last weekend, I had some precious time to read, and I picked up Jonathan Clements’s book How to Think About Money. What drew me to the title wasn’t Clements himself, or even the fact that I’m always up for new ideas about money and finance. The attraction was the fact that William J. Bernstein wrote the foreword to the book, and I’m a big fan of his. (His book If You Can: How Millennials Can Get Rich Slowly is simply fantastic.) So I dove in, and I am absolutely thrilled I did. One of the reviews of the book called it “financial feng shui,” and I agree completely. The book includes five steps covering “how to think about money.” The first step covers (you guessed it) happiness. Specifically, how to buy more happiness. If you thought it wasn’t possible, Clements offers some valuable food for thought.

First, he points out that we simply aren’t very good at figuring out what will make us happy. That’s probably no news to anyone. So many of us live the majority of our lives doing work we don’t enjoy, commuting way too many hours of every day to get to that work, and then coming home exhausted to a home that costs us way too much time, energy, and money to afford and maintain. Clements recognized the conundrum, and he turned to research on happiness to put the pieces of the puzzle together. Here are just a handful of the things he learned from the academics:

  1. “Money can buy happiness, but not nearly as much as we imagine.” 
    All of us have purchases that make us happy, but how happy do they make us over the long term? Is buying the new car more exciting than how we feel driving it six months down the road (pun intended!)? And how dependent is our happiness on our own comparison of the “stuff” we own compared to our friends and neighbors? I may be thrilled with my new Hyundai…until I look around and see myself surrounded by BMWs and Mercedes. And yet, if my parents always drove older cars because they couldn’t afford new ones, I may feel thrilled to realize I’ve upped the ante, at least in this regard. Happiness is complicated! But ultimately it’s up to us to choose how we lead our lives—including how we live and, yes, how we spend our money.

  2. “We’re often happier when we have less choice, not more.” 
    Think about it: decisions are stressful! Even little things like deciding what to wear each morning can cause some stress. Bigger decisions—like where to live or which job to take—can keep us up at night and lead to some very real anxiety. I remember when I first read The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing by Marie Kondo, I was struck by just how much stuff I’d accumulated… and spent my hard-earned money on! When I started asking myself if all of these belongings really “sparked joy,” I was surprised at how little of them did. (For more thoughts on getting rid of all that stuff, read my blog It’s that time of year: change is on the horizon.) Ultimately, it’s not the stuff that brings us joy. There’s something much better that money can buy.

  3. “We place too high a value on possessions and not enough on experiences.” 
    So if our “stuff” doesn’t define us and make us happy, what does? Experiences. Specifically, experiences with family and friends. Interestlingly, anticipation is a big part of the equation. I know when I’m planning a vacation, the anticipation is half the joy! But even more, experiences create memories that become part of the fabric of who we are. At Christmas, I decided to take my whole family to see Disney’s wonderful new movie Moana. We all went together, sat in the big, comfy seats, munched on treats, and had a great time. Every one of us walked out of the theater happy and filled with memories that will last a very long time. Was it expensive? Yes! But no more than an Apple watch. And while my grandson may have been happy in the moment as he slipped a new watch on his wrist, I know this experience was much more worthwhile. It made us all truly happy.

That’s just the tip of the iceberg— just step one out of five—but I hope it’s enough to get your wheels turning and wondering “what really makes me happy?” Everyone wants and needs to have enough money to live. That’s a given. But how we spend that money really can buy us happiness, but only if we make careful, deliberate choices based on what will bring us happiness over the long term.

I must add that being able to make these choices in the first place requires achieving some level of wealth to begin with. As Clements writes in his introduction, “Growing wealthy is embarrassingly simple: We save as much as we reasonably can, take on debt cautiously, limit our exposure to major financial risks, and try not to be too clever with our investing.” And if that seems simple, but not easy, This email address is being protected from spambots. You need JavaScript enabled to view it. . As always, I’m here to help!

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Aging parents? Offering help early can ease the way

Aging parents? Offering help early can ease the way

Getting older is a trip.

When I was just a little girl, there were two sisters—probably in their 60s—who would walk our neighborhood every evening. I remember watching them walk and chat and laugh together. It seemed like I would never be that old! Then, as my sister and I were chatting and laughing our way through the English countryside this summer, I realized: we’ve become those sisters!

Of course, walking with my sister is one of the enjoyable things about getting older. Not everything about aging is quite so pleasant (what an understatement!). And while physical decline is something every one of us dreads, one of the bigger threats to our health and happiness is mental decline. As a financial advisor, I see the effects of it every day on the lives of my clients. Watching my clients age is hard, not only because it reminds me that I’m no spring chicken myself, but because I know that, inevitably, there will come a time when they won’t be able to manage their finances themselves. The hardest part? If they don’t realize they need the help of a trusted family member or friend—or they aren’t willing to accept that help once it’s offered.

Money has never been an easy thing to talk about. At any age, it takes courage to open that checkbook, investment report, or credit card statement and face reality. For some, it is because of shame—that they should have earned more, saved more, or invested more wisely. Others have a deep-rooted fear of losing all they’ve accumulated—either because someone will come along and take advantage of them, or because they’ll make a monstrously poor decision that will suddenly wash away their wealth. It’s no wonder so many seniors have such a hard time with this important transition.

We’ve all seen it. Sweet Aunt Sally is suddenly defensive when anyone offers help, and angry whenever there’s a hint of suspicion that her capacity is diminishing. Or Grandpa Bill starts angrily accusing everyone of trying to control his every move—and his money—even when it’s clear he needs help to get safely through his day. When the people we love are so easily agitated, we’re often not sufficiently brave or skillful to bring up the elephant in the room.

I’m not a psychologist. I don’t know the complex psychology behind how seniors react and deal with the decline of their cognitive abilities, but I’ve certainly seen it manifest itself into troublesome financial decisions… over and over again. That’s precisely why, as adult children or caring friends, we need to find a way to broach the issue—at the right time and place.

I recently visited my client and good friend Cindy at her home in Sedona. Hours away from her adult children and family, at 84, she relies heavily on her live-in caregiver. From managing her physical care, to picking up her prescriptions, to balancing her checkbook and managing her daily cash flow, her caregiver seems to do it all. I had to raise a red flag. “She’s a great resource for you,” I said to Cindy. “I know that you trust her, but do you have any mechanisms in place to be sure she doesn’t take advantage of you?” Initially, Cindy was defensive. “It took me forever to find someone I could trust. I don’t even want to think that of her.”

I get it. But because Cindy was in a potentially vulnerable situation, I carefully continued. “I have a thought,” I said. “As your financial advisor, I know how you manage your money today. Will you give me written permission to contact your daughter if your finances ever start to look sketchy? Or if you start asking me to make financial transactions that are inconsistent with your plan? That way I’ll know you’re protected.” Cindy’s face immediately eased into a smile of relief. Having a solution seemed to ease her mind and put her on more solid footing.

Aging is a given—for all of us. Cognitive decline is inevitable, and research shows that our skills at financial decision-making are affected early in the aging process. At the same time, our emotions get more reactive and our capacity to handle new challenges declines. It’s a deadly combination. If you’re spending the holidays with your own aging parents, I urge you to be on the lookout for any signs of cognitive decline. Are they confused about basic things? Do they get agitated when they’re offered help or suggestions? If so, here are three next steps to consider when the ”happy and hectic” joys of the holidays are over:

1.     Help put an A-team in place. Everyone needs an A-team to assist with critical decisions, and your mom or dad may need one more than ever to manage the transition into older age. Read my blog When all feels lost, it’s time to find your A-team for a detailed list of the seven players I recommend you help find and recruit a strong team right away.

2.     Offer to start helping with the finances today. Change is coming. Suggest a Standing (not Springing) Durable Power of Attorney that gives you the legal authority to help manage your parent’s finances right away—without having to go through the legal process of having him or her deemed incapable. See if you can agree to a firm date, perhaps a specific birthday, when you can take over completely. Agreeing to this transition in advance can reduce or even eliminate the fear and anxiety about how and when to hand over the keys to the coffer.

3.     Schedule a family meeting. Communication is the key to family bliss—especially when it comes to money. Be sure all your siblings understand your parent’s wishes so no one is accused of manipulating the finances later on. Make a list and cover all the details to be sure the right people have the right information when they need it in the future. Even perfectly prepared legal documents can’t help anyone if they’re not in the right hands.

Over the holidays, take the time to relax and have fun together. But if it seems like Mom or Dad may need help today—or even within the next five years—make your New Year's resolution an important one and begin the conversation. By talking about the changes that are coming, you can help one or both parents prepare for an easier, more secure future.

Need help broaching the topic or putting a plan into action?  This email address is being protected from spambots. You need JavaScript enabled to view it.  to schedule a time to chat. As always, I’m here to help.


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Leonard Cohen: Lessons from a master in the art of aging

Leonard Cohen: Lessons from a master in the art of aging

It seems the Nobel judges and I have a bit in common. I’ve always viewed certain musicians as master poets. At the top of my list of lifelong favorites: Kris Kristofferson, Bob Dylan and, of course, the inimitable Leonard Cohen. Bob Dylan recently grabbed many headlines with the announcement that he was awarded the Nobel Prize in Literature this year “for having created new poetic expressions within the great American song tradition.” (As of this writing, Dylan has still not responded to the Nobel Academy to acknowledge the honor.) At the same time, Dylan’s slightly older friend and musical peer Leonard Cohen has been making headlines of his own. At age 82, when most people of his generation are happy simply to have time to relax, Cohen is doing anything but settling down. Last week he released a new album, “You Want It Darker,” and in typical Cohen fashion, he hasn’t shied away from topics many choose to avoid. In the title track, he declares “Hineni, I’m ready, my Lord.” When asked recently if he was truly ready to die, his reply was this: “I may have exaggerated.” Classic.

In a recent interview in The New Yorker, Cohen discussed aging, and what it means to him on a very personal level:

“At a certain point, if you still have your marbles and are not faced with serious financial challenges, you have a chance to put your house in order. It’s a cliché, but it’s underestimated as an analgesic on all levels. Putting your house in order, if you can do it, is one of the most comforting activities and the benefits of it are incalculable.”

As is often the case, I agree wholeheartedly with the man. Aging is a great gift, and if we take the steps needed to “put our house in order,” we can appreciate our later years even more. Perhaps even ease oh-so-slowly into that moment when we are, in fact, ready to die. What does it mean exactly to put your house in order? As a financial planner, my mind immediately goes to money. If you plan well enough that you don’t have financial challenges when you’re older, you can free your mind up for the rest of the equation. (For more on planning for the financial burdens ahead, read my blog, Aging: 4 steps to walking a smoother path toward the inevitable.)

Money isn’t the only factor in that critical equation. Many believe essential work—something that engages your mind, your spirit, and even your soul—is vital. Cohen is an amazing example of someone who has continued to produce essential work as long as possible. Perhaps the lack of distractions in old age has helped him be so prolific. He says that, compared to other times in his life, the lack of distraction “enables me to work with a little more concentration and continuity than when I had duties of making a living, being a husband, being a father… the only thing that mitigates against full production is just the condition of my body.”

If Cohen is any example, it seems that putting your house in order also includes deciding what you want to achieve in your last decade or two of life, and how to make it happen. We often think of artists as being the tortured ones—they struggle for years to achieve their goals, and even then they’re often not appreciated for the result. But Cohen has a passion that has kept his mind and his soul engaged his entire life. For the rest of us, it may take some introspection to discover what we want now that we finally have the time to achieve something new.

My good friend Sue Alpert discovered her own “second half of life” passion after she became a widow. Following her own experience, she dedicated her life to helping others prepare for the death of a spouse or other loved one. Her mission is to help others reduce the chaos that can swallow a new widow or widower whole by encouraging people to prepare for the business of loss. (You can take her quiz here to see how prepared you are for loss, and learn the proactive steps you can take to tackle important planning and organization before it’s too late.)

If you don’t have your financial house in order, now is the time to talk to a financial advisor and make it happen. And if you’re struggling to identify your own essential work—what you want and need to achieve in your second half of life—I recommend looking at the Halftime Institute, a program designed to help pursue significance later in life. Marc Freedman’s book, “Encore: Finding Work that Matters in the Second Half of Life,” is another inspiring resource. (To learn more about Marc Freedman and Encore, see my blog Inspirations: Finding Purpose in Your second Half of Life.) If you find what you’re seeking, I’d love to hear your story.

Leonard Cohen remains one of my heroes. I’ve already downloaded the new album on iTunes and I can’t wait to listen to every word. As for the new Nobel Laureate, Bob Dylan, he’s practically a youngster at 75. Time will tell how much this other great poet may teach us about aging in the years to come.

Not sure your financial house is in order?  This email address is being protected from spambots. You need JavaScript enabled to view it.  to schedule a time to chat. As always, I’m here to help.

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Riding the surge: a diver’s approach to managing expectations

Riding the surge: a diver’s approach to managing expectations

The older I get, the more I realize what a powerful impact my expectations—or lack thereof—can have on my state of mind. Last weekend was a great example. A friend and I had scheduled a dive trip on a boat called “Truth” (no, I am not making this up. Our destination: San Miguel Island, just off the coast of Santa Barbara. However, when we booked the trip, we were told quite plainly that 1 out of 3 trips to the island are rerouted to other nearby islands due to weather. Luckily, the Channel Islands (of which San Miguel is one) include more than a handful of other beautiful spots, so when we went to Santa Rosa and Santa Cruz instead, there was peaceful acceptance—not disappointment. I wasn’t attached to the idea of getting to San Miguel; I had no unmet expectations. “Truth” delivered on its only promise: to take us somewhere we’d never been. We had a fantastic experience. But I have to wonder... would I have enjoyed it less if I’d had my heart set on seeing San Miguel?

It’s possible that my insight has less to do with getting older and more to do with what I’ve been learning in my Sangha group, a study of Buddhist thinking where we’re working on discovering compassion and happiness by training our minds to shift the focus from ourselves to others. Perhaps my newfound interest in Zen has already given me a whole new perspective on the difficulty of expectations—in life, in relationships and, yes, in investing.

As I’m sure you heard, the Fed met last week to decide whether or not to raise interest rates. What I found most interesting about the meeting wasn’t the actual decision to keep rates where they are (it was a given that the Fed would either raise rates just a quarter percent or stay put), but the market’s response both pre- and post-announcement. How did the market react? It didn’t. Sure, there were some small fluctuations in the market in the days leading up to the meeting, but nothing like we’ve seen recently when investors were anticipating a rate hike. I believe the reason for that relative calm was the lack of expectations. There were no surprises, so the waters were calm.

Unfortunately, in situations when our expectations aren’t aligned with reality, even the littlest changes can often feel like quite a storm.

Before my dive weekend, I met with my client Laura. She was facing a financial decision: Now in charge of her aging parents’ finances, she asked me for help deciding if she should continue to pay premiums on her father’s life insurance using the policy’s cash value or pull out the cash to reinvest the money elsewhere.Her father is 88, and the death benefit of the policy is $1.5M. I did the math and recommended she maintain the insurance policy, but her expectations told her otherwise. First, she stated that she expects her father to live to the ripe old age of 102. If he does, she would need to pay the policy premiums, and some of the cost would not be covered by the available cash value of the policy. Second, she said she expected she could earn at least 8-9% on the reinvested assets, which would exceed the $1.5M payout in 10+ years. Were her expectations of dad’s life and investment returns realistic?  Probably not. With different expectations, the decision would have been different.

Years ago, I had a client with the opposite expectation. Allen was 45 years old when we sat down to build his retirement plan. As part of the process, we decided to work from the assumption that he would live to be 87. We spent the next two hours putting together a solid, long-term plan that included some needed catch-up contributions to his IRA. All the pieces were in place, and we were both happy with the final plan. But 10 minutes after he left my office, my phone rang. Allen had changed his mind. “Can you refigure the numbers? I’m pretty sure I’m only going to live to be 78.”

Of course, longevity isn’t the only expectation that can steer us in the wrong direction—or rock our boat when expectations are unmet. If I go to Vegas expecting to spend $250 of my “fun money” at the casino, I’ll still be smiling when it’s gone. And if I happen to win $50 or $100, I’ll be overjoyed. Why? Because my expectations were exceeded. In contrast, if I bought a house in 2006 for $650K expecting to sell it at a profit in a few years, I would have been devastated to see its value drop to just $450K by 2012. My perspective in both cases is rooted in my expectation of the outcome.

Expectations turn up everywhere. Investing. Relationships. Life. In diving, there’s a phenomenon called a “surge.” If you’ve spent any time in the ocean, you’ve probably felt it yourself: when the waves hit the rocks, the energy creates back and forth movement in the water. If you’re swimming, that force can push you away from where you want to go. Experienced divers know that fighting the surge is impossible, and if you try, you’ll end up wasting valuable energy. But if you ride the surge—relaxing with it when it pushes back, and then swimming with it when it propels you forward—it can be a beautiful thing. You may feel like a tempest-tossed, but you’ll eventually end up right where you want to be. How liberating.

When it comes investing, managing your expectations is key to keeping your emotions at bay when the market or your financial situation fluctuates, and it’s vital to staying on track toward your long-term goals. The best way to do that: have a plan based on research and knowledge—not just your gut—so you can trust that “riding the surge” will, ultimately, get you where you want to be. And if you find it difficult to set a course and free yourself from expectations, we can chat. As always, I’m here to help.

Speaking of expectations: Did you happen to see Stephen Colbert’s commentary about the lopsided expectations for Monday night’s presidential debate? In his words, the expectations were that Hillary had to be “confident but not smug, knowledgeable without being a know-it-all, charming but not affected, commanding but not shrill, also likable, warm, authoritative—and not coughing. Meanwhile, Donald Trump had to not commit murder…on camera.” Oh my. Here’s the clip if you’d like to bring a little levity to the less-than-light quandary we’re facing on November 8!

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Market volatility making you crazy? 5 tips to managing your emotions

Market volatility making you crazy? 5 tips to managing your emotions

I like to say that if my clients are worried when the market does somersaults, then I’m not doing my job. And yet, I know that no matter how much I talk about prudent portfolio risk and why our focus on the long-term mitigates the impact of short-term market fluctuations, it can be a challenge to turn off that voice in your head that starts making noise when the market dips. The nagging questions can persist. How will this affect my income? Should I be making any adjustments? Will I really have enough to retire or take care of myself?

While those questions may always rear their ugly heads when the market is in the red, here are 5 tips to help you stay on top of your emotions—and on track toward financial success:

1.     Admit you’re human
In fact, embrace it! Why? As humans, we are never (ever!) free of emotions. That means that the majority of our decisions—as much as 90%—are based on our reactions to events and, yes, our emotions. Which also means that a measly 10% of our decisions are based on technical realities. If you can accept your humanity and realize that emotions play a huge role in everything we do, then you just might be ready to be an investor. (For more on juggling being human with the rollercoaster ride of investing, take a look at my blog Finance and feelings: Navigating life’s twists and turns.)

2.     Get clarity about your personal values and goals
Since emotions drive our actions, it’s important to realize that each one of us has “money scripts”—absolute truths that seem to have come from our mother’s milk and that dictate how we think about money. We’re taught to be generous… or thrifty… or that “charity begins at home.” We’re given rules like “tithing is required” or “the children come first” or “children should stand on their own two feet.” We’re told that our “net worth” is our “real worth.” (For more on this topic, see my blog Money Rules.) But in the real world, these learned truths may not be so true after all.

Look carefully at your values and goals, and understand your personal truth. Throw out anything that doesn’t fit your reality. Define your personal values and goals, and then determine how much money you need to support them. Start with how much you need for the basics—food, clothing, shelter, medical—today and in the future, and then decide how you want to use the excess. What’s most important to you? Consider things like funding your grandchildren’s education, traveling, starting a business, supporting a cause, or leaving a family legacy. The options are limitless, and they’re highly individual.

3.     Be humble
There’s an Old English proverb that says it well: Enough is as good as a feast. When it comes to investing, your ultimate goal should be simple: save enough to support your goals. Remember, when investing, average is good. If your goal is to beat the market, you’re bound to assume an unwise amount of risk. A more humble approach is to trust the rules of investing, carefully balance risk and return, and set a goal of accumulating  enough assets to support your life. You may not experience the “thrill of victory,” but you’re also much less likely to suffer the “agony of defeat.”

4.     Get help
Getting the help of an objective third party can help remove the emotion from investing and support smarter, more rational decisions. My clients Doug and Marie used to have terrible arguments about money. They had very different values and goals, and that disconnect created highly emotional conflicts. When we started working together, I asked them each to write down their feelings about money, as well as their values and goals. Now, even if they don’t agree, they at least understand each other’s perspective. And when they do disagree—or their emotions start to override smart financial decision-making—they “just call Lauren.” 

5.     Stay true to your goals
Judy had been retired for just over five years when the market crashed back in 2008. It was a dramatic time when many investors were letting their emotions dictate their decisions. Pundits posited that the market would never be the same and that staying put would be a sure path to financial ruin. Judy watched friends pull everything they had out of the market and put their assets into “safe” places—short-term CDs, bonds, and even savings accounts. They all said they’d “get back in” when and if the market recovered. Judy knew her plan was sound; she knew her goals, and she stayed invested.

It took a while, but the market recovered. In the past two months, it’s set new record highs, with the Dow jumping past 18,000. As a result, when we reviewed Judy’s portfolio last week, she was thrilled to realize that she has almost the same amount in her account as the day she retired over 12 years ago. That’s the strength of the market. That’s the power of long-term investing.

When you have a solid plan in place that’s designed to support your values and goals, short-term shifts in the market don’t have the power to deliver financial catastrophe. In fact, if you’re still contributing to your savings, market dips will help your long-term outcome by giving you an opportunity to buy more for less. Even when you’re in the distribution phase, we design your portfolio to insulate you from volatility. And if you start to doubt yourself? Go back to step one and remember: you’re human. Then review your values and goals, and trust that you’re on track to have enough to live the life you were meant to live.

Need help building—or sticking to—a solid, long-term investment approach? This email address is being protected from spambots. You need JavaScript enabled to view it.  me to schedule a time to chat. As always, I’m here to help!

[Photo credit: Daniel Ito]



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Aging: 4 steps to walking a smoother path toward the inevitable

Aging: 4 steps to walking a smoother path toward the inevitable

At this moment, I’m on a long-awaited trip to Europe with my sister. We’re no youngsters, but we're certainly not elderly by any stretch. As we begin our six-day walking tour of the beautiful Cotswolds, I’m filled with gratitude that both my sister and I are physically fit and able to do this together. I know it won’t always be this way.

Aging is a fact that most of us don’t want to face. By accepting and planning for our (or our parents’) inevitable fragility, we can make life a whole lot easier down the road—especially when that road isn’t paved as smoothly as we would like!

Decide who will be in charge
Meredith is in her late 80s, and she has some significant signs of dementia. But now that she really needs help, she is too childlike and forgetful to know it. She refuses to trust anyone—her children, her sister, her doctors, or her financial advisor—and has decided to stay in her house alone until “I go out feet first.” The financial and emotional pressure on her family is huge.

One of the most important things you can do early on is decide who will be in charge when things start to shift. Deciding where, when, and how to live only gets more difficult, which is why it’s vital to make smart, deliberate choices before any serious decline makes doing so even more difficult—if not impossible. To build trust and ensure a smoother transition, decide who will be in charge early on, and sidestep any disagreements in the future by making it legal. Get a Healthcare Power of Attorney that gives someone else the power to make medical decisions based on your wishes, as well as a Durable Power of Attorney that gives someone else the legal authority to manage your finances when (not if!) you’re mentally or physically unable to do so.

Explore housing options.
When Mark was diagnosed with Alzheimer’s five years ago, he and Judy wanted to keep things simple by staying in their own home, but they both failed to accept how quickly his health would deteriorate. By the time they moved to a continuing care retirement community (CCRC) last spring, the disruption caused Mark’s symptoms to accelerate.

Senior housing is a conundrum. While there’s often an emotional desire to stay at home, physical and mental limitations that come with age often make staying put a challenge. Even if cost isn’t an issue (though it often is), how long does it make sense to live alone—or at home with a partner who is disabled? When is the right time to move? And to where? There are many options available, including those that are pretty well known—independent living facilities, CCRCs, and assisted living communities—as well as some lesser known options such as co-housing and naturally-occurring retirement communities (NORCs). To learn more about the options that are out there, see my blog House hunting seniors: Finding the right option for optimal living.

Plan for the costs of aging.
Michael was a lifelong athlete, and any doctor would have predicted that he’d live a long, healthy life. Even so, to be sure his income was protected, he bought disability insurance when he was in his 50s, “just in case.” It was one of the best decisions he could have made. Michael suffered a spinal cord injury when he was in his late 60s, and the policy has paid for his care and comfort ever since. Without the policy, the impact on his finances—and his family—would have been devastating.

According to the California Partnership for Long-Term Care, nearly half of people aged 65 and older who go into a nursing home will spend between $94,900 for just one year of care, and just under $500,000 for 5 years of care. Nearly 12% will face even higher costs. There are various options to help cover these costs, including insurance policies (life, health, disability, and long-term care), health savings accounts (HSAs) that use pre-tax dollars to invest for long-term medical expenses, and retirement savings. Talk to a financial advisor to create a plan that suits your needs (even those you can’t anticipate). From monitoring cash flow, determining how and when available assets will be used, and ensuring the person in charge of your Durable Power of Attorney has all the information and access he or she needs, a trusted financial advisor can help put every piece of the puzzle in the right place at the right time.

Agree on when to stop driving.
The hardest thing I had to do when my husband Ed became disabled was take away his car keys. I knew he’d be angry, so I secretly notified the DMV that he needed testing. Of course, he knew it was me who busted him, but I had no choice; I knew he was putting himself and others in danger every time he got behind the wheel. Even after his license had been revoked, I had to park the car away from our home so he wouldn’t be tempted to “just take a short little drive.” He hated losing his independence. Who could blame him?

Decide now how driving ability will be determined (and not by the senior!). AARP offers a Smart Driver Course for drivers over 50, as well as an online seminar to help talk to seniors about driving ability—or lack thereof. And, of course, there’s the DMV, as well as a family doctor who may be the first to recommend that a senior turn in his or her keys. By agreeing to an objective third-party decision maker before the time comes, no one has to feel like the bad guy, and everyone will be safer on the road.

It’s time to face the facts: we’re all getting older, and with age come change. Take the time to make some of these key decisions now, and that path will be much smoother when the time comes. Perhaps even more importantly, get help with the choices that matter most. Talk to your doctor about any changes in your health. Talk to your financial advisor about how to plan for future expenses. Websites focused on elder care and groups like AARP and the Alzheimer’s Association can also offer valuable support and guidance. For more information on getting the right help at the right time, see my blog When all feels lost, it’s time to find your A-team.

Need some guidance as you build a better plan for long-term care? This email address is being protected from spambots. You need JavaScript enabled to view it.  me to schedule a time to talk once I’m back from my trip. As always, I’m here to help.


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Is “retirement” the only answer? Take time to rethink the possibilities

Is “retirement” the only answer? Take time to rethink the possibilities

As a financial advisor, you would think I’ve seen a million definitions of retirement. What’s surprising to me is that I haven’t! In fact, not all, but certainly most of the people I work with tend to see retirement as an absolute goal and an endpoint. That’s why I’ve made it one of my primary goals to break that definition wide open and help every client rethink their possibilities.

At 52, Leslie is well into a very successful and lucrative career in aerospace. When we sat down for her financial review last summer, she hit me with the question almost before I’d said hello: “When can I retire?” I was taken aback for a moment. The last time we’d talked, she’d seemed satisfied with her job, and she was bursting with excitement about a new project she was working on at the time. “You’re only 52 Leslie,” I said (with just a little envy!). “What’s the urgency?”

She slumped back in her chair, and every part of her seemed to collapse. “I’m just so tired of it all. The corporate craziness. The fighting for each new project. The hamster wheel. I love the actual work, but I don’t know how much longer I can stand the process I have to go through to roll up my sleeves and just do my job.” Anyone who has ever worked in the corporate world can commiserate. But I’ve known Leslie for years, and she looked and sounded like she was truly at the end of her rope. Suddenly what I expected to be a pretty eventless review meeting was carrying much more weight.

The first thing I did was look at the numbers, and they looked pretty good—so good, in fact, that my calculations showed that Leslie could realistically retire in just two years, at age 54. For many, that would be a dream come true, but I knew that for someone like her, it could be a recipe for discontent, if not downright disaster. So I started asking some important questions. I didn’t focus on budgets or savings or future expenses. What I wanted to explore was what she wanted the next 50 years —or even the next 10—to look like. Here are just a few of the questions I asked:

If you aren’t going to an office every day, what do you see yourself doing—every day?

Do you see yourself living in the same place you are today? Do you have a dream destination?

How do you socialize? Are most of your friends work colleagues, or do you have other circles of friends? What about extended family? When and where do you get together?

What activities do you do outside of work? Is there anything you do that might become a second career?

Are you active in any charitable work? Do you volunteer?

You seem to love what you do. Is there a way to transfer your skills to another organization? Would you be interested in teaching?

If not, will you be happy not doing the work you’ve been passionate about for years?

Is there something else you love that could replace that passion?

If you could have chosen a different career, what would it have been? Is there anything you’ve always wanted to explore but never had the time to pursue?

As we sat sipping our coffees and chatting, I didn’t maneuver Leslie’s thinking; I just worked with her to paint her picture of her future. Her frustration at the office had prevented her from looking beyond her “day job.” At first, this type of “playing” wasn’t easy. Toying with the ideas felt like breaking out of a well-sealed box. But once she got there, we were suddenly onto something! “I’ve always wanted to write,” she confessed. “Not a novel or anything like that. Not fiction. But I’ve never seen a textbook that clearly explains the concepts we use every day in aerospace engineering. It’s this vacancy of information that would be so valuable for anyone entering the field.”

As soon as the words were out, everything about her seemed to change. She was literally on the edge of her seat, her eyes were bright with excitement, and her voice was as happy and clear as the last time we’d met when she had gushed about that old project. What a transformation.

It’s been a year since that meeting. On the surface, not much has changed. Leslie is still working at her job in aerospace. She’s still frustrated with corporate politics and the battle for projects. Yet her outlook has changed dramatically. She is planning to leave her job next year, and she’s headed for anything but a traditional retirement. After our talk, she began to research the process of writing a textbook. She shopped around a proposal to multiple publishers, and one has already expressed interest in her book. It’s a long, multi-year process from proposal to publication, but Leslie is well on her way to making her “retirement” dream come true.

No matter how near or far retirement is for you, I invite you to take a good look at yourself—your goals, your passions, your dreams—and rethink how you envision living your own retirement. And no matter what size your nest egg may be when the time comes, I hope you make choices that bring the most thrilling opportunities to life.

Want some guidance exploring your definition of retirement?  This email address is being protected from spambots. You need JavaScript enabled to view it.  to schedule a time to chat. As always, I’m here to help!

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Cold, hard cash! (Are you paying attention?)

Cold, hard cash! (Are you paying attention?)

Cash. It’s by far the most important piece of wealth management. And yet it is often the very last thing most people want to focus on. Time and time again, when I sit down with a new client, the first thing on their agenda is reviewing their account statements, while the first thing on my agenda—always—is to take a look at how they’re spending and saving their hard-earned cash. It’s not the sexy part of finance, but much like building that less-than-beautiful foundation to support your beautiful home, careful attention to cash flow and cash management is vital to building and preserving long-term wealth.

Tonya and Ray came to meet with me last week. In their mid-50s, they want to be sure they’re on track by saving enough for retirement and making smart choices about pre- and post-retirement taxation. They’ve also decided it’s time to get help with their investments (better late than never!). They came armed with lots of documentation: account statements, tax returns, and even a monthly budget. They seemed to have all their ducks in a row.

Then I took a closer look at the budget they had set in front of me. There were buckets for mortgage, utilities, insurance, and car payments. But everything I saw listed was a fixed expense. These are the expenses that are predictable and unchangeable. What was missing were buckets for their non-fixed expenses—the very items we can manage to achieve the two biggest goals of wealth management: eliminating debt and growing assets.

I asked the obvious question: “How are you spending your cash?” Tonya was quick with an answer: “It’s right there, in the ‘credit card’ bucket. We charge everything so we can easily keep track of it all.” Sure enough, there was a line item labeled ‘credit card’ with a budgeted amount of $2,000/month. “Ok, I asked, but where is that $2,000 going? Exactly?” They both chimed in with a lot of answers. Groceries. Gas. Restaurants. Car maintenance. Pet food. Prescriptions. Theatre tickets. Clothes. And they were clearly very proud that it was all contained in one manageable bucket. They assured me this method was working well for them.

But was it?

Luckily, in Tonya and Ray’s case, because these expenses were all on a single statement, we were able to track every expense. We drilled down into the details and looked at just a single month to see exactly where their cash was going. The numbers surprised us all. While they guessed they had spent $1,000 a month on meals and entertainment with another $1,000 slotted for necessities, the numbers told a different story. Two concert tickets at $125 each; monthly gym memberships of $120 each; one movie night at $36; four rounds of golf at $195 each (which they assured me was an unusual splurge), including two lunches at the resort for $90 a pop. While they were limiting themselves to one “nice” dinner out each week, they had spent $485 in that category, plus they’d added a handful of less extravagant meals, lunches, and lattes that racked up to $530. Total on meals and entertainment: $2,501. When we added in the other items included in the ‘credit card’ bucket (plus a few other surprises like $260 for housekeeping and $100 on supplements), what they were spending was more than double their original $2,000 monthly budget. Clearly, the budget wasn’t working after all. Without a method for closely managing cash, Tonya and Ray had been blind to the enormous rippling effect of their lack of daily money management and their invisible spending habits.  

Tonya and Ray are not alone. All too often I find that even the most financially diligent investors fail to have a basic financial planning document that includes a detailed record of their cash flow. Twisting arms doesn’t work (trust me, I’ve tried!), but by biting the bullet and following these three steps, they (and you) may finally get on the right path:

  1. Identify your top 3 goals—and make building an emergency cash fund #1. Regardless of the state of your finances, having cash on hand to cover unbudgeted expenses is key. Having an emergency fund equal to at least three months of your total household income is essential to avoid having to take on new debt in the future. Goals #2 and #3 might include paying off credit card debt, saving for a car, or funding next year’s vacation. (Read more on the power of an emergency fund in my blog When did it become ok to be financially illiterate?)

  2. Identify your income and your fixed expenses. Income is what you’re bringing home each month—salary, distributions, etc. Fixed expenses include mortgage or rent payments, insurance, utilities, and non-credit-card debt such as car payments. Be sure you know what’s coming in and what’s going out every month.

  3. Build your detailed budget. Err on the side of too much detail, and create a line item for every expense category. Separate your needs from your wants, and keep an eye on your top 3 goals from Step 1, includingcontributing to your emergency savings and paying yourself first for retirement (see my blog Getting back to basics in the New Year for more on this important topic).Be specific, and be certain your expenses don’t exceed your income! I encourage you to use a basic household budget worksheet like this one from Kiplinger. While there are apps available to help, none of them can do this work for you, and they can be more of a distraction than a benefit.

If the word “budget” reeks of giving up your spending freedom, rest assured that careful management of your cash flow is certain to have the opposite effect. By parsing your spending, aligning your spending habits with your personal goals, and projecting your cash flow into the future, you will gain the financial freedom you’ve been seeking all along—guaranteed. And the effects are long lasting too. When done well year after year, you’ll slowly but surely develop a comfort level with your actual life costs. You’ll realize you know whether something is “in the budget” without having to look at the numbers. And when changes happen like buying a home, changing jobs, growing a family, or ending a relationship? It will be that much easier to adjust to life’s transitions, whatever they may be, and rest easy knowing you (finally!) have your cold, hard cash under control.

Need help taking charge of your cash flow? This email address is being protected from spambots. You need JavaScript enabled to view it.  to schedule a time to meet. As always, I’m here to help!

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Facing divorce? 5 tips to protect your financial future

Facing divorce? 5 tips to protect your financial future

I don’t think there’s anyone among us who doesn’t have a story about 2008. Whether you lost a significant chunk of your retirement savings (at least temporarily), watched your parents struggle, or saw your colleagues panic and your friends lose their homes, it was a devastating period. The market has been volatile ever since even as it slowly and surely climbs to new highs. However, there’s a situation many people—especially older couples—face all the time that has the power to bring on even greater long-term financial devastation. What is this monstrous risk? Divorce.

Denise emailed me last week, and I was surprised to hear the elation and relief in her voice. “I’m finally doing it,” she said. “I’ve wanted a divorce for years, but I finally got the courage to make the leap. Even better, Doug feels the same, so I think it will be pretty easy. Amicable even.”

Before the words were out of her mouth, I felt my stomach drop. I hated to burst her bubble, but I also know the reality all too well. When couples divorce, no matter how “amicable” the situation may be, financial distress is inevitable. Add even the slightest bit of hostility to the mix, and you can be sure that distress will increase.

While I wish there was a way to ease the road ahead, or at least add even a tiny sugar coating, the fact is that there’s rarely a way to avoid the personal financial downturn that comes with divorce. No matter how much you’d both like a different outcome, this will be your “personal 2008.” Your assets will be divided in half. You will have two households to support, two retirements to fund and, if children are involved, two “family” vacations to pay for—all further compounded by legal fees to iron out custody details on top of everything else.

Don’t get me wrong: I would never wish for anyone to stay in a marriage only for financial reasons. Life is too short for a couple to stay in a non-productive, dysfunctional relationship. However, the sooner both parting parties face the fiscal realities of divorce, the sooner they can begin to make the appropriate adjustments to move forward financially. It’s a tough mandate considering the emotional turmoil in motion, but it’s a must.

Rather than breaking the news to Denise on the phone, we scheduled a meeting to look at the details. When we sat face to face, here’s what I shared:

  1. Be prepared for a lifestyle change. I’ve seen people stuck in faulty assumptions, unable to let go of lifestyle changes, even keeping an unaffordable house “for the kids’ sake.” Often, downsizing in every way is not only optimal, but mandatory. If your happiness is based on living in the same place and affording the same luxuries, you’re in for a rude awakening. This shift is huge, and you need to understand the ramifications at the outset.
  2. Be realistic about your budget. Yes, this includes supporting two households, and that will eat up a major chunk of any expendable income, but mortgage and rent are not the only factors. As soon as you have a clear picture of your monthly income, you’ll need to create a budget that matches that number to avoid an increase in debt due to overspending.
  3. Include retirement in your planning. Couples who remain together can anticipate the reduced expenses that come with a single dwelling and shared expenses. Going solo means you’ll need even more to support your non-earning years. If you’re over 50, consider making “catch-up” contributions to your retirement. If that’s not possible, at the very least, be sure you are contributing every month to help ensure you don’t outlive your assets as a single.
  4. Don’t count on the promises of your attorney. While I do hope that most divorce attorneys are striving to act in your best interest, we’re all optimists at heart and, even more so, some attorneys will tell you only what you want to hear. Wait until your case is closed to spend money that’s not yet in your pocket. Once your Marital Settlement Agreement is final, you’ll have an accurate sense of your financial capacity. Until then, keep your wallet closed as much as possible.
  5. Keep an eye on the details. If you’re on your spouse’s health insurance plan, those benefits may end when your divorce is final. If you decide to sell your home post-divorce, you may face capital gains taxes if the appreciation is greater than $250K. However, if you sell “incident to divorce,” you and your spouse may both qualify for a $500K exemption from capital gains instead of just half that amount. (A transfer is incident to divorce if it occurs within one year after the marriage ceases, or if it is related to cessation of the marriage.) Details add up and have a major impact on your financial health—now and down the road. Work with a professional advisor to be sure you know which decisions matter most, and when.

When Denise and I finished talking, she wasn’t on the same cloud nine. Reality checks are rarely comfortable. But she did tell me she felt much more prepared for what was to come. “It may not be as easy as I thought it could be,” she said, “but I’m still certain we’ll all be happier over the long term. I know I have some serious homework to do!”

If you’re facing divorce, I urge you to take a close look at your finances and make the best possible decisions as you walk this new path. Whether you’re wearing rose-colored glasses or are mired in the common distress and shock of it all, taking time out to review the money side of the equation may make it much easier to find joy as you enter a whole new phase of life. 

Need help working out the financial details of your divorce?  This email address is being protected from spambots. You need JavaScript enabled to view it.  me to schedule a confidential session. As always, I’m here to help.



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Mental health, money, and breaking the silence

Mental health, money, and breaking the silence

Here we are again, talking about another month dedicated to something, but this is one I simply couldn’t let pass by without addressing it. May is Mental Health Month, and it’s something near and dear to my heart. While this awareness campaign has been happening every May since 1949, this year’s theme of Life with a Mental Illness calls on individuals to share what life with a mental illness feels like for them and tagging their social media posts with #mentalillnessfeelslike. (You can read the collected posts on the Mental Health America site.) The goal is to break down negative attitudes and misperceptions surrounding mental illness and to let people suffering from mental illness know they’re not alone in their feelings or their symptoms. Breaking the silence is an important mission. All too often, mental health issues are hidden away, giving them the power to have a negative impact on our lives.

I read an article in The Atlantic a few years ago by a successful professional and Duke graduate who felt that impact heavily. Despite her passion for telling her story, she used a pen name because “The stigma that surrounds mental health is suffocating, and I don’t feel comfortable talking about it with most of my friends and family, and certainly not my boss or colleagues.” She talks about how the need to keep her mental illness a secret has impacted her professional life, as well as relationships with friends and family. It’s a sad and all-too-common story that, hopefully, is beginning to shift.

As a financial advisor, I’m very aware of another often hidden consequence of mental illness: financial distress. I’ve learned firsthand that, in many cases, high levels of debt and financial chaos are directly tied to mental health, with financial issues either resulting from or leading to mental health issues. I’m not alone in my findings. A 2011 study by a team of UK researchers found that “financial strain and debt are strong risk factors for mental-health problems.” A separate study in 2012 found that “adults in debt were three times more likely than those not in debt to have (common mental disorders).”

It’s easy to see the connection. Binging, which often involves spending, is one way to numb the feelings of anxiety, stress, and depression that can come with mental illness. “Retail therapy” is something people often joke about, but shopping binges are a very real problem for many people with mental health issues. If you’re depressed, shopping gives you a way to surround yourself with cheerful people and boost your endorphins with the pleasure of a new purchase. But when shopping becomes binging, it can result in skyrocketing debt—which causes more stress and, yes, more depression. It’s a vicious cycle, and the best way to break that cycle is awareness.

Clinical psychologist and mental health advocate David Susman offers these five steps to reduce stigma about mental illness:

1.     Don’t label people who have a mental illness.
Don’t say, “He’s bipolar” or “she’s schizophrenic.” People are people, not diagnoses. Instead, say “He has a bipolar disorder” or “She has schizophrenia.” All of this is known as “person-first” language, and it’s far more respectful, for it recognizes that the illness doesn’t define the person.

2.     Don’t be afraid of people with mental illness.
Sure, they may sometimes display unusual behaviors when their illness is more severe, but people with mental illness aren’t more likely to be violent than the general population. In fact, they are more likely to be victims of violence. Don’t fall prey to other inaccurate stereotypes, such as the deranged killer or the weird co-worker depicted in the movies.

3.     Don’t use disrespectful terms for people with mental illness.
In a research study with British 14-year-olds, the teens came up with over 250 terms to describe mental illness, and the majority were negative. These terms are far too common in our everyday conversations. Also, be careful about using “diagnostic” terms to describe behavior, like “that’s my OCD” or “she’s so borderline.” Given that 1 in 4 adults experience a mental illness, you quite likely may be offending someone and not be aware of it.

4.     Don’t be insensitive or blame people with mental illness.
It would be silly to tell someone to just “buckle down” and “get over” cancer, and the same applies to mental illness. Also, don’t assume that someone is okay just because they look or act okay or sometimes smile or laugh. Depression, anxiety and other mental illnesses can often be hidden, but the person can still be in considerable internal distress. Provide support and reassurance when you know someone is having difficulty managing their illness.

5.     Be a role model.
Stigma is fueled by lack of awareness and inaccurate information. Model these stigma-reducing strategies through your comments and behavior and politely teach them to your friends, family, co-workers and others in your sphere of influence. Spread the word that treatment works and recovery is possible. Changing attitudes takes time, but repetition is the key, so keep getting the word out to bring about a positive shift in how we treat others.

I would add one more to his list:

6.     Don’t be afraid to share your experience with mental illness.
I’m proud of my daughter Jamie for sharing her story on Facebook as part of Mental Health Awareness Month. In her post, she shares her experience living with anxiety, OCD, and bi-polar disease, and writes, “There is nothing wrong with you, and there is nothing wrong with me. It’s a real issue probably facing more people than you will ever realize. Be proud like me that you were able to face your issues, confront them, talk to someone about them and treat them. We all deserve a normal life. We all have struggles. If yours is some kind of mental illness, don’t be ashamed. You are not alone. Don’t be afraid to share with others…”

While changing perceptions about mental health may not come easily, the shift is happening slowly but surely. My friend’s daughter Emma is another great example. In her junior year of high school, she was suffering from severe anxiety and depression. A star student, her condition got so bad that she had to withdraw from regular classes for a semester and continue through independent study. When she returned for her senior year, she agreed to talk about her experience in the school newspaper. The day the paper was distributed, Emma’s mother got an urgent call from a close friend. “Have you seen the paper?! Did you know she was doing this? Are you ok?” And while the friend’s reaction was full-blown alarm, when Emma got home from school, she shared a completely different experience. “It was great Mom,” she said. “So many people came up to me and thanked me for doing the interview…they thought they were the only ones at school who had an issue until I spoke out.”

Hopefully, Jamie and Emma’s generation will erase the stigma of mental illness. If they do succeed, I have no doubt we’ll all be better off for it—mentally, socially, and financially.

Has a mental health issue impacted your personal finances? This email address is being protected from spambots. You need JavaScript enabled to view it.  to schedule a time to talk about how to get back on track and regain your financial confidence.

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Closing the financial gender gap

There’s a downside to specializing in financial planning for women. While I take great pride in the fact that I spend much of my time helping women build financial confidence and create stronger financial futures, my job can get seriously frustrating. Why? Because no matter how much the gender gap is mentioned in political speeches, and no matter how wrong we know the disparity is, it doesn’t seem to be going away any time soon. According to the American Association of University Women’s recent report “The Simple Truth About the Gender Pay Gap,” women earn an average of 79 cents to the dollar compared to men. Women of color and older women fare even worse. In other words, 79 cents is the best-case scenario, and it’s a pretty bad starting point.

When it comes to saving, this earnings gap is magnified. With lower earnings, women have 20% less discretionary income available for saving. Less savings means women are less prepared for retirement, less able to retire as early as men do, and often have less retirement income even when they do stop working. The result: a shorter, less comfortable retirement. It’s no wonder women tend to suffer from “bag lady syndrome,” that less-than-pleasant term for the fear of ending up penniless and homeless. And while it may sound extreme, this fear is very real for far too many women.

Of course, the gender gap isn’t the only dynamic at play here. Women—particularly baby boomers and older—were raised with the idea that a solid financial “plan” meant finding a reliable man to provide financial support, and maybe getting a teaching credential just in case. To find a husband, women often spend their limited resources on presentation (clothes, makeup, hair, nails, and more) in hopes of attracting their financial security blanket. While younger women may scoff at the idea, in reality, the myth that men are some sort of financial guardian for women is still alive and well. Perhaps even worse, women tend to hand over the financial reins to their male partners, often hiding their heads in the sand when in comes to money. It’s a dangerous way of thinking. It taints our relationship with money, including our ability to be financial grown-ups and a full economic partner. It inhibits our financial confidence, and it limits our ability to take charge of our financial health and close the gender gap once and for all. 

My client Lydia is a great example. When her husband Jim died seven years ago, figuring out how to transfer assets and how to invest the money was the last thing she wanted to deal with. Jim had always handled the money, and she felt lost in this “whole new world” of financial planning. Jim’s stockbroker offered to help by rolling Jim’s annuity into a new one. When Lydia signed the agreement, she didn’t understand the surrender charges on the new annuity or even what she was signing. The broker played the role of helping the grieving widow well while he captured a hefty commission for himself. Lydia came to me when she sensed she’d been betrayed. Luckily, we were able to unwind the transaction, and since then she’s become educated and financially empowered. I only wish she—and many women like her—had never been in the situation in the first place.

Whether a woman is married, divorced, widowed, or single, I believe half the battle in closing the gender gap is changing our attitudes about money. The gender pay gap has barely budged in more than a decade, so it’s likely to be with us for some time, but here are six ways we women can do our part to help change the game:

  1. Be financially self sufficient in your marriage or any relationship.
    I can’t tell you how many women I’ve worked with who “trusted” their partners to do right by them and were bitterly disappointed. Take equal responsibility for your financial health. Remember: building your financial future isn’t anyone else’s job. It’s not your husband’s job. It’s not your advisor’s job. It’s yours.

  2. If the bottom line goal is to create wealth, make erasing debt your #1 priority.
    If bringing home 21 cents less then men for every dollar you earn makes you mad, consider this: If you have $5,000 in credit card debt, you could be paying as much as 40 cents more on every dollar you spend. Consumer debt compounds negatively, drags on your wealth, and strips away your ability to “outsave” men. Do everything you can to eliminate the debt you have today, and be realistic about spending to be sure it doesn’t creep back up in the future.

  3. Invest in yourself.
    Make financial choices that increase your earning power. Learn new skills. Get your MBA. Earn a professional certification. (Note: “Investing” in Botox, designer handbags, and little dogs are not part of this plan!)

  4. Invest early and often to take advantage of compounding.
    The more your money has time to grow on its own, the more wealth you’ll have to fund your retirement. Start as soon as possible and increase the amount you invest and save each year. If you get a raise, save half of it and spend the rest. 

  5. Getting divorced? Hold on to assets that generate long-term wealth.
    While you may feel emotionally attached to your home, a house is not an investment asset. Focus on retirement funds and other savings vehicles that can produce income 20 years down the road.

  6. Maximize your Social Security benefits.
    With lower earnings, it may be tempting to start claiming Social Security as soon as you're eligible, but delaying your claim just eight years from age 62 to 70 can increase the value of your benefit by as much as 76%. For women, that pay raise can do wonders in helping support a longer lifespan.

I hope the gender pay gap will someday become a thing of the past. Until that happens, make it your mission to change the things you can control. Get educated about financial planning, take responsibility for your financial future, and be sure you’re on track for a long, happy, healthy retirement.

Need help with taking charge of your finances? Let’s schedule a time to sit down and explore where you are today and how to plan for tomorrow. As always, I’m here to help.

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For your finances, getting organized can be the greatest challenge

Photo credit: Nels HighbergIt’s a common nightmare: You walk into a classroom to take a test, sit down at the desk, and when you look down at the paper in front of you, you have absolutely no clue what you’re seeing. The topic. The material. Nothing. You panic…before waking up in a cold sweat.

Over a year ago, Susan called me asking for financial help. “The closer we get to retirement, the more we argue about money,” said the voice on the phone. “I’m scared. I don’t want to end up as a bag lady!” We made an appointment for Susan and her husband to some into the office for an initial meeting, and I asked her to bring their financial statements along to start the conversation. It seemed like we were off to a good start.

Then the day of the meeting arrived. My phone rang at 8:00 a.m. and Susan’s voice was even more desperate than before. “I think we have to cancel.” She sounded like she was almost in tears. “I’ve been trying to pull stuff together all week, and I can’t find what you need. I don’t know where to start.” I felt terrible. I realized I’d given Susan an assignment she was wholly unprepared to complete. She was living the nightmare.

When it comes to financial planning, the challenge of getting organized is as common as nightmares themselves. And unfortunately, it keeps people who need help as far away from a financial advisor as they can get. If you’re in the same boat as Susan, you might be thinking: “If I can’t even organize my finances, how can I ever hand it over to an advisor?” Or worse: “Any advisor will think I’m completely incompetent if they see what a mess I’m in.” So the fear of not being able to do it “right” and the fear of being judged stands in the way of getting help. Taking that first step can feel like climbing Mount Everest (including the lack of oxygen!), but knowing these facts can help:

Your finances are complicated.
You may feel they shouldn’t be, but they are. And unless you’re a financial planner yourself, you may not even know what all the pieces of the puzzle are—much less where they are.ideally in a concise, single-page overview) but you also don’t have to worry about the unknown any longer.

Procrastination is a killer.
As complex as your finances may feel today, the longer you wait to get help, the more complicated and out of control they’re likely to become. Don’t wait to clean out your files, pay off your debt, or put money in the bank before getting help. Woody Allen’s Alvy Singer stopped doing his homework was because: “The universe is expanding!...and someday it will break apart and that will be the end of everything…so what’s the point?!”And while I believe there is a point, he’s right: your universe is expanding. Next year you’ll have more assets (hopefully), more financial needs, and more complexity. Ten years from now, your challenges will be that much greater. Don’t procrastinate. Time is of the essence!

The older you are, the more help you may need.
Yes, finances often get more complicated with age, but there’s a bigger issue that comes with getting older. Unfortunately, the ability to understand and analyze your finances decreases with age. Even if you’ve always managed your finances in the past, as you (or your spouse) age, the task will inevitably become more challenging, and mistakes and misjudgments can happen more and more. It’s never easy to recognize changes in your abilities, but if managing your finances is getting harder, it’s time to ask for help.

There are only three prerequisites. (Hint: Being organized isn’t one of them!)
The only requirements for working with a financial advisor are 1) the desire to improve your financial health, 2) a basic understanding of how a financial advisor can help, and 3) a willingness to pay for that help. An advisor will help you make sense of your finances and then work with you to create a plan to help build your wealth and protect your assets in the future.

When Susan called that morning, it wasn’t difficult to calm her fears. “If you ask for directions to my office, what do you think my first question will be?” I asked. Without hesitation, she replied, “Where are you coming from?” Exactly. I assured her that to help her and her husband move forward, all I needed to know was where they were now. “Just bring what you have, and we’ll take it from there.” I could hear her sigh of relief. She didn’t have to live the nightmare after all.

Susan and her husband showed up that morning with three bulging boxes of files. But we didn’t start by diving in right away. Instead, we talked about the even more important and much more simple aspects of their financial lives: their ages and years until retirement, their children, their living situation, and their estimated savings. We discussed their goals for retirement, and what each of them felt would truly make them feel at peace financially. It was just the first step in the right direction.

Are you ready to take the first step toward a more solid financial future? Let’s schedule a time to meet. Bring your file boxes if you’d like, but the only thing you need to know for certain is that you need—and want—help.

Photo credit: Nels Highberg
Illustration credit: Carl Richards

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Finance and feelings: Navigating life's twists and turns

“Take the emotion out of money.” At one time or another, you’ve probably heard this advice, whether you’ve heeded it or not. But is it the best advice?

Last week I was happy to host a presentation and discussion with Dave Jetson, a therapist and financial counselor who would certainly disagree with those words of wisdom. In his work and his writings (his latest book is Finding Emotional Freedom: Access the Truth Your Brain Already Knows), Dave focuses on helping individuals explore and heal money issues.Over the course of the evening, Dave shared how our emotions impact our financial decisions, and how three parts of our brains—our “trauma child,” conscious brain, and inner child—all compete for our resources and dictate how we save and how we spend. As a financial advisor, I found Dave’s thoughts and research to be in line with my experience observing how feelings can cloud judgment and, all too often, derail the best-laid financial plans.

It’s no mystery that money is an emotional hot topic for almost everyone. Even though we know intellectually that money is simply a necessary tool to support our goals, most of us can’t help but have feelings (and often lots of them!) about money. And those feelings, whether they’re conscious or not, can cause some very real issues when it comes to making smart decisions.  Issues that typically cause the most conflict are rooted in our fears about money, safety, and survival. Dave refers to this fear as the reaction of the “trauma child”—the part of us that, at a very young age, formed our deep-rooted reactions to money. Like Dave, I’ve found that it’s important not to ignore these feelings when they come up, but instead to connect with them and share them—especially when making decisions together with your partner. Here’s an example:

My clients Julian and Karen have very different perspectives about money. Julian was raised by a single mother and money was always a challenge, so he has a lot of fear about being able to provide for his family. To manage his fear, he is hyper rational about money. He serves as the financial regulator in the family, setting the budget and the savings rates, and taking full responsibility for meeting their financial goals. His wife Karen, on the other hand, was raised in an affluent family and never had to worry about money. Since Julian takes the reins financially, she doesn’t have to worry about survival, so she’s free to focus on keeping the family healthy and happy. That structure seemed to work well, until recently when they faced a financial crisis that challenged their thinking. When their pre-teen daughter showed signs of serious depression and needed a residential treatment program, Karen called me in tears. Julian was refusing to spend the money needed to pay for his daughter’s treatment, and talking to him about the issue was leading nowhere.

I was so glad she called. Clearly this crisis was bringing some big emotions into play, and those feelings were clouding the real issues. Whether it was their “trauma children” interfering or some other issue, I knew I needed to tread carefully. But I also knew that, ultimately, they both wanted the same things: a happy, healthy, financially secure family. With that as a basis, I was able to help. I asked them to meet with me as soon as possible to talk through the issue and see if we could agree on a solution. When we sat down together, I began by asking them to revisit their shared values. Next, we talked about their fears. Julian opened up about his fear of getting off track from their savings plan. “We don’t even know if this treatment will work, and it will set us back a lot. How can we be sure we have enough money to cover the expense and still be on track for retirement?” Karen shared her fears for her daughter. “Depression is a serious issue. What is it worth to us to be sure she can recover and be safe and happy?” Then she shared about her sister’s depression growing up and how much it had scared her. “I couldn’t do anything for her, and it made me feel helpless.”

As we talked, I could see the walls come down. In less than an hour, Julian and Karen had “felt” their way through the issue instead of “thinking” their way through it. They both had a new appreciation for where the other was coming from and, most importantly, they were re-focused on their shared values and goals. Julian was able to see that this crisis was a small wrinkle in their big-picture plan—not a derailment—and Karen was no longer angry at his initial reaction to what she saw as an urgent need.

It may sound a lot like a full-fledged psychotherapy session, and while I’m certainly not a therapist, financial planning is, by definition, a type of intervention. The purpose of creating a financial plan is to help identify your values, understand your goals, and create a tangible path to achieving your short- and long-term objectives. But even with a great plan in place, there’s always (and I mean always) an unexpected twist and turn. At one time or another, every family will face a crisis that drives them back to that emotional place and forces them to deal with a “trauma child” throwing a fit that can threaten to undo even the best-laid plans.

As Dave Jetson shared last Thursday, “Our ‘trauma brain’ is the same as our financial brain.” That’s why it’s important to pay attention to what we’re feeling first, and then tackle the dollars and cents of the equation. So the next time you’re facing a financial decision that has you feeling less than peaceful, take the time to connect with what you’re feeling rather than “taking the emotion out of money.” I expect you’ll find it’s a much easier path to wise, rational decisions—about money and just about everything else.

Need help figuring out how to navigate your emotions to make better financial decisions? Let’s schedule a time to chat. As always, I’m here to help.

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Movies, the Oscars, and your money

It’s Oscar season in Hollywood. And while that may not usually have much to do with your finances, this year’s best picture nominees are chock full of money lessons that will prove valuable long after the awards are handed out next Sunday.

The Big Short

The Big Short is all about the why, what and (most importantly) how of the 2008 financial crisis. From my perspective, the real lesson for investors doesn’t come from watching a band of misfits leverage a highly unique opportunity into big profits. These were the (very) few who made big money from the housing crash.

The tragic stories of what happened are of regular people who lost their homes and their fortunes. As a financial advisor, this was one of the most difficult times in my career. My clients and friends were swept up in the real estate frenzy. So many people came to me asking, “How much house can we afford?” When I gave a true and honest answer—which included putting 20% down, staying away from adjustable rate mortgages, and looking at the long term—they thought I was a crazy, ignorant dinosaur. Sadly, some didn’t take my guidance and bought because they were caught up in the noise. “All of our friends are buying! We’d be nuts not to invest when it’s a buyer’s market!” The movie’s depiction of a Florida stripper with five homes may have been a dramatic illustration, but smart people believed that the market was different this time, and real estate was the quick fix.

Lesson learned: In any risky market, there will be big winners—and big losers. When you see an opportunity that sounds too good to be true, it probably is. Stay focused on your strategy, make decisions based on reality (not frenzy), and be a winner for the long term. Not sure you have enough to get by? Check out How much do we really need? A lesson from the Mayo brothers.

The Martian

Matt Damon’s astronaut in The Martian was, above all, a survivor. Even when all seemed lost, he went back to the basics: his knowledge of science and rationing his resources. With no food or water on Mars and very limited supplies on hand, he leveraged every resource he had to create what he needed. To grow food, he used seeds from the potatoes he had (fertilized with excrement that was stored on board). To make water, he combined unused fuel from his vehicle with carbon dioxide from his own body (plus a lot of plastic tenting). He figured out how to use old technology to communicate with NASA. And, through it all, he analyzed how long he had to make his resources last, and he rationed what he had to make it happen.

Lesson learned: Planning for your future requires a lot of the same skills. Carefully build your financial resources, leverage the money you accumulate to build more wealth and, once you stop working, budget what you have to be sure it can support you through what is hopefully a nice, long retirement. Need a refresher on the basics of financial planning? See Getting back to basics in the New Year.

Bridge of Spies

Based on a true story, Bridge of Spies is my hands-down pick for best picture. Not only because it’s a wonderful, intriguing spy movie, but because it offers the most important financial (and life) wisdom of the year.

Tom Hanks is Jim Donovan, an unassuming and quiet lawyer who gets wrangled into defending an accused Russian spy at the height of the Cold War. The spy, Rudolf Abel (brilliantly played by Mark Rylance) is a painter with a deep, quiet soul. Even as he is accused, put to trial, and faces a potentially deadly return to his home country, his integrity and his unwaveringly calm and unworried demeanor remain. Multiple times in the film, Donovan asks him, “Do you never worry?” Abel’s consistent response: “Would it help?” The words struck me over and over again as I watched this man face a series of complex, frightening situations with the same quiet resolve. He was grounded in his own truth, knew that worrying would not change the outcome, and focused on living his life in the beauty of the moment.    

Lesson learned: When it comes to money, it’s easy to worry, but if you have a careful, long-term strategy in place, you should be able to sit quietly and let your money work for you. Ignore the headlines, don’t focus on the short-term ups and down of the market, and don’t worry. After all, “Would it help?” Want to know why I’m not worried about the markets? Read Volatility, escalators, and yo-yos.

Of course, that’s only three, but every nominated film had some great lessons to offer. Here’s the quick rundown of the rest:

The Revenant, Room, and Mad Max: Fury Road were about as different as you can get, but they all focused on surviving…and thriving. Each of the main characters showed resiliency and a keen ability to adapt to any and every new circumstance that came their way. Lesson learned: Make a plan, adjust it as needed, and live happily ever after.

Brooklyn is a beautiful film about personal choices. Lesson learned: Whether you have few options or many, be sure to make the choices that support your financial life and your life as a whole. Here’s to finding true joy.

Spotlight tells a fascinating, real-life story about journalists who do what it takes to reveal the truth—even when they’re pressured to make headlines. Their goal was to do the right thing and serve the victims, rather than take the quick and easy route. Lesson learned: Too many journalists are paid to create stories that generate advertising revenue and miss the real story. When it comes to your money, ignore the headlines and focus on getting the facts.

If you have time, I highly recommend rolling out your own red carpet, popping some champagne, and taking in each of these great films—with at least a bit of an eye (of course!) to what they say about you, your money, and the choices you make that support a truly rich life in every way.  Enjoy!

Want to share your personal insights from these—or other—films? Email me. I’d love to hear your thoughts and recommendations.



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It’s that time of year: change is on the horizon

It’s almost the end of another year. (How does time fly so darned fast?!) If you’re anything like me, the looming New Year means it’s time to get your act together, make resolutions, and do what you need for a fresh start to 2016. Of course, the usual culprits come to mind— diet and fitness, clean out my refrigerator, and get that bag of stuff to Goodwill. But this year it goes deeper for me. The time is ripe for some bigger changes.

Yesterday, when I let my mind start to go there, I was instantly overwhelmed. My brain was cluttered with 50 things I’d love to accomplish now to make some real changes in my life by January. And with all those ideas bombarding me, I felt immediately weighed down and…stuck.

As I tried to figure out a way to move forward, I remembered a fantastic article I read in The Atlantic—an interview with David Allen, an organizational guru and the author of the best-seller Getting Things Done: the Art of Stress-Free Productivity. Allen has been speaking and coaching on the topic of “getting things done” for years, and his insights and methods are a game changer for anyone who, like me, feels plagued by too many tasks and is desperately seeking more time to do it all.

One of Allen’s most important steps to getting unstuck is to get things out of your head and down on paper. He suggests that by simply writing down the long list of items that are floating around in your mental to-do list, you can free up your mind to start to organize your tasks and accomplish your goals. My friend Linda—a high achiever who I’m guessing, has at least two million ideas and tasks in her head at any given moment—told me she keeps a small notebook with her everywhere she goes. Why? To write stuff down and get it out of her head. (Others use their smart phones). Whether she got the idea from David Allen or not, it works for her.

Another tool Allen recommends is to have a physical “in-basket” for all the stuff you have to handle—one place to deposit all the myriad things that come into your already cluttered space until it’s time to focus on them. When I read this, a light bulb went off in my head. At my office, I have an in-basket, and it works perfectly. But my home is another story. Without a personal in-basket, it seems that every flat surface is a virtual in-basket. A letter from my sister is on the side table (I should have replied last week). A half-scribbled grocery list is on the kitchen counter that begs a trip to the store, right next to a coupon for that new restaurant I want to try, and the empty battery package to remind me to add that to my list. And then there’s the invitation to that great speaker series I’d love to attend…over there on the coffee table. The list goes on.

David Allen isn’t alone in his mission to help the overwhelmed (like me!) get it together. A year ago everyone was buzzing about the new book The Life-Changing Magic of Tidying Up: The Japanese Art of Decluttering and Organizing by Marie Kondo. Twelve months have gone by since it hit the bestseller list, and the buzz has only escalated. Every time I turn around, someone tells me their story of how using Kondo’s KonMari Method has changed their lives. In truth, I already own the book—it’s sitting on the table with the letter from my sister—but the type is so darned small it’s a chore to read it! Plus, I know deep down that reading it will give me even more things to add to my to-do list. In the introduction (at least I’ve gotten that far!), Kondo writes, “when you put your house in order, you put your affairs and your past in order too.” What a lovely thought. I guess I have some homework to do.

There are just a few short weeks before January 1, and my mission is to take both David Allen and Marie Kondo’s advice and start to simplify my life. I’m going to begin writing things down to create “mind space” by clearing all that messiness out of my head. I’m going to set up an in-basket at home to get some control over the tasks that do require action. And I’m going to take a closer look at the KonMari Method to begin to get organized. I’ll start with organizing my things…hopefully “my affairs, and my past” will follow. One can only hope.

Of course, as a financial advisor, I see financial organizing as an absolute must on any year-end to-do list. Be sure these items are a top priority in the next few weeks so you have them completed by December 31. Other money-related tasks can go into that new in-basket to handle when the time is right in 2016.

Establish Keogh or Solo 401k plan

Make 401(k) contributions

Sell stock to realize gains/losses

Take Required Minimum Distributions (RMDs)

Pay expenses for tax deductions

Make tax-deductible gifts to charities

Make annual tax-free gifts

Need help with the details before the December 31 deadline? Let’s schedule a meeting ASAP to be sure you’re on the best footing with your money as we head into 2016. I’m always here to help.

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Lessons from the green

b2ap3_thumbnail_Lauren_Klein_golf_lessons.jpgThis past weekend I decided to give myself a treat and attend three full days of golf school. A class called “The Scoring Game” was being offered locally at the Strawberry Farms Golf Club, so there would be no hotel or travel costs, and my short game is decidedly my weak point. So I signed up and treated it like a mini-vacation. My expectation was simple: I would walk in on Friday and present my faulty game—warts and all—and walk out Sunday with a new and improved short game that would make me the envy of all my golf buddies. Yes, I was looking for a silver bullet.

If you’ve never played golf, the short game consists of the strokes taken within about 100 yards of the green. This is not the high flying balls soaring down the fairway, but the very precise and tactical strokes, typically chips and putts, that get the ball from near the green to in the hole. And yes, it’s how the game is won.

The class consisted of the instructor and four students. A 15-year-old girl who is on track to be a golf pro (we should never have been on the same golf course!); a lighting designer by day/golf fanatic by every other minute (this man had his own golf pro and was very serious about the game); and one man I could actually relate to who was a franchise business owner and a basic, weekend player who just wanted to improve his game. I hoped his expectations matched my own and we would both walk away with a “short game in a box.”

Here’s how I pictured the weekend would play out: the instructor would watch me play, identify what I was doing wrong, tell me what to do—including specific strokes that would dramatically improve my game—and applaud when my game was “fixed.” What I experienced was far from that dreamy reality. Yes, he watched me play. And play. And play. The 15-year-old didn’t bat an eye when the instructor told her to hit another 20 balls. She was balanced, flexible, and tireless. Then there was me. When he told me to hit another bucket of balls, I had to stifle the moan that escaped from my mouth. Ugh. I quickly realized my level of fitness wasn’t adequate and that this was going to be a lot more physically and mentally strenuous than I anticipated. (Some vacation!) The instructor did tell me what to do: “Twist your body to the right.” “Turn your shoulder this way.” “Close your club.” He also taught us how to use feedback devices, not just his own words, to help improve our games. Rather than just swinging and seeing where the ball would land, he told us to aim for a certain point and gauge our accuracy in order to strive for precision. He helped us figure out the best club to use for the situation, and how to play differently to handle an uphill lie or a downhill lie. And while his guidance and feedback were valuable, I realized that’s all he could really offer. It was up to me to practice, again and again and again, and to be willing to do it wrong in order to get it right.

As I was reflecting on the weekend on Sunday night (and examining my bruised wrist, lamenting my sore muscles, and basking in some actual down time!), I realized that, as usual, golf was a perfect analogy for life. Our job is to work through our challenges and strive for continuous improvements…at our own pace.

The same, of course, is true when it comes to financial planning. My job as a financial advisor is to coach each client toward success. First, we identify the starting point—where the ball lies at this one moment. What is your financial situation today—warts and all. Next, we work together to determine where you want (or need) to be in 5, 10, 20, or 30 years. Just as a golfer uses different clubs and techniques to manage different situations, my job as a coach is to recommend which tools to use when and how to prepare for changes in the landscape. A financial misstep is no different than a flubbed shot. It may take some correction, but it doesn’t mean you’ve lost the game. And while you can’t predict what’s around the corner—whether it’s a sand trap or a market correction—you can be well prepared for whatever comes next. That’s part of the game. And just like in golf, it’s my job to help you understand why a certain strategy may work—or not—and create clear feedback to help you continue to make the best possible choices in the future.

No matter where your finances are today, strategy, practice, and feedback are all part of getting you where you want to be in the future. But unlike my weekend, let’s focus on the long game this time. That’s where the winning takes place in this game.

Feel like your finances aren’t quite on par? Let’s schedule a time to talk about how we can get you back on track for a long-term win.

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Do you speak the language of money?


Now and then, a particular theme seems to hit me from all sides at once.

Two weeks ago, I was fortunate to catch a performance of a stunning new play called Vietgone at South Coast Repertory in nearby Costa Mesa. (The local run just ended, but if you ever get the chance to see it elsewhere, GO!) The story revolves around a Vietnamese couple who met in an Arkansas refugee camp after the evacuation of Saigon. Throughout the play, as the Vietnamese and English languages are shared, mistranslated, and misheard (all in English for the audience’s sake) some of the richest comedy of the play spills out. I’m still laughing thinking about it!

The next week, I got on a plane and headed to Austin, Texas for a conference for financial advisors hosted by the investment firm DFA. One of the wonderful speakers discussed the importance of “talking in language your clients understand.” Her point? Here’s just one example: While most investors (perhaps yourself included) think of their investments in “stocks and bonds,” financial advisors (perhaps myself included!) often speak about “equities and fixed income.” I always make it a point not to speak in financial jargon, but I began to wonder if my clients hear something equivalent to a foreign language spilling out of my mouth.

The theme continued over the weekend when I extended my stay in Austin to visit my sister Susan. Over a glass of wine, I started to share what I was thinking about. As soon as I mentioned “stocks and bonds,” my sister blurted out: “But you don’t buy stocks for your clients—you buy mutual funds.” I felt like I was back in the audience at Vietgone watching people try to communicate but just missing the mark.

In homage to Halloween, I’ll say my sister’s comment put the last nail in the coffin. I hadn’t seen it before, but clearly there is a significant language barrier when it comes to money and investing. While we may all think we're clear, in reality what we’re saying to each other may be about as clear as…mud. And it’s not just the difference in our understanding of technical terms. Much of it has to do with our emotional reaction to what I’ll call “the language of money.” And everyone’s reactions are different. For instance, when you think of being poor, is that bad to you? Is being rich good? Or vice versa? Does the word saving bring up feelings of accomplishment… or deprivation? There’s no right or wrong, but how those words feel to you may have more to do with your past experiences, your personal motivations, and your financial goals than they do with the actual meaning of the words themselves.

For instance, think about the word invest. It means to “commit money in order to earn a financial return.”That sounds like a great idea, right? For many people, when they hear the word invest, they think gamble. Sure, there is always a risk of loss associated with any investment. But in capitalism, investors are paid to take calculated, prudent risks. But long-term investing in a diversified portfolio provides the potential for that significant financial return in the dictionary definition.

Volatility is always one of my favorites. It inevitably brings up negative connotations. Volatile people. Volatile situations. Volatile governments. And yet, when it comes to the market, volatility simply means “sudden change.” Even when market volatility is referring to a decline in market prices, it’s just as rational to look at that as an opportunity to buy as it is to see a reason to worry. (For more on how I see volatility, read my blog Volatility, escalators, and yo-yos.)

Which is more appealing to you: saving or paying off debt? There are certainly different motivations for each. You may be saving for a dream vacation or for retirement, which can be positive because you’re working toward a positive goal, or negative because you feel deprived while you’re putting the money away. Paying off debt can feel negative because it’s something you owe. Yet saving and paying off debt have an equal impact on your net worth. That knowledge alone can empower you to make better decisions based on your financial reality rather than your emotions.

Coming back full circle to my sister’s comment, it’s important to note that investing in a mutual fund is the same as owning stock in companies. This type of pooled investment vehicle gives investors the opportunity to diversify into many great companies. DFA portfolios include stocks in 12,000 companies in 40 countries—a strategy that allows investors to place 12,000 bets, of which many are sure to pay off. It’s rare that my clients invest in a single company. Even historically big names like IBM, Exxon Mobil, Macy’s, and Apple have seen major downturns. But as part of a diversified portfolio, these swings are hedged by upturns in other stocks. (Hedged. There’s another one!)

When it comes to the language of money, there are so many terms that are filled with innuendo. Passive versus active investing. Fixed income. Equities. Conventional investing and evidence-based investing. The list is long. But until I have the time on my hands to create a thesaurus, let’s all do our best to communicate as clearly as possible. If I’m not clear, ask me to decode. And I’ll do the same. I’d prefer to keep the mistranslations and misunderstandings to a comedy on the stage.

What other money terms make your head spin? Send me your thoughts. I’m happy to offer my own perspective and, hopefully, some clarity. 

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Things change!

b2ap3_thumbnail_things-change1.jpgSummer is quickly coming to a close. My Facebook feed is full of pictures of my friends’ kids who are starting high school and heading off to college, and adorable images of the younger ones with their big, toothless grins announcing their start of kindergarten. All of that back-to-school activity has me thinking about fresh starts. And change.

My client Kathy and I met the other day to review her finances and see if early retirement was an option for her. She’s more than ready emotionally, and she’d “done the numbers” and figured out she could make it work. She handed me a list of her fixed and day-to-day expenses, but what was missing was a personal “escrow account” to cover longer term and unexpected expenses that are harder to manage when a monthly income is no longer coming in the door: saving for a new car three to five years down the road, minor and major home repairs, increases in medical costs, and more. And while we were able to figure out a good plan that will allow her to retire comfortably in 2016, change is never simple. There were a lot more pieces to the puzzle than she’d realized.

Kathy is no exception. It’s not uncommon for a client to come to me with no particular money issue in mind, but once we start talking, I realize there has in fact been a change that requires some rethinking when it comes to finances. If you’re a client, you know I always kick-off financial review meetings with two questions: “What is your biggest financial concern right now?” and “What is your biggest non-financial concern right now?” What I find is that it’s often the non-financial concerns that raise the biggest flags for change:

Larry and Lisa, both in their mid-70s with no kids, came in for a mid-year review. Larry’s biggest “non-financial” issue was that his younger brother was having some major health issues and was just forced to foreclose on his house. Adding his brother as a second beneficiary on Larry’s life insurance and IRA would provide some much-needed support for him in the future—he just hadn’t thought about the possibility.

Kerry’s mother is in her early 70s, and her general health is pretty good. She works out at the gym regularly and walks every day. But she’s fallen and ended up in a rehab facility with broken bones twice in the last two years. As an only child, Kerry didn’t realize the impact her mother’s health could have on her finances. I suggested Kerry talk to her mother now to make decisions that may impact them both sooner than expected.

At 59, Martin is planning to propose to his long-time partner, Marie, who is 60. The plans were all laid, and he was very excited about the pending event. What he didn’t realize was that re-marrying before age 60 would significantly impact his partner’s future Social Security widow benefits; enjoying a long engagement and delaying the actual wedding would add an extra $1500 to their monthly income in retirement. Even if they decide not to wait, they’re aware of the some of the financial “marriage penalties.”

Other changes are less subtle:

Ken and Katherine love their home, but now that they’re in their late 70s, the house and yard work is more than they can manage. They could afford to hire help, but they’re concerned about living independently for the long term. Driving is becoming an issue and they feel isolated, but the low cost of owning their home without a mortgage and with the benefit of Proposition 13 makes the choice complicated.

Lena moved from Northern California to take care of her elderly mother, but she was just diagnosed with a terminal illness herself. The fact that Lena’s mother will almost certainly outlive her requires a major shift in her financial and estate plans.

Judy just changed jobs, and her new employer gave her a sizable sign-on bonus. Plus, she has to figure out what to do with the 401(k) at her old employer. It would be easy to just leave it where it is, but she wants to know what makes the most sense for her long-term plans.

Subtle or not, change is a constant—for us and for others in our lives. It’s not just the school kids who are moving forward. No matter how young or old you may be, it’s a great time of year to look at all the changes in your life and, with a little help, identify which changes affect your finances and make the necessary adjustments to be sure you stay on track toward your long-term financial goals.

Contact us today to schedule a time for your own “back-to-school” review. I’m here to help explore your own life changes and how they impact your financial plan.


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No more whispering: It’s time to talk about cancer

Lauren_Klein_blog.pngIn 1974, Betty Ford changed the future of cancer. Perhaps known best for making her struggles with alcoholism public a few years later, this forward-thinking woman, who spoke openly about her mastectomy for breast cancer at a time when the disease was still a whispered topic even within families, was groundbreaking. It brought the reality of breast cancer into the public eye and into the forefront of many people’s minds for the first time in history. This changed how cancer was treated socially, politically, and medically. By speaking out, Betty Ford empowered women to speak openly about the disease and make their own choices about their treatments and their bodies. She brought a global awareness to the disease that exploded the discussions in the medical community, opened up floodgates of research funding, and expanded treatment options.

“The Big C” is weighing heavily on my mind right now. On Mother’s Day, my daughter-in-law was diagnosed with colon cancer and is now undergoing treatment. And in February my sister was diagnosed with breast cancer which led to two lumpectomies and, on Monday, a mastectomy. Having dealt with it myself when I had my own battle with breast cancer two decades ago, I can see how times have changed—not in the treatment of cancer necessarily (it seems amazingly medieval to me that we’re still removing body parts and poisoning our bodies to try to eradicate this disease), but in its sheer prevalence. Cancer—breast and other forms—has reached epidemic levels. The American Cancer Society has estimated 1,658,370 new cases of cancer in the US in 2015 alone. Just under a quarter million of those cases are attributed to breast cancer. Most of us have either experienced cancer first hand, within our family, or among our closest circle of friends. A decade ago, I felt people at work looked at me differently because of my cancer. I felt tainted. And whether or not that was accurate or I was projecting how I felt myself, a woman dealing with breast cancer today is more likely to get the reaction of, “Oh, you too?”

In his Pulitzer Prize Winning book The Emperor of All Maladies, Siddhartha Mukherjee calls cancer “the defining plague of our generation.” Of course, no matter how common it has become, the impact of a cancer diagnosis can feel devastating, both to the patient and those who love them. My client Cindy is dealing with a terrible diagnosis, and it’s unlikely she will live another 12 months, but she can’t get herself to bring up early retirement to her husband. “He can’t face it,” she said. “Whenever I talk about leaving work, he seems to panic with the reality of the future. I just can’t do it to him.” Another client, Louis, came to me after his cancer went into remission. Two years ago, soon after his surgery, he and his wife splurged on a $60,000 luxury vacation with their whole family. “We couldn’t afford it. I know that now,” he says. “But at the time, all that mattered was enjoying every moment.”

When I’m helping my clients through these issues, I’m struck by the financial impact cancer has on the lives of the patient and those around them. We all owe Betty Ford a huge thank you for changing how cancer is viewed, talked about, and accepted. But knowing that the lifetime risk of developing cancer is now slightly less than 1 in 2 for men and a little more than 1 in 3 for women*, there’s one more big change that needs to take place: how we view and manage cancer from a financial planning perspective. And it needs to start today.

Solid financial planning before a cancer diagnosis is critical because once you’ve been diagnosed, it may be impossible to obtain the insurance you need to help you through treatment or, in the worst case, help your family in case of your death. When cancer strikes, money is the last thing anyone wants to think about, but Cindy and Louis are great examples of how our emotions can derail our financial decision-making—even when it’s more important than ever to make wise choices about your money. Here are a few questions to get you started today:

Do you have sufficient life insurance coverage?
Once a cancer (or other diagnosis) comes your way, it may not be possible to get a policy.

Is the family caregiver in your family insured?
In families where only one parent works outside the home, many neglect to get a life insurance for the at-home caregiver.

Are you taking the maximum available disability insurance (DI) at work?
The majority of workers sign up for only the basic, employer-provided coverage. The cost for additional coverage is often minimal, and well worth the added security.

If you don’t receive disability insurance through your employer, do you have private disability insurance?
Insurance is vital to provide living wages in case of a disability.

Do you have long-term care (LTC) insurance? Don’t assume LTC insurance is only for the elderly.
Getting a policy in your 40s or 50s is affordable, and protects you at the time in life when many cancers are found.

Mitch Albom, the bestselling author of Tuesdays with Morrie, wrote, “Mortality means you don't have forever to work things out. You can live your life unexamined but then on the last day you're going to think: 'I've left things a little late.'” I urge you: don’t leave things a little late. Take care of the things today that can have a major impact on your own finances should you become ill (with cancer or anything else that knocks you to your knees) down the road. Having a plan in place can help make money the last thing you have to think about at the time, and give you and those you love the time and energy to focus on each other and, hopefully, getting well again.

Are there financial planning details you need to examine today? Whether you are a cancer survivor, are battling cancer today, or want to proactively plan for the future, let’s schedule a time to put a plan in place.

*Source: Cancer Facts & Figures 2015, The American Cancer Society

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Lauren Klein quoted on finance site TheStreet.com

The following content originally appeared in an article by Chris Metinko on the popular finance site The Street on May 26, 2015.

b2ap3_thumbnail_coffinatfuneral.jpgEnd-of-Life Harsh reality – Older Americans Die Broke and Destitute

NEW YORK (TheStreet) – While people checkup on their 401(k) to make sure they're adequately planning for their golden years, most don't worry about dying with no money.

However, according to a new study by the non-profit Employee Benefit Research Institute, more than one in five Americans who died at age 85 or older had no assets beyond their home, and more than 12% of that cohort had no assets at all. It was even worse for singles who died at or above age 85, with nearly a quarter having no assets other than their home and 16.7% having no assets. The average net equity left in the homes of those who died at ages 85 or above was $141,147 for couples and $83,471 for singles.

While it’s no secret Americans are bad at saving for their retirement, the numbers paint a particularly bleak picture for those in their last few years. However, experts say there are thing people should keep in mind, especially as they get well

Commie Stevens, managing director of strategic and financial planning for Beacon Pointe Advisors in Newport Beach, Calif., said as people age, they shouldn’t be afraid to ask those they care for to check certain expenses and financial details.

“Your mental abilities may change over time without you even being aware of it, so it's wise to have an open discussion with loved ones now,” Stevens said. “It's important to let them know where you keep your records, what you owe and own and wise to ask them to occasionally check to see if you're staying current on bills and that no one is draining your resources.”

Stevens added it is typical for many people to have accounts spread out among many different custodians, and it’s wise to consider consolidating investments to simplify the review of your accounts and associated withdrawals that create a retirement paycheck.

Lauren Klein, a certified financial planner in Newport Beach, Calif., said the hardest thing for many as they get older is to change their behaviors and attitudes. She said she recently had a 73-year-old woman experiencing financial challenges in her later years, mainly because she was outspending her own means. 

"I explain that in the short run, almost everything is fixed, but in the long run most items become variable,” Klein said. “First, I try to get the client to clearly see the need to change.” Klein said some things she recommends as people get older is to substantially reduce the small -- and not-so-small -- luxuries, consider moving to a smaller apartment or even subsidized housing, use the Medicare Advantage plan and work as long as possible. 

“Even if you work less, a dollar earned is a dollar saved,” she said.

Another reason to work is to delay the start of Social Security benefits. Each year a person waits beyond the minimum age, their Social Security benefits increase approximately 8%, said Allison Alexander, a financial adviser at Savant Capital Management in Rockford, Ill.

Alexander also reminds people to be aware of what they have and determine their tolerance for risk and ability to maximize their investment return. She said an adviser can do projections of income and expenses so a consumer knows with some degree of certainty what he can expect for cash flow in her or his retirement. They also can do a stress test on one’s portfolio and expose it to different assumptions regarding inflation and market return.

“Whether the news is good or bad, it's better to know while you still have time to be proactive and adjust your saving habits,” Alexander said. “Small changes in savings now will provide a more comfortable lifestyle later.”


© http://corporate.thestreet.com/terms?_ga=1.177816613.140917481.1423247948

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Your summer to-do list: take a vacation


As I was en route home from last week’s trip to Bonaire, a Caribbean island off the coast of Venezuela, I stumbled across Time magazine’s article, “Save the American Vacation.” It’s not a new topic. This time last year, USA Today ran a story on countries with the most vacation days, leading with this unfortunate fact:

“The United States is the only developed country in the world without a single legally required paid vacation day or holiday. By law, every country in the European Union has at least four work weeks of paid vacation.”

And we’re not only behind the EU when it comes to vacation. We’re behind every industrialized nation:


Clearly, America has bred a culture of non-vacation. And my own family was living proof. My dad was a business owner, so vacationing just wasn’t something we did when I was growing up. Sure, I went away to summer camp, but we didn’t plan getaways as a family. As a result, it took me until late in my adult life to finally begin to understand the importance of not only setting aside the time and money to take a vacation, but also how to actually benefit from the time I spend away from the office.

Last October, for the first time in a decade, I took a real vacation on my own. I went diving on the island of Bali, and I remember feeling uptight nearly the whole time. I wasn’t able to turn off the constant vigilance and attention to detail that dominates my business-owner brain. If the internet at the hotel was down, I felt panicky. If plans fell through, I felt like I’d failed. I stayed focused on the next item on the agenda and what I was “missing” at home. It wasn’t until the very last day of the trip that I felt able to exhale and take in where I was, who I was with, and the sheer experience of what I was doing.

Earlier this year, I was diving in Palau with a wonderful dive master named Eddie. Before each dive, Eddie would say, “Remember, diving is not swimming. Look up. Look down. Look around. And most importantly, have fun.” It seems basic, yet most beginning divers are so focused on a destination—on the agenda—that they forget that the reason for being there isn’t to achieve, but to simply let go. We spend most of our lives striving to do more, in school, at work, even in our social lives. But vacation is perhaps the one time we can truly forget about doing and just accept what happens day to day, moment to moment.

So how do we get there?

The Time article focuses on the need to take time for vacation, but clearly no government policy is going to help make that happen. Just like planning for retirement, it’s up to each of us as individuals to actually make it happen, and that takes planning—for both time and money.

Decades ago, back when people actually walked into the bank building to make a deposit and we all had “passbooks” for our accounts, Vacation Clubs were popular. Basically a layaway plan for the holidays, some community banks and credit unions still offer this simple way to budget every month to prepay for your time off. According to surveys by Visa, AAA, and Money Magazine, most Americans spend about $1,600 on vacation (I’m guessing that number is higher in Southern California). By saving just a little over $30 a week all year in a dedicated account, you could easily have at least the bulk of a vacation paid for. Then it’s a matter of planning the actual time to get away, which for many of us is the biggest challenge of all. But by planning now, you will not only set yourself up for success, but you may also be able to completely let go once you do get there. The benefits? There are lots of studies that show regular vacations help reduce stress, increase creativity, and strengthen family relationships. No wonder all those other countries make it a top priority!

Need help planning a summer vacation? I’m no travel agent, but I’m happy to help determine a budget for this year and start planning for the future. And, of course, if you’re interested in hearing about my favorite diving spots, I’ll be glad to share.


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Money lessons from a recent high school grad

  Ronald Nelson graduated from Houston High School in Germantown, TN on Tuesday.You may have seen this piece in the news last week: Ronald Nelson, a Tennessee high school student, was accepted to all eight Ivy League universities. And he turned them all down, deciding on the University of Alabama instead. His reasoning? He didn’t want to take on the burden of college debt as an undergrad. While the Ivy League schools had offered him some level of financial aid, the University of Alabama offered Nelson a full ride—and he decided to jump at the opportunity.

As interviewers commented over the weekend, Nelson’s decision is stunning to many. It shines a spotlight on the exorbitant cost of college tuition in the US, which continues to rise faster than inflation. But his decision also says a lot about this young man’s understanding of money. When he looked at the long term, he took into account his plans to attend medical school, and the additional cost of his education down the road. He took the emotion out of the decision (I can’t even imagine the pressure he felt to say yes to Stanford, John Hopkins, NYU, among others) and focused on his ultimate goal: starting his career with as little debt as possible.

The story speaks to the need for families and individuals of every age to understand “good debt” versus “bad debt,” and the importance of balancing the expected return on an investment with the burden of the debt itself.

The upside of debt

While even the word “debt” can cause most of us to cringe, there really is such as thing as good debt. Good debt helps build wealth—not deplete it—and works over time to help you increase your net worth. Of course, no investment comes with a guarantee, but these top three examples most often result in asset growth, at least over the long term:

  • College Education: It’s no mystery that greater education leads to greater earnings potential, which is why investing in higher education is generally considered good debt. But as tuition costs continue to outpace inflation, college-bound students may be wise to take a lesson from Ronald Nelson. He is still working toward his goal of medical school, but he’s accomplishing that goal at a much lower cost than if he’d chosen one of the Ivy Leagues.
  • Real Estate: Buying a home is often the primary goal for 20- and 30-somethings. And while such an investment doesn’t always pay off (talk to anyone who found themselves “underwater” after the last housing crash), in most cases, owning a home for 15-30 years results in a significant profit.
  • Investing: Again, long-term is the key. Sure, some people get lucky on a short-term stock purchase that they happen to buy low and sell high, but the more trusted approach to building wealth is investing over many years in a market that, at least to date, has consistently gone up over time. Yes, bear markets happen, but so do bull markets, and the bulls seem to always win in the end.


Dow Jones Industrial Average - 1900-Present

The downside of debt

While there are no guarantees on the return of good debt, bad debt has no upside. Yes, there are certain living expenses we all must make—including some of the big-ticket items listed below—but the key is to manage that debt as much as possible. Be rational, not emotional, and make choices that reflect your own budget (even your neighbors may not really be able to afford that luxury car, even if it’s sitting in their garage!). Here are some examples of bad debt: 

  • Credit Cards: While it’s important to build your credit over time—and using credit cards is often the primary vehicle for this goal—living beyond your means and increasing your credit card debt may very well be the worst possible “bad debt.” Beware of “no interest” cards that falsely allow you to view credit as “free money.” While compound interest is good for investors, it is exponentially bad to debtors.
  • Cars: Yes, most of us need a car (especially in Southern California!). But remember, you are not what you drive. Cars are both a necessity and a major acquisition. Try to keep emotion out of the decision and do your homework. Remember that driving your own car for just one more year can be a profitable decision.
  • Stuff: Items like furniture, clothing, and appliances may be necessities, but that doesn’t mean you should take on debt to pay for them. Making a budget and sticking to it, or saving up for that beautiful new sofa instead of financing it, can keep your level of bad debt to a minimum.

Ultimately, managing debt is a balancing game, and I expect every one of us could learn a lesson from Ronald Nelson. He took a close look at his long-term goals and opted for the road less traveled, all in an effort to manage his debt. I have to wonder how his peers who are busy taking out huge loans to pay the cost of an Ivy League tuition are going to fare in comparison down the road. My guess: Ronald Nelson is going to excel at more than just medicine in years to come.

Need a better strategy to help manage your family’s debt? Let me know when you’d like to chat. I’m always here to help.



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All written content on this site is for information purposes only. Opinions expressed herein are solely those of Lauren S. Klein, President, Klein Financial Advisors, Inc. Material presented is believed to be from reliable sources and we make no representations as to its accuracy or completeness. Read More >