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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.

Ready to retire? Consider taking the road less traveled

Ready to retire? Consider taking the road less traveled

It’s inevitable. You tell your friends you’re retiring and the first question out of their mouths is, “What are your plans?” Question number two: “Where are you going?” It seems the connection between travel and retirement has become an obsession in our society. And while it may conjure up images of tropical destinations and “once in a lifetime” adventures, the dream doesn’t always reflect the reality.

My friend Joyce is a perfect example. After working in corporate healthcare for decades, ten years ago she was finally ready to call an end to her career. Of course, the questions and suggestions began immediately: “Where are you off to? Have you thought about a cruise?” “You should go on a safari! It’s the trip of a lifetime!” “We loved Capri! You just have to go!” “You’ve never been to Paris?” Joyce had already traveled a fair amount in her life, for work and pleasure, so the idea of planning a big retirement trip wasn’t even on her radar. Suddenly the pressure was on. She started to feel like she had to travel—it was, after all, what retirees are expected to do.

When we met for coffee a week after her retirement party, she was restless. “I don’t even know where I want to go, but I feel like I should figure it out soon. I’m already bored with my routine!”

It’s a dilemma I see all the time. As retirement looms, people are so focused on closing the door on their careers that they don’t take the time to think about what’s next. They know they’re not ready to settle into a rocking chair, but they have no idea how they want to spend their days.

To help guide Joyce, I posed a question that was much different than, “What’s your travel destination?” Instead, I asked, “What do you want to do in your second half of life?” Joyce looked like a deer in the headlights. I took a sip of my coffee and continued. “Is there anything you’ve dreamed of doing, but have simply never had the time—not including traveling?” We sat quietly for a few minutes, and I could see the wheels turning in her mind. When she did speak, she seemed almost embarrassed, as though she was confessing a dark secret. “Paint,” she said. “I’d love to paint.”

Joyce’s vision was no standard image of an elderly gentlewoman quietly painting landscapes on a sunny hillside. Her dream was to paint large, bold canvasses that would take people’s breath away. I could already picture her in paint-covered overalls tossing paint onto the canvas like a modern-day Helen Frankenthaler. She didn’t know her next step, but she now had a vision in her mind, and it had nothing to do with jumping on a retiree-filled cruise ship.

Don’t go me wrong. I’ve recently discovered my love for travel, and I get that, at least for some people, travel is a retirement dream come true. Even then, I’ve seen peer pressure turn what should be a time of financial freedom into a whole new level of stress and anxiety. Travel anxiety can be especially challenging for anyone who lives in an affluent area, and even more so for affluent couples who set out on their travels together. Suddenly, what could have been a modest, budget-conscious Alaskan cruise morphs into a five-star, luxury journey on the Crystal line—for five times the original cost. The pressure to overspend can come from relatives as well. Knowing that memories are important, it’s all the rage right now for grandma and grandpa to treat the entire family to an all-expenses-paid family vacation, yet few retirees can afford this level of extravagance. I’m all for spending money on experiences instead of “things,” but it’s important to be realistic. If a trip is beyond your budget, that’s the moment you need to stop and ask yourself: whose dream am I living? Mine—or my neighbor’s? Peer pressure can be tremendous, but swallow your ego and make choices that align with your dreams and your budget.

Joyce’s story has a wonderful outcome. After our talk that morning, she decided to make her dream come true. She signed up for classes at Otis College of Art and Design, studied with master teachers, and earned a certificate in Fine Arts. She’s been painting ever since, and though I have yet to see her in overalls (I guess that’s my version of her dream, not hers!), she’s happier than I’ve ever seen her. She does travel a bit, but mostly to New York City on artist trips. By focusing on what she truly wanted, she took the road less traveled (pun intended!) and painted a beautiful “retirement” that even she never saw coming.

If you’re on the cusp of retirement—or even already there—take some time today to brainstorm how you want to spend the next decade of your life. Build a vision board. Journal. And don’t let anyone else’s expectations stand in your way. Once you have some ideas, I recommend sitting down with your financial advisor to figure out a realistic budget, and then take it from there. By charting a path based on your dreams and your finances, you can paint your own picture of a wonderfully fulfilling retirement that’s free of financial anxiety. That’s what I call the “golden years”!

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Ready to be a successful investor? It’s time to rewire your brain

Ready to be a successful investor? It’s time to rewire your brain

If I asked you to make a list of your biggest financial mistakes, what would be on it? Overspending today and not saving for tomorrow? Taking on too much debt? Pulling your money out of a down market, or being guilty of too much hubris when the market was up? Investing in that “sure thing” that wasn’t so sure after all?

No, I’m not psychic. (If I were, I’d most certainly have beaten the market into the ground years ago!) The sad truth is that everyone can add at least one of those mistakes to their list at one time or another. Why? Because so many of the most common mistakes stem from the fact that we are hardwired for financial failure. And hardwiring is extremely tough to fight.

Jonathan Clements does a great job explaining this phenomenon in his most recent book, How to Think About Money. I covered Clements’s Steps 1 and 2 in my blog posts Money really can buy happiness and How long do you plan to live (and are you planning for it?), and while those steps were certainly important, Step 3, Rewire Your Brain, deals with issues I see my clients struggle with every day.The good news according to Clements (and I wholeheartedly agree) is that it is possible to be more sensible about how we manage our money, but changing that wiring takes great mental strength. Rewiring does not mean you need to be smarter or more educated than anyone else—you just need to stay focused on the right things at the right time. Here are four things you can start doing today to start to change your thought patterns and truly begin to think differently about money:

  1. Save like crazy. It sounds so simple, doesn’t it? But unfortunately, our brains aren’t nearly as rational as we’d like to think. Many people lack the self-control not to overspend, so they take on too much debt. My friend Lydia was always one of the most “fabulous” people I knew. She always had the best clothes, the cutest shoes, and the fanciest car. But Lydia was a victim of her own fabulousness. While she was dressing to impress, she wasn’t saving enough for retirement. Now in her late 60s, she has to continue to work—not by choice, but by necessity. In contrast, there’s the story of Carol Sue Snowden, a librarian who lived modestly and then made headlines for gifting the library where she worked over a million dollars in her will. As Clements says, “Growing wealthy is ridiculously simple, but it isn’t easy.” It requires saving early, saving often, and focusing on becoming wealthy tomorrow—not appearing wealthy today.
     
  2. Embrace humility. Are you a victim of the Lake Wobegon Effect? In Garrison Keillor’s fictional town of Lake Wobegon, “all the women are strong, all the men are good-looking, and all the children are above average.” The Lake Wobegon effect is the tendency to overestimate your capabilities and see yourself as better than others, and it’s a common affliction. The antidote? Embrace humility—and require anyone managing your money to do the same. Because when it comes to investing, average is good! But our hardwired brains want so badly to be above average that we feel a need to beat the market, or we hire someone who says they can beat it for us. But historically, active investors lag the market indexes. That means that “buying and holding” almost always wins in the end. While your neighbor may be bursting with the news of an approach that helped him beat today’s market, you can bet he’ll be quiet as a mouse when his returns fall behind. “The meek may not inherit the earth,” says Clements, “but they are far much more likely retire in comfort.”
     
  3. Find value. If you find it difficult to ignore fluctuations in the market, you’re not alone. It can be a challenge to turn off that voice in your head that starts making noise when the market dips. Remember this: your goal is to seek long-term value in your portfolio. Ultimately, the market is efficient (really!), and that efficiency makes it extremely difficult for anyone—even the most seasoned money managers—to beat the market over the long term. Focus on investments that are poised to deliver value, and then stay put. (For more on how to win this battle with your brain, see my blog post Market volatility making you crazy? 5 tips to managing your emotions.)
     
  4. Stay grounded. When the market does bounce around (and considerable bounces are inevitable), think like a smart shopper: when the market is down, the companies who offer stock haven’t fundamentally changed, which means their stock is on sale! Avoid mental errors such as over-confidence, loss-avoidance, anchoring, confirmation bias, and more. Stay focused on the long term, secure in the knowledge that market prices of securities will fluctuate, often wildly, in the short term. Over decades, the trajectory has always been up. By staying grounded in the knowledge that you own shares in real businesses whose value is derived from dividend yields and earnings growth, you will achieve the investment success to which you are entitled.

It’s natural: every time you think about money, your hard-wired, reptilian brain tells you that your very survival is threatened. But in this case, following your instincts may be the very worst thing you can do, leading to financial mistakes that can truly threaten your future. It requires great mental effort to save, stay humble, find value, and stay grounded, but by challenging your thought patterns, you can train yourself to think differently about money and help drive your own success.  And if you need help with the rewiring, give me a call. I’m here to help!

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When risk is a good thing, embrace it!

When risk is a good thing, embrace it!

Risk. It’s a word that makes most of us feel uncomfortable—at best. Even if you’ve been blessed with an appetite for adventure, when it comes to taking risks with money, you may find your stomach feeling a bit queasy. While I can’t recommend skydiving or cliff jumping (especially for my retired clients!) taking the right amount of risk with your money isn’t a bad thing. In fact, it’s often the best way to help grow your assets to meet your retirement goals.

Anne is one of my favorite examples of a smart risk-taker. She loves (and I mean loves!) Las Vegas. She loves pitting the thrill of victory against the agony of defeat—even when it is her money at stake. And yet, despite her penchant for slot machines, she’s clearly not much of a true thrill-seeker. She has had the same gambling budget since the first day she walked into a casino over 30 years ago, and she’s never lost more than she can afford to lose. “I started with $100 of ‘play money’ in my wallet, and I promised myself I’d never let myself dip below my $20 reserve,” she says with a smile. And she does have something to smile about. Over the years, Anne has won (and lost) thousands of dollars, just playing the slots. “For me, it’s my favorite form of entertainment,” she says. “It’s a ‘safe’ risk that makes my adrenalin go crazy!”

A ‘safe’ risk. What an interesting term.

The dictionary definition of risk—“exposure to danger, harm, or loss”—sends a pretty clear message that risk is something we should avoid if at all possible. And yet, as counterintuitive as it may sound, when it comes to investing, risk is the one thing that drives reward. In fact, in a capitalist economy like ours, investors are paid to take risk. It’s that simple. Every time you invest in a company you are, in essence, assuming ownership of that company and are entitled to the rewards that owners receive. When earnings grow, you reap the rewards. If the company fails, your investment will fail as well. That’s the risk.

In skydiving, the risk is pretty clear—particularly if your parachute doesn’t open! In investing, risk is a bit more complicated. To understand why investment risk is something to embrace, let’s look at the three basic kinds of risk:

  • Credit risk. When a bank loans money to a borrower, there is a risk that the borrower may default on the loan. If that happens, the bank loses the principal of the loan, and the interest associated with it. That’s credit risk. Your own credit rating dictates your ability to borrow money and the interest you pay, and the same is true for bonds. Lower-yield Treasury bonds are “safer,” so they pay less than high-yield or “junk” bonds. That means that, as a bond investor, when you take more risk by lending to less credit-worthy borrowers, you get paid more interest.  
     
  • Term risk.When you buy a bond or CD, you are lending money for a fixed period. When the bond is due, your money is repaid. When you lend money for a few days, that’s a short term. When you lend money for ten years, that’s clearly a longer term. Long-term is riskier than short-term because you don’t expect the borrower’s situation to change in a month, but in 10 years? Anything can happen. That’s term risk. That is why a one-month CD pays far less interest than a five-year CD. So, term risk is another way investors get paid more to take on more risk.
     
  • Equity risk.Every time you hold stock in a company, you accept the risks of ownership. As an owner, you are paid a share of earnings, and the value of each share increases with company growth. Because of the risk of ownership, investors are paid an equity risk premium to bear uncertainty, price fluctuations, bear markets, business failures, and other perils. Earning the equity risk premium is how investors get paid more for owning stocks.

As an investor, by definition, you must be willing to take some level of risk to reap the rewards. Whether you take on credit risk, term risk, equity risk, or a combination of all three, risk creates value. While risk and reward may not be a perfect relationship, if you add time and discipline to the equation, it’s nearly perfect. It’s what capitalism is all about, and it’s what gives every investor (including you!) the opportunity to leverage assets for continued growth.

Of course, just like Anne and her slot machines, the smartest way to play is to know how much risk you can accept. If you’re a younger investor with years of saving ahead of you, you have time on your side. You can breeze through a bear market, happily buying up equities at sale prices, and waiting for the inevitable bull market to come your way decades from now. If you’re already retired, you may still have years ahead to enjoy growth, but you’ll need a strategy to meet your changing income needs. Whatever your life stage, remember that risk is your friend. Unless you’re skydiving, in which case I can only recommend that you check that parachute just one more time before you jump!

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House hunting seniors: Finding the right option for optimal living

House hunting seniors: Finding the right option for optimal living

It seems everywhere I go these days, there’s one thing on everyone’s minds: where (and how) to live after retirement. In the past week alone, the topic has come up everywhere I turn. In my office, of course. But also at my bridge club, on the golf course, and even at my hair salon. And everyone seems to be grappling for answers.

I have to begin by saying this first: just like everyone else, I don’t have any easy answers. It’s such a complex question, and the “right” solution is going to be different for everyone based on everything from your age and general health to your social and environmental preferences. But one thing is for certain: with the tsunami of Baby Boomers hitting their later retirement years, this issue is only going to escalate. As I look at the options that are out there today, I wonder if finding new, better solutions is going to be up to us seniors rather than the companies who have been busily trying (and in many ways failing) to deliver on what we need to live the most fulfilling lives possible in our last stage of life.

At the moment, the most common options for seniors include:

  • Aging in place. This has been a popular discussion for years now, both among seniors and in the press. It’s attractive to many because most of us have spent a good part of our lives making our houses our homes. Whether we’ve been in the same place for decades or just a few years, we’ve nested here. It’s where the things we love exist, and it’s where the people or the memories of the people we care about the most reside. It’s comfortable. But it’s not optimal for everyone. The cost of in-home care is not covered by Medicare, and the costs of care can be exorbitant. Plus, it can be lonely, especially of your home isn’t in an urban environment where company is just past your doorstep.
     
  • Independent living communities. These communities are usually built by corporations for a profit, so they can be costly, but they can be the perfect fit for some. Many of my closest friends call Laguna Woods home, and they’re constantly telling me how wonderful it is and how strong the community is there. Another friend is looking at Rancho Mission Viejo, a new 55+ development just east of Laguna Niguel. It’s luxurious, but those luxuries come with a hefty price tag. The pros of these communities include local facilities, a close-knit group of other seniors, and lots (and lots!) of activities. The cons: every neighbor is a senior as well, so there’s no diversity and no “younger” energy. Plus, by necessity, these larger communities are often a city unto themselves, so getting beyond the gate requires driving, which is not always an option in later years.
     
  • Assisted living communities. Also called Continuing Care Retirement Communities, these facilities are designed for seniors who require a variety of levels of care and provide everything from independent living options to full-time nursing care and, in some cases, even hospice facilities. This type of community can be particularly attractive to couples who want to age together in a facility that offers various levels of care in a single location. Though they’re often expensive, a couple can move there together as early as age 55, sometimes even into a single family home, and then shift their joint or individual level of care as they age. Interestingly, as a board member at Heritage Pointe, a senior living center in Mission Viejo, I’ve seen an unexpected evolution to the structure. As the independent residents have aged, the facility has become more of an assisted living facility than a hub of senior activity. As a result, it’s not attracting younger retirees, so the mission of the facility has evolved as well. Until we identify a solution to the challenge (which we will!), this facility—and I’m sure others like it—are in a bit of a quandary.
     
  • Co-housing. Personally, this concept intrigues me. The concept is that seniors who have the same preferences work together to purchase and design their own housing situation—where they want it, and how they want it. I’d love to live in Dana Point after I retire, but it’s doubtful I could afford an “aging-in-place” option there, and there are no independent or assisted living communities in the area. By banding together with like-minded seniors, it may be possible to purchase an ideal property and either lease commercial property on the site to provide essential services, or ensure the property is located near the services we would need. It may sound like a new twist on the old commune, but I think it could really work this time around!
     
  • Naturally Occurring Retirement Communities (NORCs): This is my other favorite. A twist on “aging in place,” NORCs are community-based programs formed in neighborhoods where the residents are already living and aging. Rather than having to leave their own homes, services and facilities evolve out of the community, and are built or formed to serve its aging residents. On the plus side, seniors are able to stay in their existing neighborhoods and maintain close relationships that can dramatically improve quality of life as they age. And with built-to-serve facilities, they can receive a certain level of care. On the downside, while some NORCs establish assisted-care and other medical-level facilities within the community, high-need care is not part of the standard structure.

If you’re overwhelmed with this major decision, know this: you are not alone! There’s so much confusion and emotion about this major life choice, and it’s no wonder. Everyone understands that buying a first home is a huge decision—one that’s rife with excitement and new beginnings because it’s understood that what you choose will contribute to your quality of life in this first stage of adult life. Choosing where to spend the last phase of your life is perhaps an even bigger decision. Plus, the options are limited. The only advice I can offer is to make that decision while it’s still your decision. Don’t wait until you’re “ready”—that time may never come or, when it does, the decision may no longer be your own. No matter how overwhelming it may be, consider the options (or even better, create your own!) and make the right choice for you.

Have insights or suggestions based on your own experience? Please email me your thoughts. I’d love to hear them!

 

 

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Retirement stress: When “living the dream” doesn’t come easy

Retirement stress: When “living the dream” doesn’t come easy

I came into financial planning in the second half of my career. It is truly a calling for me. As a CFP®, I adhere to a code of ethics that holds competence as a core principle and requires a commitment to lifelong professional education. Because there is always more to learn and new ways to help my clients achieve their goals, I recently began coursework through the Sudden Money Institute to become a Certified Financial Transitionist®. It’s a natural fit for me, and I’m thrilled to say that after completing Part One of the program, I’m already putting some of the lessons into action.

One of the topics we covered in the first session last weekend was the importance of mindset in how one defines and handles the stress that comes with every life transition. Mindsets exist at two ends of the spectrum, with a growth mindset at one end and a fixed mindset at the other. People with a growth mindset see stress as a challenge, while people with a fixed mindset see stress as a threat. Every transition comes with stress, but your mindset dictates how you respond when something you care about is at stake.

Oddly (or so I thought so at first), one of the most stressful transitions I could think of with my clients is one that is viewed as a positive change: retirement. In nearly every case, approaching retirement is full of a crazy amount of stress. So much for that vision of the happy couple laughing hand in hand as they stroll on the sand! Instead, retirement often comes with a ton of uncertainty, fear, disagreement, and emotional chaos. Here’s an example:

My clients Wendy and Brian have been looking forward to retirement for years. Brian is five years older than Wendy, so he retired a few years ago. Wendy is still working at a job she loves, but Brian wants to travel, hike and fish, and do all the things he’s afraid they’ll soon be too old to enjoy. They agreed on a retirement date for Wendy, and with my help, they’ve been working toward that goal. Now that date is just around the corner, and instead of feeling joyful, Wendy is completely stressed out. When she and Brian met in my office last week, I could feel the tension between them, and despite my best efforts, I couldn’t seem to help them focus on the rational aspects of their retirement plan. Both Wendy and Brian were swimming in emotion, and their upset was palpable. When life changes, money changes—and that’s stressful.

Wendy’s mindset about retirement was a fixed mindset. She had a negative view of stress, and every decision felt life-threatening. When I asked Wendy what she was thinking and feeling, she said, “I realize how confused I am about what my life will look like after I leave my job. Who will I be? What can I afford? Will we have enough money to live like we do now? Brian wants to travel the world, but I’m not sure that’s at the top of my list,” she said. “Everything feels upside down. I realized I’ve been running so hard to get to the end of work that I haven’t been able to face what is beyond. What is retirement? There are so many things I need to understand before taking the leap!”

Brian’s mindset about retirement was a growth mindset. He realized all the changes he would have to address, but he was excited and challenged. Although Wendy and Brian were in sync with their goals and dreams, their different mindsets triggered very different responses to the stress that comes with the transition to retirement. Given that there are two sides to money—the technical and the emotional—our work together will address the emotional side first so Wendy and Brian can rise to the challenge of the next phase of life, connect with others, and learn and grow together.

If your retirement (or another life-changing event) is around the corner, here are three steps to get you started on a path toward your “new normal”:

Step 1: Examine your mindset about stress
By taking a deeper look at how stress triggers your responses, you can harness the power of stress and position yourself to learn and grow. Do you act or react to major change or loss? Are you reactive and closed off, or are you responsive and open? Acting puts you in a growth mindset, while reacting puts you in a fixed mindset. Explore ways to take control of change. Share your stories and your history so you can better understand yourself and those who share your life.

Step 2: Know what’s at stake in the future
This iswhere you move towards the stress to name it, understand it, and embrace it. When life changes, money changes, and this is important. At this stage, it’s important to name your fears. Are you afraid of being a bag lady, or are you afraid of failing to live the life of your dreams? Maybe you’ve always wanted to write a novel, but your career got in the way, and you now have the time to realize your dream. Maybe you want to see the Northern Lights or spend more time with grandchildren or take up a second career (perhaps a service-based career like the opportunities I talked about in my recent blog Inspirations: Finding purpose in your second half of life). There are no rules. Take the time to explore how you want to live it so you can make it happen.

Step 3: Harness the power of stress
With a growth mindset and a clear idea of what is at stake—for you—you will be more open to opportunities and learning. Now you can work on the technical side of money; set realistic budgets, set meaningful goals, and strive to build a community of friends and family. Remember that after 50, changes come fast and furious, so when the next change comes (and it will), you’ll have created the capacity to be responsive rather than reactive. You’ll get a little older; you’ll get a little wiser, and the trade-off will be a good thing!

When I meet with Wendy and Brian meet next week, we’ll follow these steps, taking the time to dig into each area to help them find a deeper connection, decrease stress and, most importantly, have a shared growth mindset that will serve them well through this transition and all the rest to come.

Remember: endings bring transitions, and every transition leads to a new normal. Fostering a growth mindset through transitions will enable you to harness the creative power of stress so you can get to your “new normal” with as little uncertainty, fear, disagreement, and emotional chaos as possible.

Having troublesliding smoothly into 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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Inspirations: Finding purpose in your second half of life

Inspirations: Finding purpose in your second half of life

Retirement. It’s a concept that certainly means different things to different people. But is it time to change how we define it—completely?

While I was away on my abolutely blissful vacation in Belize last week, I finally had time to dig into Marc Freedman’s book, Encore: Finding Work that Matters in the Second Half of Life. It has me utterly inspired. It’s no secret that I’m passionate about retirement planning—and not simply from a financial perspective. I feel part of my personal mission is to help people of all ages discover how to be truly happy both pre- and post-“retirement,” however they choose to define it. But as I read the book, I found myself swimming in new ideas.

First, I realized that I am in an “encore career,” Freedman’s term for a later-in-life career that has a greater purpose and serves a greater good. My path to becoming a financial advisor wasn’t straightforward, but once I found my passion, I was able to apply the myriad skills I’d learned in my prior career and in my life to help others. The result: I’m fulfilled every day because my life has greater meaning and value.

I’m not alone. In his book, Freedman shares his experiences watching others go through similar shifts. But it’s not always easy, in part because of society’s expectations of those of us in the second half of our lives. Think about it: Here is a person at the height of professional ability. A person who has accumulated a career’s worth of knowledge and personal insight. And our culture suggests that now is the perfect time to bring that growth to a screeching halt and, in essence, dive into a second childhood. To reduce our activities to simple leisure as though we’re no longer capable of achieving or providing any good in the world. So we substitute busy-ness for purpose. We focus on building a better golf game instead of building a better world. As a result, people who have been successful in their careers are often thrown sideways when facing a traditional retirement. It’s no wonder!

But what if we took a completely different approach to “retirement”?

This is precisely what Freedman is trying to help foster. He founded Encore.org, a non-profit organization with the mission of “building a movement to tap the skills and experience of those in midlife and beyond to improve communities and the world.” By engaging millions of people in later life as a vital source of talent to benefit society, he hopes to help create a better future for young people and future generations. If it sounds lofty, just take a look at some of the personal stories on the site, and you’ll soon see how very real it can be.

What Freedman found is that highly skilled individuals—attorneys, physicians, volunteers, business leaders, artists, teachers, and more—thrive by finding new ways to apply their expertise in new, meaningful ways. He even created the Purpose Prize to recognize and reward passionate change-makers in the second half of life who are tackling the world’s most urgent problems though social entrepreneurship and innovation. The organization has awarded over $5 Million in prizes to people working in everything from early childhood education to eradicating homelessness.

As I read his ideas and stories, I couldn’t help but wonder if our highly publicized “retirement crisis” isn’t a crisis at all, but rather a major shift—and an incredible opportunity for change. What if every one of us was able to find an encore career that not only gave us greater personal purpose but also helped build a better world? How much change could we drive together? How much happier would our communities be when filled with older, wiser women and men doing good for others? How much stress would be diminished if these encore careers could support the financial needs of those who have been “aged out” of their earlier careers and are seeking something new?

Of course, as a financial advisor, I understand that this type of change takes money (see my blog on creating a freedom fund for more on that topic!). I was lucky when I transitioned into my encore career; I had a solid “freedom fund” on hand, so I was able to take the time to explore options, identify dreams, and discover my purpose. I was blessed to work with Stanlee Phelps, an amazing life and business coach who helped me find my path. Since becoming a financial advisor in 2003, my passion has never waned. After reading Freedman’s book, I decided that now is the time to take it one step further. Before I made it home from Belize on Saturday, I signed up for a year-long course to become a Certified Financial Transitionist™ (CeFT™), beginning in June. This training will give me even greater knowledge and skills to guide my clients through financial transitions, including managing the physiological, sociological, and psychological impacts of change. I can’t wait.

No matter where you are in life, I urge you to read Freedman’s book. You just may find yourself no longer looking for a “job,” but instead looking for a way to help others. And that small but significant shift may lead you to a new life’s work that is much more fulfilling—and financially rewarding—than you ever dreamed possible.

Ready to start rethinking your approach to 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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Celebrate Retirement Planning Week: Create a “freedom fund”

Have you noticed that every day or week is dedicated to something? It was Siblings Day last weekend. There's National Doughnut Day (a fundraiser for the Salvation Army), National Hot Sauce Day (January 22), and yesterday was Scrabble Day. Among all the frivolity, there are some worthwhile campaigns, including National Retirement Planning Week, which began this past Monday.

The attention on retirement planning begs this question: Does retirement planning need an "awareness week"? Absolutely! While no one needs to be made more aware of doughnuts, anything that gets people to pay attention to something that will help them live a better life is worthwhile. As a survivor myself, I hope Breast Cancer Awareness Month pushes women to get that mammogram they’ve been putting off. As a financial advisor, I hope Retirement Planning Week pushes you to take a serious look at where you are today—and where you need to be when it comes to funding your future income. At the same time, I’d like to make a unique push for redefining retirement planning as most people think of it today.

When I first met Katherine ten years ago, she was enjoying a fantastic career at a large, global company. She was traveling the world, entertaining, and a living a high-end, high-cost lifestyle that included a sizable mortgage. She came to me to start planning for retirement. The challenge: she was already in her mid-50s. And while she was earning a bundle, she had almost nothing stashed away to support her once those big paychecks stopped coming in. The first time we met, I suggested we rethink her approach; rather than “saving for retirement”, I recommended she start building a “freedom fund” for the future. Katherine loved the idea. She looked at it like a credit card payment that had to be paid in full each month, and she was religious about her contributions.

Five years later, calamity struck. The company she’d been with for the bulk of her career went bankrupt and laid off 80% of its employees, including Katherine. At the same time, she was hit with a frivolous lawsuit and had to spend thousands of dollars to defend herself in court. Luckily, her freedom fund was at the ready. She was able to pay herself each month while she figured out her next career move, and she paid her legal fees without having to take on any debt. Within 12 months, she had reestablished her career—this time as an independent consultant—and was once again growing her freedom fund. She’s not looking to retire any time soon, but she’s paying off that debt to herself now so she can focus on enjoying life when the time comes.

At 65, Katherine is redefining “retirement.” Like many her age, she’s continuing to earn, but she stopped looking for a “job” the day she walked out the door of her last one. Katherine is part of the growing gig economy. While much of the coverage about this new way of working focuses on millennials, many pre- and post-retirees have jumped on the lucrative bandwagon of taking on a portfolio of work to bolster their income, and possibly delay retirement completely. For many, the Great Recession brought an unplanned early end to their careers, and they found themselves overqualified and, frankly, over the hill when looking for a new job. Like ‘Cassie’ in the classic musical A Chorus Line, they found they couldn’t take a step back from being a star to being just another player—no matter how much they wanted to be. They took a new approach to working and turned the job economy on its head. From consulting gigs to driving for Uber to freelancing, older workers are finding new ways to make ends meet and completely rethink how they view life after 65.

When it comes to retirement planning, there are two sides of the equation: what you spend, and what you have coming in. To have resources you’ll need, start your freedom fund today. Or take a fresh look at how you’re funding the plan you already have. If continuing to work after 65 is appealing, consider joining your peers in the growing gig economy. It can be a great way to stay mentally and physically active while keeping some income rolling in the door.

However you define retirement, realize that it’s a complex balancing act—emotionally, physically, and financially—that you should start thinking about long before you receive that gold watch. To make the most of it, view your retirement income as a debt you owe yourself, and pay it in full every month. By the time you do decide to stop working once and for all, you’ll be truly debt free, and the last thing you’ll need to worry about is retirement income. How’s that for retirement planning awareness?

Need help creating your retirement “freedom fund”?  This email address is being protected from spambots. You need JavaScript enabled to view it.  today to schedule a time to chat. As always, I’m here to help.

 

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09 November 2016

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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 >