Money Archives

Why Voting Matters – #Election2020

September 23, 2020 by Sharlyn Lauby 1 Comment

I’d like to think that everyone knows there’s an election coming up in the United States. And like all elections, the outcomes are important. Some might argue that this year is even more important. I’m not going to get into that today except to say that even if you vote regularly, I hope you will take the time to finish reading today’s post.

I was a political science major in college, so I like reading and staying up on politics and the news. Which I will admit can be a bit challenging at times. A few months ago, Keith bought me a book titled “OMG WTF Does the Constitution Actually Say?” by Ben Sheehan. Whether or not you’ve read the Constitution, this is an educational and fun read. It contains both the actual text as well as a casual interpretation. I hadn’t read the Constitution in a long time and it was a good refresher.

Shortly after finishing Sheehan’s book, I heard about another book…this one about voting. Kim Wehle is a professor of law and legal expert. She wrote the book “What You Need to Know About Voting and Why”. Needless to say, I had to get a copy.

While I’ve been voting for a long time, I really enjoyed this book for a few reasons. It’s a book that talks about both the mechanics and complexities of voting. The book delves into whether or not we have a “right” to vote, how to qualify to vote, and how voting impacts government. I’ve never questioned my ability to vote ever nor have I ever had anyone question my ability to cast a vote. (Yes, my white privilege is showing.) That’s not the case for everyone and this book does a good job of explaining how voter suppression has happened over time and still exists today. It also talks about money in elections and if you ever wanted to know the difference between individual contributions, political action committees (aka PACs), and Super PACs…this book will clarify it for you.

The book was also helpful in sharing how older Americans who need assistance can have a caregiver help them vote and how individuals with disabilities can make sure they’re able to vote with accommodations. Finally, the book offers suggestions about what to do if for whatever reason you’re turned away from a voting precinct (and it could be because of what you’re wearing – and, yes, they can do so legally).

Voting is important. Our votes elect individuals who create laws that impact our personal and professional lives. I’m not just talking about major pieces of legislation like the Americans with Disabilities Act (ADA) or the Family and Medical Leave Act (FMLA). Right now, an elected school board official is deciding whether or not our kids or grandkids should go back to school in person or online. That’s pretty darn important.

I’m not trying to give you the hard sell on buying this book. I did think it’s really good and it will have a permanent spot on my bookshelf (next to Sheehan’s book about the Constitution). That being said, there is one quote from the book that I want to share.

“As far back as 1886, the Supreme Court has repeatedly declared that the right to vote is ‘fundamental’ because it is ‘preservative of all rights.’ Without the right to vote, individuals can’t hold government officials accountable for breaking other laws.”

Wehle suggests thinking about our ability to vote as an accountability tool. Without it, government officials could feel – and act – as if they’re above the law.

A recent AARP study showed that Americans 50 years of age and older would be the world’s third-largest economy if they were counted as their own country. You can imagine the economic impact of this demographic and the power they have in the voting booth. I’m not here to tell you how to vote. But I do hope you will take the time to learn the voting laws in your state, get educated on the issues, and make a plan to go vote. What happens on November 3, 2020 will have a long-term impact on us as individuals as well as our plans for retirement.

Image captured by Sharlyn Lauby while exploring the streets of Gainesville, FL

5 Ways We Can Bridge Our Retirement Gap

September 9, 2020 by Sharlyn Lauby Leave a Comment

wall art hands reaching toward each other implying a retirement gap

I ran across an interesting TEDx video on the Center for Retirement Research’s Squared Away Blog. Kevin Bracker, a finance professor at Pittsburg state university in Kansas was talking about “The Retirement Gap”. While the video is from 2019, it does have some really good takeaways for retirement planning.

Statistically, we know that people are living longer. The challenge is that we’re not financially preparing to live longer. The financial shortfall between how much we need for retirement and how much we have has been labeled “the retirement gap”.

The retirement gap is global and it’s growing, especially in the United States. So why do we have a retirement gap? There are two primary reasons. First, we don’t save enough. There are people close to retirement who do not have enough saved. Bracker says 40% of the population doesn’t have a retirement account and the majority of individuals do not have enough in savings to last them a year. Second, Social Security, which is supposed to be our retirement safety net, doesn’t have enough funding.

Whether you believe Social Security is funded enough is a topic for another day. The bottom-line is that individuals need to prepare for retirement. Social Security wasn’t designed to cover 100% of our retirement expenses. Here are five things that could help individuals bridge their retirement gap:

Save more. I realize this is very difficult to do in general. Even more so when people are facing unemployment or taking a job that pays less than the last job. Toughness aside, are there ways we can set a little bit aside? I’ve mentioned before that we have monthly budget meetings and ask ourselves, “Is there something we can cut from our regular expenses?” Sometimes we amaze ourselves with what we can live without.

Understand the tax code. I’m not saying don’t pay your fair share. But there are ways to legitimately reduce your tax burden. One thing I immediately think about are 401(k) plans where you can save pre-tax. According to the Investment Company Institute, 50% of all employees have access to a 401(k) plan. And over half of those plans include an employer match. As a HR professional, I’m amazed when people don’t take advantage of this benefit. It’s a way to automatically save, pre-tax, and get a savings match from your employer.

Become financially literate. In addition to taking advantage of the savings opportunities from your employer, it’s possible to invest on your own. I think it’s important if you’re going to invest to understand key financial terms. For example, knowing how inflation impacts the market. Also, individuals should know how to read an organization’s financials to determine whether or not to invest in them.

Think about professional help. Most of us are not full-time market fund managers. At some point, we might want to consider the services of a financial advisor. Keep in mind these services are not free. Individuals should know how to select the services of a financial advisor and what their fee structures are. A financial advisor can be a huge benefit but it’s important to have trust in their abilities.

Play the long game. It can be frustrating to save and not see immediate results. Or not see big results. Those small increments can and will add up if we play the long game. I’m reminded of the saying, “If it seems too good to be true, it probably is.” It definitely applies here. Retirement planning happens over time. In small increments. It happens when we’re patient.

Toward the end of the retirement gap video, Bracker talks about creating some systemic changes like “opt out” 401(k) plans versus “opt in” and automatic savings increases but I think most of us aren’t in a position to implement those changes. The five actions above are things we can do now.

I know for some people these financial strategies aren’t anything new. It is a good reminder to stay focused and look for opportunities to do more. After all, we want to enjoy those extra years ahead.

Image captured by Sharlyn Lauby while exploring the streets of Fort Lauderdale, FL

Portfolio Career: An Alternative to Encore Career

July 1, 2020 by Sharlyn Lauby 1 Comment

old time image on a cruise ship gentleman reading newspaper during a portfolio career

Given everything that’s going on right now, it’s possible that individuals might have their primary career on hold while waiting for their employer to bring people back to the workplace. Of course, this could be having an impact on planning for an encore (or second) career. However, there is an alternative.

A portfolio career is where someone works many part-time jobs instead of one full-time job. For example, an accountant might sell insurance and do tax preparation. Or an HR pro might conduct file audits and help people update their resumes. It’s the idea of having several smaller jobs that a person can work on at the same time.

I understand that for some, this might not be optimal. But for others, this could be exactly the flexibility you’re looking for. If you’re looking at your current and future work options and thinking a portfolio career might be something worth exploring, here are a few pros and cons to consider. Let me add that, depending on your situation, some of the advantages could be disadvantages (or vice versa).

Advantages

Decide carefully what projects you want to work on. The plus side of a portfolio career is that you can pick the projects you enjoy and minimize the ones that you don’t. A downside can be that in order to make money you take projects that you don’t like, and they don’t produce your best work. So really spend some time soul searching about the work you want to do and that you feel you’re good at.

Learn to manage your time well. The purpose of a portfolio career is to provide flexibility, while still making a living and feeling fulfilled. Juggling multiple smaller careers isn’t going to be easy. Losing control over your time can have a detrimental effect on your health and wellbeing. You will need to figure out when you’re going to work and how you’re going to handle last minute requests to work on your day off. Trust me. It will happen.

Consider a long-term strategy. Another great aspect to a portfolio career is that you could start with 3-4 smaller jobs then transition down to one prior to “officially” retiring. This has the potential to be a very viable way to manage your exit strategy while still accomplishing some of your personal and financial goals. But like all strategies, you have to plan and get the support of your family and friends.

Disadvantages

Realize that you need to market your services. In order to be successful with a portfolio career, people need to know what you do. It’s possible a person might know you as the person who walks their dog when they’re on vacation, but they don’t know that you can also run errands. It will be important to have a marketing plan in place, so you don’t miss out on opportunities. Oh, and don’t forget that there may be some costs involved.

Think about setting up a home office. There’s a good chance that whatever you’re doing for a portfolio career will involve needing a space. Even if you decide to do house cleaning and handyman services, you’ll want a place to keep your calendar and do invoicing. This can be tough, especially if you’re trying to downsize in retirement. You’ll also want to think about your technology needs including internet.

Balance risk and reward. Again, remember the goal of your portfolio career. The last thing you want to do is go heavily in debt and not see a return on the investment. Maybe when planning a portfolio career, it makes sense to start small and add as time goes on. For example, maybe your current computer equipment will do, and you can save toward buying better equipment in the future.

There’s more than one way to transition your career during unretirement. Portfolio careers can allow you to start smaller side gigs while working a full-time job. Then when you’re ready, you can make those side gigs your focus. The key is planning so you have the flexibility to be successful.

Image captured by Sharlyn Lauby somewhere off the coast of the Mexican Riviera

Retirement Planning Bot: A Unique Solution for Unique Times

May 27, 2020 by Keith Lauby 1 Comment

wall art bot representing a retirement planning bot

We’ve all seen the terms recently – unique, unprecedented, even surreal or seismic. Whatever you call these pandemic times, most of us can agree that they often require equally anomalous ways of dealing with them. Depending on how close you are to retirement, that could apply to your retirement planning too.

I was excited to see that Michelle Singletary, personal finance columnist for The Washington Post, has introduced a retirement planning bot to “see us through the coronavirus pandemic and beyond”.

If you aren’t familiar with bots, they are software applications which are programmed to complete certain tasks. In this case, the bot collects information about your financial situation and retirement plans and makes recommendations relative to both. I had the opportunity to run through the bot program and see first-hand some of their suggestions.

The good news is that this is all completely anonymous. While they ask specific questions about your finances, they don’t know who you are, and they don’t save any of your information. Along the way, you can hear advice and commentary recorded by Michelle. I’ll be candid: I didn’t always find them helpful, but I thought they were good reminders and could offer a little effective guidance, particularly for some people who may be early in their planning.

On the downside, the program doesn’t factor whether you’re planning as an individual or a couple. That can make a huge difference when they ask for retirement or bank account balances and earnings. The bot also doesn’t ask your expected retirement age. It just makes the assumption that you will retire as soon as you reach the age for full Social Security benefits.

The best thing about this particular retirement planning bot is that it provided a step-by-step guide with as much hand holding as you can expect from a robot program. And there is a little encouragement along the way provided you are doing something to fund your retirement. They even have some FAQs at the end.

A couple important things to focus on:

This is not a replacement for your professional financial advisor. A single source of information is rarely enough for something as important as retirement planning.

You may not agree with the assessment of your financial situation and your retirement plans. That’s okay. It doesn’t mean you are doing a bad job of funding your retirement.

I think the best way to view this tool can be found in their own description:

“We may not be able to capture everything about your financial situation, but it’s a place to start”.

Many people are very concerned about their financial situation right now regardless of when they plan to retire. This retirement planning bot may help relieve some of the stress as you think of future plans. Who knows? You may just be better off than you think. And, if not, you could get some ideas on how to get back on track.

Image captured by Sharlyn Lauby while exploring the streets of Fort Lauderdale, FL

The High Cost of Financial Exploitation and Tips to Prevent it

April 29, 2020 by Sharlyn Lauby Leave a Comment

Las Vegas slot machine early retirement and tips to prevent financial exploitation

AARP recently offered a webinar on “The Costs of Financial Exploitation & Tips to Prevent It”. It was a very interesting and eye-opening listen. One in five individuals fall victim to some form of financial exploitation. The average loss is $120,000, which for many can be their entire savings. And while you might say to yourself, “I’m smart and alert. I’m not going to let some stranger scam me out of my money.”, the research shows that it’s often not the strangers we have to worry about. It’s family and friends.

I’m not bringing this up to scare you or to make you suspect of anyone. But AARP’s philosophy of “If you can spot a scam, you can stop a scam.” Is a good one. AARP mentioned during the webinar that being aware of scams makes a person 80% less likely to engage in one and if a person does start to engage, it makes them 40% less likely to be a victim. So, talking about scams, fraud, and financial exploitation is an important topic.

Many of us are well aware of the Social Security Administration scams going on. But we’re already hearing about scams associated with the stimulus checks that we’re scheduled to receive. That’s right, we don’t even know when we’re going to get these checks and there are already scams in place to get them from us.

The webinar pointed out five actions to look out for when it comes to financial exploitation. These might be actions that you want to discuss with family members or ask someone to review with you (so you stay alert as well).

Pay attention to withdrawals, loans, and overall transactions. It simply makes good financial sense to have regular reviews of your expenditures. This can also be a time to take note of anything unusual in your spending and address it. This isn’t about a lack of trust. It’s about making sure that our financial affairs are in order.

Have two power of attorneys for checks and balances. It’s always recommended to have a power of attorney in estate planning. But I can see where it might make sense to have two. This can create checks and balances on financial decisions. It will take some conversations to figure out who those two people are – the last thing anyone wants to do is create friction. But it’s worth consideration.

Ask your financial institution if they participate in the BankSafe program. The AARP BankSafe Initiative provides training to employees at financial institutions to help them spot potential signs of financial exploitation. Researchers have found this type of training gives employees greater confidence in recognizing and reporting cases resulting in 12 times more money being protected per employee.

Learn about third party requests for money. During these difficult times, it can be wonderful to give to organizations and individuals who need assistance. I’m not saying to stop. But it’s important to take a moment and do our homework about where we’re sending our money.

Screen your phone calls. AARP continues to bring up this point. Phone calls are an easy way to scam people. The best way to avoid a scam phone call is to let it go to voicemail. If it’s a legit call, they will leave a message. Let your family and friends know that you won’t answer spontaneous phone messages. Recommend they send a text or some other type of message, so you don’t have to deal with scam calls.

PLUS! in addition to scams about stimulus checks, another popular scam right now involves the U.S. Census. Individuals posing as census workers collect information that can be used in identity theft. If you’re concerned about this, check out the video “5 Ways to Avoid a Census Scam” and share it with others.

Talking about money is always a sensitive topic and no one wants to admit that they might have fallen victim to a scam. That’s why taking a preventative approach to financial exploitation is so important. Start the conversations early and get used to having open and honest conversations with people you trust.

What We Are UP To: Quarantine Life Edition – #Unretirement Project

April 15, 2020 by Sharlyn Lauby Leave a Comment

Like many of you, Keith and I are still sheltering in place this month. But we’re making the best of our quarantine life. I know, it’s not really a quarantine. Here are a few of the things we’ve been doing during this wild time.

Watching | Zombieland 1 & 2

> I’m sure this movie choice sounds a bit offbeat given what’s going on, but they are really fun movies. Neither of us are into scary or gory films. Don’t want to give away the storyline, but I will say that I loved the list of rules for surviving the zombie apocalypse. Especially number 32. You can look it up.

Reading | AARP Memory Activity Book

> I bought this book a while ago because I wanted to see what types of activities were being encouraged to stimulate our brains. I believe brain health is important, so I was curious. The book contains dozens of individual activities that a person could do on their own (like creating a song playlist) or with others (playing a team sport). Even if you’re not dealing with memory loss, there are some fun things in the book to occupy your time.

Remembering |Great Recession

> No, I’m not looking back on the Great Recession with fond memories. But with all of the talk about recession these days, we are looking back at what happened to see if there are some lessons that we need to remember or ideas we should incorporate into our lifestyle sooner versus later. Better to plan ahead.

Working On | Hanging Pictures

> Living the quarantine life is giving us the time to do a few small projects around the house like hanging pictures. We did a few right after moving in to make the house feel more homey but it’s time to finish the project. When you’re spending more time than usual inside, it is nice to have beautiful things on the walls.

Feeling | A bit of FOMO

> FOMO is an acronym for “fear of missing out”. It’s often associated with the anxiety of not doing something such as going to the hip new restaurant or buying the latest trendy item. In our quarantine life, I think it’s attached to making the latest culinary trend like Dalonga Coffee, a South Korean drink made from instant coffee and sugar served over milk. It was tasty and a fun distraction to make.

Planning | With Blueberries

> One of the benefits to living in North Florida is the number of blueberry farms in the area. And we love blueberries! The season just started, and we were able to get a summer’s worth of blueberries. Good thing they freeze well. LOL! That being said, I’m on the hunt for really good blueberry recipes. Quarantine life is the perfect time to try then out.

Loving | Pigs in a Duvet Cover

> When we lived in Cincinnati, one of our favorite places was Skyline Chili. We were very fortunate when we moved to Fort Lauderdale that they had not one but two Skyline Chili franchises. Well, now that we’re in Gainesville, we’re not as fortunate. Luckily, we can buy Skyline online. We saw this recipe for ‘pigs in a duvet cover’ and decided to try it with some mustard, Skyline chili, onions, and cheese. OMGosh, it’s a deconstructed cheese coney! Delish.

Geeking | Fiasco

> A favorite podcast of mine is Slate’s Slow Burn. It’s a well-researched look at significant events in our history. The original host of the podcast, Leon Neyfakh, has recently gone out on his own and created another podcast documentary called Fiasco. I’m listening to season one about the contested 2000 election between Al Gore and George W. Bush. If you enjoy politics and the news, check it out.

What’s UP with you? How are you passing the time in quarantine?

Retirement Savings Boost Due to Relaxed Rules

April 1, 2020 by Keith Lauby 1 Comment

We don’t write a lot about retirement finances – preferring to leave that to the experts. But there are some recent changes worth knowing about regardless of when you plan to retire. And it’s definitely something you should know if retirement is a relatively short time in your future.

Of course, I’m referring to the Coronavirus Aid, Relief, and Economic Security Act or the Coronavirus Relief Bill as it’s commonly called. Just signed into law, this new measure is designed to stimulate the economy and offer economic aid to those negatively impacted by this global pandemic.

The most visible benefit of the new bill is a direct, one-time payment to most adults. The actual amounts of each stimulus check depends on age and reported income so be sure to read up on the details. Best of all, the bill includes language that allows Americans receiving Social Security to obtain a stimulus payment as longs as they received a Social Security benefit statement (SSA-1099).

The aid package provides three provisions that can benefit your retirement financing.

You can delay taking your Required Minimum Distribution (RMD) for most defined contribution plans when you reach the applicable age as indicated in the SECURE Act. This new law suspends those RMDs for all of 2020. It’s particularly good news since cashing out securities in a depressed market is not ideal. Of course, withdrawals are still allowed if you really need to make them.

The bill allows you to borrow more against the money you have already saved in your contribution plans. Typically, you could borrow up to $50,000 or 50% of your vested account balance, whichever is less. This new measure will double that and allow you to borrow up to $100,000 against your existing savings.

The Coronavirus Relief Bill allows struggling savers to take hardship distributions of up to $100,000 from retirement plans and individual retirement accounts in 2020 without the 10% early withdrawal penalty if you are under age 59 ½. Smart investors know that this early withdrawal is never ideal – but it is available if needed.

Planning your finances for retirement is not easy even in the best of times. As global economies struggle to deal with the outcome of this pandemic, many workers are rethinking their retirement plans. The hope, of course, is that recovery will be quick. These relief measures are expected to help those who need it the most.

Qualifications directly related to COVID-19 may apply so, before taking any actions, we recommend that you discuss them with your financial professional.

If you are looking for additional resources to help you during these difficult times, AARP has a few great articles including regular updates as significant events happen. Caregivers can find information on taking care of a sick relative or friend. Best of all, they include some great tips on how older adults can reduce their risk of illness. Stay safe out there!

Image captured by Sharlyn Lauby while exploring the streets of Havana, Cuba