Boomers, Markets & Money

A Down-to-Earth Discussion of Financial and Lifestyle Information for Baby Boomers

What is Your Legacy?

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I enjoyed an AAII presentation given by Robert Powell, a well-known writer and editor on retirement topics. Or as he calls it “The most depressing job in America.”

He gave a lot of useful information on the usual retirement themes. But one point that stood out for me was the importance of passing on your values and the lessons you learned to your family.

A Young Woman

A Young Woman

Here are links to two articles he wrote on the subject that I think you will find interesting:

For this post, I’ve included some photos of a scrapbook my mother-in-law, Augusta, put together decades ago. (Click on a photo to see a slideshow.)  I enjoyed hearing the stories associated with the treasures in the collection. It helped me understand some of her experiences and those of her peers.

Below is a transcript of the some brief remarks I made at my father-in-law’s celebration of life service. This was my attempt to pass along some of his life experiences and values to his grandchildren. There were a lot of lessons to be learned from the way he worked his way through college in the Great Depression, and medical school. And as soon as he finished his internship, he was off to serve in World War II as a battalion surgeon on Okinawa Island. I hope you find it interesting.

Joseph J. Lambiase, M.D. Celebration of Life

Like many of you today, I can tell you many stories that illustrate the kindness, empathy, love, and humor of my father-in-law, but I figured you would hear enough of those today.

What I want to share is a very short tale, of a young man who pulled himself up by the proverbial bootstraps. Joe never bragged about what he did but I found his stories of the past so interesting that I would often ask him about his experiences. His life and values, like the rest of his generation, were colored by the struggles of the Great Depression where he learned to work as a teenager and give his wages to his mother to help the family.

I remember I once asked him how he decided to become a doctor and he told me, “My mother told me to be a doctor.” I thought that was kind of funny since you don’t hear of many young men who listen to their mothers. So, the first step to becoming a doctor was to go to college. He went to Brown University. One important reason he went there was that he could walk there because affording carfare was out of the question. He worked during the summers to afford tuition. When he ran out of money, he’d take a semester off until he could scrape together tuition money. The challenges didn’t stop him from graduating with honors.

I found his stories of his medical school training in Washington, DC the most fascinating. To cover room and board during this time, he worked through the night at the hospital every other night after doing his regular duties during the day. He said, “That covered room and board, but if I needed cash for something, I’d sell my blood.” He had a pretty, young sweetheart in Rhode Island for whom he bought a string of pearls by selling his blood.

I remember his stories of being sent out as a medical student into the apartments of poverty-stricken women of Washington, DC to delivery babies while rats scurried across the floor. He told of the streetwise nuns who worked in the emergency rooms “who really knew their stuff.” The sweltering heat of Washington DC summers nights led to many sleepless nights, where he would walk to the river in a futile attempt to find respite. He never complained or bragged about these experiences but just stated them matter of fact manner when he was asked.

Later, he and his sweetheart Augusta married, and together, with old-fashioned values of hard work, frugality, sacrifice, and love contributed in countless ways to the well-being of their family. In the interest of time, I won’t go into detail. But I just want to say how utterly I was affected by kindnesses shown to me by both Joseph and Augusta and how grateful I am that they are the grandparents of my children.

As Malcolm Gladwell stated in the book Outliers, we are who we are, in large part, because of the sacrifices of those who went before us. We never accomplish anything truly on our own. It is easy to overlook a quiet, modest person like my father-in-law, who went about doing the difficult but not very glamorous work of day-to-day life. But all the good, long-lasting things in life are a result of the sacrifices of ordinary people who choose to live an ethical life. As we take time to honor the life of Joseph John Lambiase today, I would like to conclude by asking his grandchildren to follow in his footsteps and live lives dedicated to hard work, sacrifice, humor, dedication to family, and love.

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What is Stopping Me From Investing my Money??

Investing Anxiety

Investing Anxiety

My friend Ann said, “What I want to know is: What is stopping me from investing my money?”

Ann is not alone. A Nationwide Financial survey found that more people are afraid of investing in the stock market (62%), than are afraid of death (58%), or public speaking (57%.)

Daniel Kahneman, psychologist and winner of the Nobel Prize in Economics, gave advice on this topic in his book Thinking, Fast and Slow. Kahneman gave this sermon to fictional character Sam:

“I sympathize with your aversion to losing any gamble, but it is costing you a lot of money.”

Kahneman advised, “You will do yourself a large financial favor if you are able to see each of these gambles as part of a bundle of small gambles and rehearse the mantra that will get you significantly closer to economic rationality: you win a few, you lose a few. The main purpose of the mantra is to control your emotional response when you do lose.”

The author did not condone reckless gambling. He had three limits on his “win a few, lose a few mantra.”

  • Diversify. The gambles have to be independent of each other. “…it does not apply to multiple investments in the same industry, which would all go bad together.”
  • Don’t bet the farm.  The gamble should be small enough so you are not worried about a significant loss to your wealth. “If you would take the loss as significant bad news about your economic future, watch it!”
  • No long shots.  This mantra doesn’t apply to long shots which he described as “the probability of winning is very small for each bet.”

Kahneman said you have to have emotional discipline to follow the above rules. But his main point is that you should see each decision as one of many small decisions in a portfolio.  Emotional distress can also be reduced by cutting back on how often you check how your investments are doing.

Related Blog Posts

“How to Handle Emotions When Making Investment Decisions”

“When to Trust Your Intuition or Gut Instinct When Making Financial Decisions”

“How the Heck Do I Invest my Money?”

Sources

“Nationwide Financial Survey Finds Fear of the Markets Trumps Fear of Death”

“Thinking, Fast and Slow” by Daniel Kahneman, pages 338-339


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Book Review: “What if…Workbook: Give the Gift of Preparedness to Your Loved Ones

Now that fall is here, many of us are dusting off our neglected to-do lists. For those interested in organizing their financial information, Gwen Morgan has put together a handy fill-in-the-blank guide to “putting your affairs in order.”

A ceramic mother mallard duck followed by two ducklings

PUT YOUR DUCKS IN A ROW! (Click to Enlarge)

The workbook guides an individual or family as they assemble their important information in one place. This helps us by:

  • Making it easier to find information when we need it
  • Helps someone forced to take over in an emergency

After losing her mother to Alzheimer’s, Morgan realized she didn’t really know how her mother wanted her to handle many decisions, including planning her funeral service. She thought a guide would help loved ones carry out a person’s last wishes.

I like the workbook and think it has value even if a person isn’t ready to record all of his or her “last wishes.” Even people who are more organized than usual will appreciate the prompts for information.

A Ceramic Mallard Duckling Sitting on Grass

Take Care of the Little Ones (Click to Enlarge)

Space is provided for:

  •  A page to rip out to send to two people to tell them where your workbook is.
  • Personal Information
  • Contact information for loved ones
  • Contact information for household matters such as utilities, attorneys, medical and friends. There’s even a section for important information on dependent children.
  • There are pages for financial accounts such as banking, brokerage, mortgages and other loans, insurance, document storage.
  • Family medical history. This is helpful to an individual in an emergency. But it also can be helpful for the rest of the extended family to have a record of medical conditions that run in the family.
  • Personal Last Wishes.  A lot of space and suggestions are given for detailed instructions.
  • Gifts for loved ones. This can save a lot of family arguments!
A Ceramic Mother Mallard Duck with a Duckling on Each Side

Gathering Together Important Information Helps the Whole Family (Click to Enlarge)

You can find information on the guide at http://www.whatifworkbook.com

Have a Great Summer! See You in September…

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Taking a break for the rest of the summer. Hope you have a good one.  Look for new posts in early September. I hope you enjoy this brief slideshow of a whelk I found on the beach.  Just click on one of the photos for the slideshow.

Helen

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Paul Volcker: Why Are We Here With No Regulation?

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I saw this one-minute video on Bloomberg Surveillance (my favorite financial TV news show) this morning.  It is definitely worth watching!

Related Posts on Boomers, Markets & Money

Book Review – “The Bankers’ New Clothes: what’s Wrong with Banking and What to Do About It”

Book Review: Exile on Wall Street: One Analyst’s fight to Save the Big Banks From Themselves


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Summary of “Boomers and the Great Recession: Struggling to Recover”

AARP also recommends that older workers keep up-to-date with the latest job skills.

AARP recommends that unemployed workers receive government help with job training. (Click to Enlarge)

Here is a summary of points in a 131-page report prepared by the AARP Public Policy Institute on Baby Boomers experiences during the Great Recession and soon after.

Study surveys found:

  • 47% of Baby Boomers who were unemployed gave job loss as the reason for not working.

What the unemployed perceived as significant job search barriers:

  • The struggling economy.
  • One-third to one-half felt that age discrimination was a factor.

Feelings of the recently reemployed:

Fewer than 50% felt they were on target for their financial goals.

Reasons why they felt this way:

  • Pay at the new job was lower and savings were depleted.
  • Debt levels were too high.
  • They were hired as temps.

How Boomers surveyed coped with financial setbacks

  • Most commonly, they cut expenses.
  • They withdrew money from savings accounts.
  • Some postponed medical or dental care or stopped taking medications.

Researchers wrote “More than half of the Boomers surveyed stated that they were less confident of having enough money for a comfortable retirement than they had been before the recession started.”

Biggest worries for Baby Boomers:

  •  Cost of health care and long-term care.
  •  Inflation
  • Unable to leave an adequate inheritance
  • Unable to live in their own home.
  • The surviving spouse might not be able to maintain their way of life.

A selection of the report’s public policy recommendations:

  • Encourage older workers to take advantage of employer training programs. AARP advises employees who are close to retirement to continue to participate in training. They may be forced to stay in the workforce longer than planned or to re-enter the workforce after retirement.
  • Offer financial assistance to cover training costs for unemployed workers. Government data on job skills needed and areas of demand needs to be timely, accurate and easy to obtain.
  • Increase monitoring and enforcement of age-discrimination laws.
  • Let older workers know about government and private programs that offer advice on entrepreneurship. Information should be available about the suitability of considering this as a primary or secondary source of income.
  • “As traditional pensions decline, Social Security remains the only major stable retirement income source. It is critical that this program be protected.”

Source:

SURVEY METHODOLOGY  (Click to Enlarge)

SURVEY METHODOLOGY (Click to Enlarge)

“Boomers and The Great Recession” By the Public Policy team at AARP Public Policy Institute. September 2012. You can find a ink to the PDF of the 131 page report in this article.

Related Posts on Boomers, Markets & Money

Resources for Baby Boomer Entrepreneurs

Summary and Link to Interesting Video on Recent Retirement Study

Review of PBS Frontline’s “The Retirement Gamble”

Resources to Help You Decide When to Take Social Security

A Critical Step in Preparing for Retirement

Save Money and Enrich Your Life at the Library


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Resources for Baby Boomer Entrepreneurs

The over 50 set are becoming entrepreneurs

Baby Boomers Open Small Businesses (Click to Enlarge)

Many Baby Boomers are starting small businesses

  • To pursue an interest or goal they didn’t have time for when they were younger
  • For flexibility in work hours or location
  • Persistent unemployment. The 55+ age group has the longest period of unemployment before being hired. Do you think there is age discrimination involved?

One important point I came across when researching this post—Don’t lose your retirement money!

You have less time than other age groups to make up your losses, so take less risk. Don’t use funds that you need to live on in retirement.

Here are some helpful small business resources:

  • Small Business Readiness Assessment. The U.S. Small Business Administration’s (SBA) online checklist forces you to examine your personality, physical and emotional health, as well as skills and experience. The main strength of the checklist is that it forces you to slow down and really consider the many different factors that are needed to run a successful business.
  •  SCORE, a volunteer resource partner of the SBA, offers free business counseling. Help is available for established businesses, start-ups, and non-profits. Chapters also offer small business workshops. I’m partial to this organization since I volunteer with the Rhode Island chapter.

 Visit the SCORE website at www.score.org to find:

A mentor. Free, confidential counseling is available face to face or by email.

Chapters near you. Type in your zip code for a map of local chapters.

Online workshops. Many live webinars are offered in English and Spanish.

Templates and Tools. Over 100 articles are available with advice on small business challenges. For example, I found an interesting article “10 Steps to Protect Your Great Idea.”

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