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November 6, 2019 by intrinsic 0 Comments

Retirement Income Realities & Solutions

The goal of traditional retirement planning has been to build a “nest egg” of personal savings and investments that will supplement Social Security and pension benefits.  Together, these three sources of retirement income have long been referred to as the proverbial “three legged stool”—a solid and well-balanced foundation for building financial security in old age.

However, Social Security benefits are less generous than they once were, and the solvency of future benefits is in question.  In addition, employers are also reducing retirement benefits and switching to pension plans that transfer accountability for investment selection and performance to employees.  Because these two legs of the retirement income stool are shrinking, more responsibility for financial security has shifted to personal savings and investments.  Nevertheless, for most pre-retirees, this third leg of the retirement income stool is seriously under funded as well.

Generational Viewpoints

What Is “Retirement? In an extensive report based on a 2019 survey conducted by the Transamerica Center for Retirement Studies.  It explores the meaning of retirement and examines the attitudes and behaviors of three generations currently represented in the workforce:

Baby Boomer:  Born 1946–1964

Generation X:  Born 1965–1978

Millennial:         Born 1979–2000

Due to the evolution of the retirement landscape, workers of all ages are increasingly expected to self-fund a greater portion of their retirement income.  In addition, they are expected to manage their own investments and associated risks.  However, across generations, only 20 percent “strongly agree” and 34 percent “somewhat agree” that they are building a large enough retirement nest egg.

In terms of “greatest financial priority right now,” the percentage of workers who cited “saving for retirement” increased significantly with age: Millennials (9 percent), Generation X (24 percent), and Baby Boomers (38 percent).  In addition, Millennials (the youngest cohort surveyed) also cited a cluster of competing financial priorities including “cover basic living expenses” (19 percent), “build savings” (17 percent), “pay off credit card debt” (16 percent), and “support children” (15 percent).

The authors of the study also cited “infrequency of conversations about retirement” as a major concern.  They described this major life transition as “a family matter that calls for important conversations.”  In fact, nearly one-third of Generation X (31 percent) and Baby Boomers (32 percent) reported “never” discussing the topic.  Surprisingly, it was Millennials (21 percent) who were most likely to report “frequently” discussing savings, investing, and planning for retirement with family and friends.

A New Solution for a New Age

Workers of all ages need a new framework to guide their preparation for this stage of life.  To add stability to the retirement income stool, this new model proposes adding a fourth leg comprised of income and benefits derived from post-retirement work.  In this scenario, “retirees” will likely follow one or more of the following paths:

  • Work longer and delay full retirement
  • Work part-time or part-year
  • Transition into new careers
  • Phase out of current position rather than make an abrupt departure.

In addition to extra income, post-retirement work also provides non-financial benefits that most adults find liberating and compelling.  That is because a growing majority don’t view retirement as a respite from work, but rather as an opportunity to explore new arenas, stretch their comfort zones, and engage in purposeful activities that contribute to their own life satisfaction and the well-being of others.

It Takes More than Money

In the past, the transition to retirement has been viewed solely as an economic event.  As a result, the focus of retirement planning has always been on building a nest egg.  In The Late-Start Investor, author John Wasik recommends discarding this obsolete view in favor of a “flexible life plan that provides for financial, vocational, physical, emotional, and spiritual needs.”  He explains, “Unless you look at your future holistically, merely saving up a pile of money will be a meaningless act.”

Of course, financial security is extremely important, but wise retirement preparation emphasizes that financial planning alone will not guarantee a rich and rewarding life.  In The Millionaire Mind, Thomas J. Stanley points out that the most satisfied wealthy people don’t just have financial goals, they also have life goals.  In other words, they have clarity around what they want in life and use their wealth as a tool to support those values and priorities.

Therefore, the most important message to remember as you prepare for retirement is this: “It takes more than money.”  Make sure that you not only consider how the transition to retirement will affect your life financially, but how it will influence all other areas of your life as well.

Reprinted by permission of Money Quotient, NP

December 4, 2018 by intrinsic 0 Comments

Retirement Expectations

Retirement will trigger changes in every area of your life.  As you anticipate and prepare for this stage of life, you are likely to look forward to certain changes and to dread others.

In fact, it is not uncommon for individuals to experience many ambivalent feelings towards retirement because of the significant transitions they anticipate.

For example, many express that they are eager to leave the workforce, but nevertheless are concerned they will miss the structure of the workday and interaction with colleagues. In addition, most people closely identify who they are as individuals with their job titles or what they “do for a living.”  Therefore, they are likely to feel less significant when they step out of those roles.

Furthermore, spouses or partners can feel a tremendous strain as they adjust to more togetherness and to a new economic status.  As one woman related, “I define retirement as twice as much husband and half as much income!”

Both research and experience have shown that overcoming challenges and taking advantage of opportunities are key elements to making successful transitions in retirement. Therefore, it is important to learn ways to cope with change in healthier and more productive ways.

William Bridges, author and preeminent authority on managing change, defines transition as the psychological process people go through to come to terms with a new situation. Similarly, in the world of music, the “passing note” is a note that is not part of a particular chord, but placed between two chords to provide a smooth melodic transition from one to the other.

As you prepare for the many transitions you will experience in retirement, seek ways that you can orchestrate the important “passing notes” in your own life.

To accomplish this goal, it is important to view retirement not as a respite from work, but as an opportunity to explore new arenas, stretch your comfort zones, and find unique ways to fulfill your potential.

Reprinted by permission of Money Quotient, NP

November 26, 2018 by intrinsic 0 Comments

Fresh Perspectives & New Resources To Guide Your Giving Decisions

Regardless of how or where we choose to give, most of us would like to feel confident that our financial donations are being used wisely.  Thanks to technology and some out-of-the-box thinkers in the social sector, we now have a bevy of new tools at our fingertips and excellent educational resources that will guide our giving in a smart and purposeful ways.

Picking a Charity

Until recently, most guidelines for charitable giving recommended that we spend time researching charities and then select from those that limit overhead to less than 20 percent of their total budgets.  However, many experts now question these criteria because expense ratios alone provide a limited perspective of a charity’s value and effectiveness.

In contrast, organizations that analyze charities are increasingly evaluating non-profits based on how well they are delivering on their missions.  To accomplish this goal, rating systems need to go beyond number crunching and bottom line analyses to include subjective criteria as well.

GreatNonprofits.org, for example, uses a methodology similar to Yelp.com that created a means for sharing reviews of restaurants and services via the Internet.  In a recent interview, CEO Perla Ni described the role of GreatNonprofits as two-fold:

To collect feedback that helps both donors and nonprofits better understand the effect of the nonprofits’ activities on the ground in the local community and to bring the highly-reviewed nonprofits, as rated by their local community, to the forefront.

MyPhilanthropedia.com also offers a new way to evaluate charities based on survey responses of qualified experts. Each group of experts includes foundation professionals, researchers, and others who have an average of 8 to 20 years of experience in their sector.  The experts recommend nonprofits based on their impact and other organizational strengths, but are not allowed to recommend the organizations with which they are affiliated.

Creating a Giving Plan

There are no hard and fast rules about how much giving is the right amount.  This has to be a personal decision, but it often helps to know what others are doing and how they make their donation decisions.

While many may choose to give far more, MyPhilanthropedia.com offers an easy to implement strategy to those who have not yet committed to a specific charitable giving goal:

While everyone’s situation is unique, consider this simple formula for deciding your annual contribution. Your income may rise and (hopefully not) fall, so no need to stick to a fixed annual amount.  What about donating 1% of your annual income to the causes you care about and the organizations that are doing the best work in those areas? You can set up a monthly recurring payment to provide consistent support that is always within your budget.  Only 1% is not that much, but it can make a big difference.

Another tip comes from Jason Franklin who is the Executive Director of BolderGiving.org:

Once you have determined the amount you’d like to give and the causes you’d like to support, we recommend dividing your funds into 3 pools:

  • 50% to just one or a few organizations that are near and dear to your heart
  • 30% for your community/obligatory gifts – places like your church or synagogue, yours or your children’s schools, the nonprofit your best friend runs, your local art museum, and the causes your friends and neighbors support
  • 20% for impulse gifts – disaster relief, to support a friend in a fundraising drive, items at a fund raising event, or something you’ve never considered giving to before to see if the organization is a good fit for your major giving category. This fund allows you to just say yes!

Bolder Giving’s mission is to inspire and support people to give at their full lifetime potential. To this end, this organization does not suggest where to fund, but rather gives donors a hand with the complex, long-term journey of becoming effective, passionate, deeply-committed givers.

In addition, Bolder Giving has recently launched GivingCommunities.org, an online resource created to assist in matching individuals with like-minded peers who share the same philanthropic interests, values, circumstances, and passions.

Reprinted by permission of Money Quotient, NP

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Contact Us

Our Offices

Tempe, Arizona

1255 W. Rio Salado Parkway #115,
Tempe, AZ 85281

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NEW OFFICE!

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2522 Chambers Road #200A,
Tustin, CA 92782

(480) 924-5613

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