Monday, June 15, 2015

Dealing with the unexpected. 'You can give in or you can find meaning'

"While the experience of grief is profoundly personal, the bravery of those who have shared their own experiences has helped pull me through." -- Sheryl Sandberg on the unexpected death of her husband.

By Julia Anderson
We sat next to each other by accident at an outdoor barbecue. Our small talk quickly turned to the details of her life. She’d been on her own for four years after her husband's unexpected death.

“The first two years, I woke up every morning cussing his name for leaving... for leaving me with such a mess,” she said, tossing her head back. “I drank a lot of tequila. Made some mistakes.”

Now at 57, she's getting a handle on the challenges both financial and family. One step forward, sometimes two steps back, she seemed to be saying. Her husband was a building contractor. During good times he bought mixed use commercial real estate. The buildings are older with both retail and residential space.

“Everybody thinks I’m well off,” said the woman. “They have no idea how tough it’s been getting over losing him and figuring out my financial situation,” she said. “And I’ve got a son who is addicted…I know he’s stealing from me.”

For her, there’s a lot to talk about.

I said, “Call the police on your son the next time he steals from you. It would do him and you a favor.”
She nodded. “It’s just been so hard,” she said. “I’m alone so much that I go out to eat dinner just to talk to someone.”

Lately she hired a property management company to handle one of her commercial buildings to get rid of a derelict tenant. It didn’t happen.
“You pay people to help you out but then nothing gets done,” she said. “I’m selling two of the buildings just to get rid of the headaches.”

“What are you going to do with the cash,” I asked.

She paused. “A lot is already spent on stuff I’ve got to fix at my house…maybe set up a bank trust for the rest I guess," she said. I said, “Be sure to check out the bank’s management fees on that arrangement.”
She said, “I suppose so, everybody wants a piece.

Like many of us, she’s struggled to sort out things. Her husband had been in charge of their business life and income.

“People just don’t know how hard this all is,” she said.

Maybe she could talk to a financial planning expert, I said, who on a fee-only basis could help her put together a plan that would give her some long-term income.

Ask your friends who might be someone to talk with, I said. Make sure they won’t try to sell you something for a commission. Make sure this is strictly for their best advice and nothing more.

We talked about how hard it is to lose someone who you relied on, someone that you loved and shared a life with.
I told her that I thought she was on the right track, that things would be OK.

She asked my name and told me hers.

I doubt that I see this woman again but I wish her well. Grieving and trying to get a handle on finances at the same time is not easy. But several women who I know have gutted their way through it. I’ve seen them get back in the game and move forward emotionally and financially. One step at a time.

The facts are that 35 percent of marriages will end with the death of a spouse, usually the husband. Women will spend one-third of their adult lives financially on their own.

With the recent sudden death of her husband, Sheryl Sandberg wrote on her Facebook page that "you can give in or you can find meaning. May we all find meaning.

For more:
Sheryl Sandberg’s Post on Late Husband Set Off Meditations on Grief, click here.
Organizing your finances after your spouse has died, click here.
A shocking death, a Financial Lesson and Help for Others, click here.
Why Women Need Retirement Planning more than Men Do. click here.

Sunday, May 17, 2015

Bucket lists: If you need one, here's how

"It’s not the listing, it’s the doing that’s important. Why not make a list of one thing at a time.
 Do that and then go to the next one,”  ---  Al Bernstein, psychologist and book author.

"The Origins of 'Bucket List'  - WSJ - click here.

How to write a bucket list
- Give yourself time to reflect on your interests, not just destinations.
- Make a one-year goal list but also have a “sometime” list.
- Keep your lists short. It’s the doing that has meaning.
- Mix big and small goals.
- Keep your list financially and physically within reach.

“That’s on my bucket list.”
Cynthia Anderson hears clients say that all the time.
“To be honest, people have always had lists of where they want to go, what they want to see,” Anderson, owner of USA River Cruises Inc., said. “But now, bucket lists are mentioned quite a bit. It’s certainly become a marketing tool for travel publications…I see it all the time.”
Anderson, who books river cruises both in the U.S. and abroad, is inspired by clients who say that “this is on my bucket list, now I’m going to do this.”
So is Nancy Parrott, vice president and general manager at Azumano Travel with offices in Portland, Ore. and Vancouver, Wash.
“There’s quite a variety of ideas on peoples’ lists,” Parrott said. “Someone may want to go on a safari in Uganda to look at gorillas. Someone else might want to visit Iceland.”
The idea of a list has become so popular that Azumano staff give presentations on how to create a bucket list, Parrott said.
A quick Internet search turns up dozens of Web sites devoted to bucket lists – how to write them, suggestions for what might go on your list. There’s even a Web site called where you sign up to compare your list to other peoples’ lists and share comments on successes and failures. The site has 245,130 members who are tracking 3.36 million goals, sharing advice and keeping score.
It’s all about things people want to do or accomplish before they kick the bucket, just like the two characters played by Jack Nicholson and Morgan Freeman in the 2007 movie, “The Bucket List,” which imbedded the concept in our minds.
While some bucket lists include personal goals related to weight-loss, running a marathon or earning an advanced college degree, most are travel- or event-related. With more baby boomers aging into retirement every day, people -- list in hand -- are out there seeing the world.
But are bucket lists really a good idea?
Vancouver psychologist Al Bernstein has his reservations.
“I wouldn’t put a list of 10 things together because between now and when I finish the list my ideas might change,” Bernstein said. “What I might want to do could change even next year.” It’s not the listing, it’s the doing that’s important, he said.
“Why not make a list of one thing at a time. Do that and then go to the next one,” he said.
On the other hand, Bernstein said that if having a list helps you get things done then making a list may be helpful -- if it’s short and you keep it simple.
List considerations
In addition to psychological issues related to bucket lists, there are financial considerations. Women especially may be tempted to spend money on short-term rewards such as a family vacation to the Baja or a trip to Disney World with the grandkids, say financial planning experts. But if the trip racks up expensive credit card debt and cuts into retirement savings, then a less expensive weekend outing at the beach may be a better option.
Recreation specialist Becky Anderson with the city of Vancouver (Wash.) Parks & Recreation Department says that there’s plenty to do and see in the Pacific Northwest. Her department arranges three or four day-trips and over-night tours a week for seniors, 50 and older year-round. Offerings include music events, gardening classes and museum visits. Some trips cost as little as $25 while more elaborate over-night travel such as an Amtrak round-trip to Leavenworth, Wash. at Christmas time might cost as much a $1,085, she said.
“Traveling, hiking, a beach trip, they all give people something to look forward to,” Anderson said. “We do a hot air balloon trip every year out of Newberg, Ore. Lots of people have that on their buck list.”
My guess is that every county in the U.S. has a similar service for seniors through parks and rec departments.
Baby boomers are stepping away from full-time work and setting out to travel before their knees give out. The travel service for seniors, Road Scholar, already is offering educational excursions to Cuba.  I know someone who just completed a river trip on the Amazon River. Next year, it will be a river cruise in Portugal and Spain.
 How to write a bucket list
So how best to develop your bucket list?  Experts say taking time to think about your interests is a good way to start.
“Let’s say you’ve always been interested in the history of the Titanic,” said Azumano’s Nancy Parrott. “What you may not know is that you can visit its resting place off the coast of Newfoundland by boat as part of a travel package.”
Here’s what Parrott and others suggest in making a bucket list:
- Keep it short.
- Make sure your list fits your physical and financial picture and your lifestyle.
- It’s an evolving process. You can add things to your list or take them off.
- Think outside the box by first considering your interests, not destinations.
- Don’t think of a bucket list as a competitive sport. It’s not about posting it to Facebook but accomplishing something that has meaning for you.

Psychologist Bernstein even objects to the term bucket list.
“These are things we most want to do before we die,” he said. “They are life goals. Saying they are on a bucket list cheapens the intention and the meaning.” A better way to approach it, he said, may be to stop writing your bucket list and start living it.
Helpful Web sites:

Monday, May 4, 2015

Donor-advised charitable funds: Good for your heart with tax benefits

“If you can’t feed a hundred people, then feed just one.”Mother Teresa, Roman Catholic religious sister who lived most of her life in India. (1910-1997)
For tax benefit reasons and because we like to support good causes, Americans donate to charities. Over a year, my donation checks might go to my grandson’s elementary school foundation and to MercyCorps, the Portland-based international aid organization. I support a local historical society, an arts group or two and my alma mater. At the end of the year, I add up these donations and claim the total as a charitable tax deduction when I itemize my federal income tax return.
But suppose that this nickel and dime charitable giving isn’t enough for you. It may feel haphazard. And there are those dinner-hour phone calls from certain charities asking for more money. Or let's say your financial picture has changed because of big increase in annual income or because of an inheritance.
For the charity-minded, federal IRS regulations provide an attractive tax-management option: A donor-advised charitable fund or a DAF.
Using DAF rules, you can contribute cash, securities or other items to a donor-advised fund administered by an IRS qualified organization operated for religious, charitable, educational, scientific or literary purposes, or for the prevention of cruelty to children or animals. The real beauty of these funds comes from donating appreciated securities.
You get an immediate tax deduction for the total value of the stock that goes into the fund. The institution administering the fund gains full control of the stock donation and manages the account where it stays until you provide instructions for later distribution.
How donor-advised funds work:
Let’s say you inherit 50 shares of McDonald’s stock (worth about $4,750) from your grandmother, which she accumulated over 20 years of saving and investing. There’s no cost basis (how much she paid) for the stock. Instead of selling it and paying capital gains taxes on the sale, you can transfer the unsold stock into a donor-advised fund. Fund managers sell it and reinvest the cash according to your direction in one of several funds available within the fund program.
You get the upfront tax benefit in the form of a ($4,750) deduction in the current tax year, but you can accumulate money inside the fund provider for charitable distribution at your direction, later.
Vicki Fitzsimmons, a financial advisor with Edward Jones in Vancouver, Wash., says many of her clients like using donor-advised funds. “A donor-advised fund is a good alternative for smaller gifts and lets you contribute assets (cash, stocks or bonds) to a charity. And you can recommend how you want the assets distributed,” she said.
Many charitable organizations and large brokerage firms offer donor-advised funds within their investment programs: Foundations supporting universities, hospitals and community groups, for example. And it’s not just money or stocks that can go into these funds. Charitable funds may accept real estate or interest in a limited partnership. The National Philanthropic Trust offers a comparison chart of donor-advised funds and private foundations that looks at fees, gift valuations, administrative responsibilities. (click here).
A few facts about charitable giving in America:
- 95 percent of American households give to charity.
- The average annual household contribution was $2,974 in 2013.
- In 2013, the majority of charitable dollars went to religion (31 percent); education (16 percent) and human services (12 percent). See National Philanthropic Trust. According to the trust, there were 201,631 donor-advised fund accounts in 2012. Total contributions that year: $13.9 billion.
In 2013, contributions climbed to $17.2 billion, up 23 percent.
Next step: Making a donation
When you are ready, you can recommend a grant to a qualified 501(c)3 nonprofit organization of your choice.  (No, the money can’t go to your financially strapped granddaughter.) Donor-advised fund managers make your distributions, which can be anonymous. No fuss, no muss and no record keeping since you’ve already taken the tax deduction.
Donor-advised funds are not just for the wealthy. You can start making contributions with as little as $1,000. There are no payout rules. The minimum donation amount could be as little as $50.
Learn about donor-advised funds
Before you dive into a donor-advised fund, do your homework. Ask about minimum contribution requirements and fund balances. Check up on fund administrative fees, which typically are 1 percent or less a year. Some funds have tiered fee schedules based on fund account totals. Look at fund investment options and donor services. Some funds offer workshops for potential donors. For more consider these resources:
“The Art of Planned Giving by Douglas White. ($8.17 at Barnes & Noble.)
“An Analysis of Charitable Giving and Donor-Advised Funds,” by Molly Sherlock ($13.99, Amazon). Or visit these Web sites:
National Philanthropic Trust at
Fidelity Charitable at
About Money at
Oregon Community Foundation at
Pros and cons of donor-advised funds, click here.
Vanguard Charitable, click here.
More pluses: With money in a donor advised fund you can save it up for a year when you don’t want to write checks out of your personal checking account but still want to maintain annual giving. And you can name a successor trustee for your account so the money doesn’t have to be immediately distributed if something happens to you. Fund managers will do due diligence to make sure your donation is going to a legitimate qualified charity.
So go ahead, write that check to the local food bank but consider building a donor-advised charitable fund that over time will grow (tax-free) for later distribution in a significant way.

Friday, April 3, 2015

Women and a secure retirement: Small businesses need savings plan options

"I see success as bringing some confidence back to the American people that despite our differences, we can find some way to move forward," - U.S. Sen. Patty Murray. (D-Wash.).

In Washington state where I live, a recent survey showed that approximately 462,000 residents ages 45-64 have less than $25,000 in savings. The survey also reported that the average monthly Social Security benefit for Washingtonians is $1,300. That’s $15,600 a year…not enough to live on.
U.S. Sen. Patty Murray (D-Wash.) brought up these statistics in her talk at a recent White House Conference on Aging in Seattle. She also mentioned that 1.1 million residents in our state do not have access to retirement savings plans at work.
This led her to the point that women -- especially women -- “face systemic challenges” in planning a secure retirement. One in 10 older women are living in poverty. (2.9 million) women 65 and older).
This is the same statistic that I began writing about seven years ago when I was still working at the newspaper. In the years since, as more baby boomers age into their 60s, women and retirement has become a much discussed topic, along with equal pay for equal work, the minimum wage and paid sick leave. All of these workplace issues contribute to the fact that a higher percentage of older single women live in poverty than do single men.
To her credit, Sen. Murray, the ranking member of the Senate Health, Education, Labor and Pensions Committee, has repeatedly called for reforms and programs that would address this situation.
Her Healthy Families Act proposed in the Senate would for instance allow workers in businesses with at least 15 employees to earn up to 56 hours or seven days of job-protected paid sick leave each year. She’s also is promoting reauthorization of the Older Americans Act that would increase funding for Meals on Wheels, adult protection and caregiver support programs.
All these proposals are caught up in the over-arching discussion in the other Washington of how we pay for them. I get that. But in terms of poverty and women, the tsunami is hitting the shore. From my perspective, there’s been a lot of talk and political posturing but little has changed. Women have fewer opportunities to save for retirement and many aren’t.
New idea in Washington state
In Washington, a few legislators in the House of Representatives have come up with a new idea that might trigger more retirement savings by women. They call it the Washington Small Business Retirement Marketplace bill (HB 2109, SB 5826).  Here’s how it would work, according to an outline from the Seattle-based Economic Opportunity Institute.
The state will identify financial services firms willing to offer retirement plans and investments. The state would publish performance data on these plans and investments. The state would enforce agreements, including no cost for a business to participate and employee fees would be no greater than 1 percent of their account balance. The state will establish a Marketplace Web site for employers to learn about the firms and their products.
Financial services firms will offer retirement plans to employers with several basic investment options. The firms will manage the accounts and work with the businesses to complete reporting requirements.
Employers who participate may choose whether to offer any matching contribution to the employee retirement savings accounts.
The plans would be portable, voluntary and no risk to the state. In other words they would work just like 401(k) plans offered by larger employers.
Here’s why this is a good idea. In Washington, alone, some 1.1 million people DO NOT have access to a retirement plan, and 77.4 percent of workers employed by businesses with fewer than 100 employees lack access to one.
That’s not surprising since these plans require quarterly reporting, paper work and management. Small business owners are hassled enough.
So a state-sponsored “retirement fund marketplace” seems like a possible way to at least get at this issue. People who have a retirement plan at work are much more likely to use it than not. Any plan like this must come with some sort of education workshop or presentation that addresses women and financial literacy issues. Let's face it, we don't learn this stuff in high school.
Another factoid: More than 38 million Americans in working-age households do not own any retirement account assets, whether in a pension plan, an employer-sponsored 401(k) or an Individual Retirement Account. (click here)
The Institute calls the marketplace proposal “a commonsense approach.”
This is the first “new” idea that I’ve run across in my reporting on women and financial literacy and retirement planning. Of course, there already are critics. Andrew Remo, writing for the National Tax-deferred Savings Association, says small business owners in Washington can already create retirement savings plans, if they choose. This, he says, is needless government meddling. What he overlooks is the paperwork and hassle involved.
In her talk, Murray pointed out that the bills in the Washington House and Senate are bi-partisan. Lead sponsor is Washington state Rep. Larry Springer (D-Kirkland). Bipartisan means broader support. There might be a chance of passage. Let’s hope so.

Tuesday, March 24, 2015

Is there inflation 'crabgrass' in your retirement planning? Deal with it.

"Inflation is the crabgrass in your savings," Robert Orben, (1927 - ) American comedy writer.

Believe it or not, a little bit of inflation is a good thing. It means the economy is perking along. It means consumers like you and I have the confidence to buy stuff. It means that producers and retailers can expand their businesses, add workers and hand out pay raises. That’s because they believe they can cover higher operating costs and still earn a profit by improving efficiencies and by raising their prices.
Inflation is a natural part of a functioning capitalistic society. (Just ask the Federal Reserve Bank). For the past gazillion years the average annual U.S. inflation rate has been running at about 2 percent. That means that a “market basket” of consumer items as determined and measured by the U.S. Bureau of Labor Statistics increases in cost by 2 cents per $1 every year.
Over time these small annual inflationary cost increases can take a serious bite out of your buying power, now and in retirement.
Let’s look at the Portland, Ore. metro area near my home. From 1987 through 2014, the annual inflation rate in Portland has been as high as 5.6 percent in 1990 and as low as 0.8 percent in 2002 and 0.1 percent in 2009. In 2014, Portland’s Consumer Price Index (inflation rate) rose an overall 2.3 percent.
Within that number, prices for specific items jump around.
Last year in the 12 months through December, food prices rose 2.8 percent while rental housing costs increased by 4.7 percent (mostly because of apartment rent increases). Energy costs dropped because of lower gasoline prices but those lower prices were mitigated the rising cost of electricity, which jumped 7.2 percent as utilities raised rates to cover the cost of new power projects in our region.
Inflation’s long-term impact
In Portland, a market basket of goods and services that cost about $100 in 1987 now costs $242! So over the long term, inflation eats away at our buying power. A great lament of our current economy is that wages in the past 10 years have not kept pace with the increasing cost of living. While prices for such items as food, energy and housing have been going up, employers have not been willing to raise employee pay. Now we are seeing more local and state governments take on the politically popular idea of raising minimum wages. (But I am getting off topic).
In reality, if you are NOT getting at least a 2 percent raise every year, you are losing ground to inflation. But even a 2 percent annual raise means only that you are treading water. If you haven’t received a raise in say, the past 10 years, you’ve lost about 20 percent of your purchasing power thanks to inflation and the rising cost of living.
Inflation in retirement
The same goes for those planning for retirement or who already are living in retirement. If your investments are not producing income of at least 2 percent a year, you are getting poorer. Thoughtful investors must take inflation into account as they figure out an ongoing retirement financial strategy. Like death and taxes, inflation is here to stay unless you live in Japan where prices have been in decline. Our Federal Reserve Banking System does NOT want that to happen. Deflation throws ice water on the economy ---consumers stop spending, producers stop growing and adding jobs.
Don’t ignore inflation, deal with it.
Tips from investment experts on managing inflation
- Balance investment safety with a reasonable return. The S&P 500 has provided a dividend yield averaging 1.92 percent a year for the past 30 years. Add on increases in share value and you’ve got nice asset growth over the long-term. Keep some cash in reserve so you don’t have to sell principle to groceries or a new car when stock markets are in decline.
- Consider Treasury Inflation-Protected Securities or TIPS bonds to guarantee a return that rises along with the inflation rate.
- Own real estate that over time increases in value. Your borrowed mortgage money gets cheaper as your home increases in market value, points out William Baldwin at
- Consider buying individual blue-chip stocks with a good dividend of around 3 percent a year. Avoid high-paying dividend stocks…higher dividends mean higher risk.
- Delay Social Security and give yourself an 8 percent raise in benefits every year until age 70 ½. You get a bigger monthly retirement check, which is inflation-protected. Authors Larry Kotlikoff, Philip Moeller and Paul Solman have written "Get What's Yours: The Secrets of Maxing Out Your Social Security. You can download it for $10.49 to your Kindle or buy a hardcover for $11.99 special at Click here.
For more:
"What is inflation and how does the Federal Reserve evaluate changes in the rate of inflation?" click here.
"Smart Equities for Creeping US Inflation," click here.
"Seven Ways to Beat Inflation," click here.
"How to Deal with Inflation Risk in Retirement, " click here.

Tuesday, February 24, 2015

Handling a windfall. Do nothing for at least a few months

"I stand to inherit a lot from my father, including high cholesterol and diabetes. Oh, and maybe a few Beatles records. Actually, the first two don't sound bad compared to the last," -  Jarod Kintz, author and humorist  (1982 -  ) -- "This Book is Not FOR SALE."

By Julia Anderson
Your grandmother leaves you an unexpected chunk of money in her will. A great aunt dies with you as her only heir.  Your spouse dies leaving you a substantial life insurance payout.
An employer offers you a lump sum pension buy-out.
You settle a lawsuit.
You win the lottery!
Coming into a large amount of money, especially if it is unexpected, may at first sound like a wonderful surprise, a good thing. But financial advisers say people often lose their heads when they see dollar signs. They put the new money in a special category and go on a spending spree. Later they may have regrets about how the money was used.
In one case, a middle-aged woman received $3 million in life-insurance money when her husband was killed in an on-the-job accident. She gave money to friends and family, took expensive trips, bought and sold houses and expensive cars. Within five years the money was gone.
Coming into money can happen at any age but women over age 50 will likely be among a large category of recipients. That’s because they stand to inherit 70 percent of the assets that will be passed down over the next two generations. Those assets likely will come from their elderly 90-something mothers when they die or when a long-time spouse passes on. Or both.
Whatever way it may happen, coming into money has psychological implications, says Susan Bradley, author of “Sudden Money: Managing a Financial Windfall.”  “People think windfalls are about money. But it’s really all about change and transition…and people need time to adjust,” she says.
Plan ahead, if you can
If you have the slightest hint that you might inherit money, make your plans in advance to avoid bad decisions. If it’s a surprise, establish a money moratorium. Some advise that you should not tell anyone of your windfall…not your kids, not friends.
Do nothing with your money for at least a few months, if not an entire year, advise the experts at Put it in safe place such as short-term bank CDs. Get it out of your checking account so you don’t see it every day.
Seek the help of a therapist to sort through the emotional impact of your sudden wealth. Money changes who you are, affects relationships and may create resentments. “Everything a person has spent decades building changes in one fell swoop,” says Dennis Pearne, psychologist and co-author of “The Challenges of Wealth.” “Half the people who attain sudden riches spiral into self-destructive behaviors.”
The advisers at recently posted an item, "What to do with a big, fat inheritance," They suggest that if you've got a chunk of money that the best strategy is to look long-term with a plan to reinvest for earnings and income in 70 percent stocks and 30 percent bonds. "Focus on creating a portfolio that's right for you,' says Walter Updegrave in the Fidelity post, "but stick to low-cost choices like index funds or ETEs. Half a percentage point a year in fees can boost the eventual size of your nest egg by 25 percent or more." 
Set up a team of advisers
If your windfall is substantial, the experts recommend that you weather the storm by setting up a team of advisers whom you trust: a fee-based financial planner, an estate attorney and an accountant. Don’t ignore taxes. Some windfalls such as an insurance payout are tax-free. However, a large inherited estate could be subject to federal and state taxes. Or if you cash out an inherited (and tax-deferred) individual retirement account you may owe taxes on the entire amount. How to handle these issues requires tax advice.
Meanwhile, don’t quit your day job. Windfall recipients often under-estimate how much money they’ll need to replace their income, says William Hammer in the Kiplinger Personal Finance newsletter. “If you earn $50,000 a year, you’ll need to invest anywhere from $1 million to $1.5 million to generate enough to replace that income, he said. Those who are retiring already know this from calculating how much they can withdraw from their 401(k) nest eggs.
Geoff Williams, writing for says getting rich can be easy compared to staying rich. “Do nothing for as long as possible,” he says. “Don’t spend unusually large amounts of money. The last thing you want to do is blunder into an expensive purchase you can’t return and will soon regret.” Issues worth thinking about include your current debt, your plans for retirement and taxes, he said.
The experts all seem to be throwing a wet blanket on having any fun from your new found money. But at least one suggested a “small splurge” on say, a trip you’ve always wanted to take. “A small indulgence could reduce the chance that you’ll blow your entire windfall,” said Mitch Brill, a CFP with MassMutual Financial Group.
Let’s face it,  a windfall will likely only come around once in a lifetime, so give yourself time to figure out how to make it last a lifetime.
Definition:  Windfall – noun. An unexpected, unearned or sudden gain or advantage usually to do with money. The English word windfall originates from the Middles Ages when royalty or lords owned most land and estates and serfs were forbidden to pick fruit or fell a tree. However, if a storm or strong wind blew down a tree, it was referred to as a “windfall” and free for the taking.

Wednesday, February 11, 2015

Working in Retirement. It may mean different things to different people

"If we don't change, we don't grow. If we don't grow, we aren't really living,"  - Gail Sheehy, author of "Passages" and 16 other books.

Full retirement age for Social Security is 66 for people born in 1943 to 1954 and will gradually increase to 67 for people born in 1960 or later. But Social Security allows people to begin taking benefits with a lower payout at age 62. If you are under full retirement age but start collecting benefits and continue to work, Social Security will deduct $1 from your benefit payments for every $2 you earn above the annual limit of $15,720 this year. (For more, visit In the year you reach full retirement age, $1 in benefits is deducted for every $3 you earn above $41,880 this year. That’s only for the months before you reach full retirement age. Once you reach full retirement age, you can collect benefits without deductions even if you’re working full-time. Even better, if you keep working and don’t take benefits, your benefits will increase 8 percent for every year you wait, up to age 70.

Jean Morris likes her job, likes her clients and could never think of a reason to stop working even though she is well over full retirement age. “The incentives for working are many fold,” said Morris, 74, who is a financial adviser for iQ Credit Union in Vancouver, Wash.
With 44 years of experience in the financial services arena, Morris said she likes her employer and finds her job rewarding. “When people ask me when I’m going to retire, I give them my pat answer…in eight more years. I’ve been saying that for quite a long time,” she said.
Morris is among a growing number of older Americans who are working full- or part-time even though they are at retirement age. For some it’s a financial necessity and helps stretch their savings. For others, working brings stimulation and social rewards.
According to the U.S. Census Bureau, workplace participation by Americans 65 and older has reached 22.1 percent for men and 13.8 percent for women, up from 17.7 percent and 9.4 percent in 2000. Increased life expectancy, a rising “full” retirement age as determined by Social Security and a shift away from defined benefit pension plans all are factors, the Census Bureau said.
Experts say that workers at age 65 should have saved seven times their current salary for retirement. For example, if you’re earning $65,000 a year, you should at least have $455,000 stashed in a 401(k) tax-deferred retirement plan. Many people have not achieved that goal, which means working in retirement is a requirement.
“Increased cash flow is an obvious incentive,” Patsy Eby, a Vancouver CPA, said. “Professionals who have expertise in management or sales…accountants who only work during tax season are good candidates for working part-time in retirement. Some people like to keep an active mind. Retirement can be isolating,” Eby said.
Eby’s advice: Keep working and hold off on collecting Social Security benefits as long as possible. “It’s a gamble, but you get more money, if you wait,” she said.
Fear of running out
Many, especially women, who are approaching retirement, have a fear of running out of money in their later years, even if they’ve saved a substantial nest egg. With concerns about the economy, a rising cost of living and swings in stock markets, many may feel that staying on the job or taking part-time work is a good way to go. Experts recommend retiring in phases. Ken Dychtwald, CEO of Age Wave, a research think tank on aging, suggests:
- Do your retirement home work. Give your retirement a new beginning and a new purpose. Talk to your partner, your friends. Sign up for work shops.
- Make a list of things you have always wanted to do. Rank them and evaluate what’s possible.
- Get fit. Make your health a priority. 
- Schedule a face-to-face meeting at your local Social Security office to find out what your benefit options are. Then meet with a financial planner to decide if you can cut back on work without taking Social Security benefits.
- Come up with a new structure for your days…volunteering, church, part-time work.
- Get a new job. It may be something you’ve never done before but keeps your life productive.
Steve Pierce, who lives in Tacoma, Wash., has three “jobs” and one volunteer commitment in retirement.
Since leaving full-time work as communications director of the Washington state Department of Transportation, Pierce, 66, is filling his days by teaching piano lessons, doing yard work for neighbors and driving for the Department of Services for the Blind. He also volunteers for the local Humane Society.
His advice: Don’t wait until retirement to plan your retirement.
Using as a resource the New York Times best seller, “Younger Next Year,” by Chris Crowley, Pierce identified passions that he’s had for a long time.
“I’ve played the piano since grade school and decided to take on my granddaughter as a student,” he said. “Now I have four students. It’s a joy to see them learn.”
By driving for the blind, he’s formed new rewarding friendships. As a driver, he works for the local Department of Services for the Blind Office, which pays $15 an hour for his time.
 “I like yard work so I began doing yard work is for neighbors for which I’m paid or in one case, I trade work for a weekend at their beach house.”
 The money, he said, is secondary to the rewarding experiences.
“Money can’t be the focus, but if you’re passionate about certain things you might be surprised that there’s a revenue stream from it,” Pierce said.
In his book, “The Confident Retirement,” author Ron Kelemen observes that “some people view retirement as a solution to their unhappiness at work. They are running away from something instead of to something.”
He suggests making a list of what you like and what you don’t like about your job. Then he recommends (if possible) changing your work situation so that it is more sustainable and enjoyable. Kelemen, an Oregon-based financial adviser, has seen clients develop a new attitude toward their work by tweaking the job they have. Thus, delaying real job loss.
“And, of course, their retirement became more financially secure as a nice side benefit,” he said.
Clueless in retirement
Many people are totally wrapped up in an all-consuming job and are clueless about what they might do with their time if they leave that job. Planning the final third of your life might take work and will likely evolve over time.
“People who retire may need to pull some layers away to get at what they might find rewarding, Pierce said
Both Morris and Pierce advise those who want to work full- or part-time in retirement to do their homework for what makes sense both financially and emotionally.
“I know a retired school principal who now works at a hardware store because he gets to talk to people all day,” Morris said. In her job, Morris estimates that she manages about 600 clients and handles 60 or more phone calls in an average week.“I don’t consider this working in retirement but just working,” she said.
Pierce left his state job with the full knowledge that he would find a new life in retirement.
“My advice is not to wait but start thinking ahead about what you’re passionate about and whether there’s a way to make some money doing it,” he said.
“Younger Next Year,” by Chris Crowley
“The Confident Retirement Journey,” by Ron Kelemen.
“Roadmap for the Rest of Your life,” by Bart Astor
“Can I Retire?” by Mike Piper, CPA
 “How to Retire Happy,” by Stan Hinden
“Working After Retirement for Dummies,” by Lita Epstein