Retire… Are you done yet?

You've all seen ads for retirement. Ads for planning and preparing to retire, investing, rolling over your 401k, making sure you’ve saved enough money, and warnings that retiring is going to cost you more than you think. There is only one problem with these narratives. They make the assumption that retirement means no longer contributing to the world while receiving a paycheck. The Concept of Retirement Before the 1880’s, there was no institutionalized concept of retirement. Then in 1889, German Chancellor Otto Von Bismarck invented retirement when he announced that he would pay a government pension to all non working Germans after they reached 70 years of age. Bismarck wasn’t trying to spread goodwill, but rather stave off the expansion of socialism in Germany. The retirement age was later lowered to 65, but no one really benefited because life expectancy during that time was about 46 years. Retirement was an unknown…

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When dad could no longer speak, he sang

It was only 3 months since I last saw my dad in his Florida home. At 93, he was physically fit. Good posture. Strong hand grip. Dad even showed off a few of his old dancing step routines. So when I visited him again only 3 months later, I was shocked. I suspected something had changed even before I knocked on his door. When Iris and I pulled up to the Boca complex, my dad wasn’t on the 4th floor front catwalk, waving at us and laughing, as he usually did. When we entered the apartment where dad and my step-mom lived, we saw a very different person. Dad could barely stand up. He appeared so fragile. So weak. Taking tiny steps to move his body forward. First I asked dad why he was standing and walking this way. He still managed to force a laugh, and said something like he…

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You have a traditional Will. Maybe it’s time to think about an Ethical Will.

You have a traditional Will. Is it time to think about an Ethical Will? Before you write your financial will is it beneficial to create your ethical/spiritual will to guide you? This “life letter” can express your values and perspective on your life, your meaningful relationships and your world and spiritual views.   An ethical/spiritual will, although not legally binding, is an opportunity to “pass on” what is most important to you by reflecting on your beliefs and coming to terms with your relationships, good and bad.  An ethical/spiritual will can be written or recorded, addressed to individuals or to a family or group, and focus on one point in your life or be a reflection on your total life. For many of us the formulation of an ethical/spiritual will is difficult to do.   I recently spoke with Rabbi Sarah Cohen on this subject.  Rabbi Cohen has written her own spiritual will…

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When it comes to Investment Risk- Are you Country or are you Rock? Part 1

The way economists typically measure risk preferences is the ratio between someone’s pain from losing money and their pleasure from gaining it. If someone really hates losing money and doesn’t really care that much about gaining more of it, clearly they will be loath to risk any losses. More formally, for economists, measuring risk preferences entails estimating a utility of wealth function that describes how happy an individual is with each level of wealth. This function can then be used to calculate how happy or sad the individual would be about moving from one wealth position to another. How risk averse a person is can be described by how concave the function is in other words how much the subjective value of each additional dollar declines as wealth increases.. this in turn determines at any given wealth level, how much more valuable a dollar lost is relative to a dollar gained.…

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When it comes to Investment Risk- Are you Country or are you Rock? Part 2

The Financial  Adviser’s Problem There are two reasons why a financial  adviser needs to measure an investor’s risk preferences. These have to do with the two ways that financial advisers add value for investors. The first way an adviser adds value is to act as the agent for the investor, faithfully carrying out the investor’s wishes. Many investors don’t have the time or the proper tools to manage a portfolio by themselves,  so they delegate the job to an adviser. In order to carry out the investor’s wishes, an adviser must have an understanding of the investor’s risk preferences. The second way an adviser adds value is to improve the investor’s decisions. Investors may be financially unsophisticated, or subject to certain biases, as documented in Loos et al.  (2014). By adding knowledge and subtracting emotion, advisers can improve investors’ portfolio choices. More subtly, an investor may not be able to implement…

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How to Define Your Life Purpose: Insights from Dr. Ben Michaelis

Viktor Frankl, in his book “Man’s Search for Meaning,” tells about his experiences in a Nazi concentration camp. Throughout the book, Frankl quotes Nietzsche’s words: “He who has a Why to live for can bear almost any How.” Frankl’s powerful story of survival poignantly shows how having purpose and meaning in life--a “why” to live for--was the difference between those who lost all hope and died, and those who continued to live. (Read our post on “Man’s Search for Meaning.”) Dr. Ben Michaelis, psychologist, author and speaker, echoes the importance of having a purpose and how that purpose is an essential driving force in our lives. In his book, “Your Next Big Thing: Ten Small Steps to Get Moving and Get Happy,” he compares purpose to a guide, a “North Star that will lead you, follow you, and carry you when the days are dark and all seems lost” (Chapter 4: Discovering…

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Signs of Elder Abuse: Physical, mental & financial warning signals

Is someone taking advantage of someone you love? June 15 is World Elder Abuse Prevention Day, a day to call attention to a crisis that may become even more common as baby boomers enter the “third acts” of their lives.1 Every year, more than half a million American elders are abused or neglected. That estimate comes from the Centers for Disease Control, and the frequency of elder abuse may be greater as so many elders are afraid or simply unable to speak out about what is happening to them. In some cases, the abuse is limited to financial exploitation. In other cases, it may encompass neglect and physical or emotional cruelty.1 What should you watch out for? Different varieties of elder abuse have different signals, some less obvious than others.  Neglect. This is commonly defined as withholding or failing to supply necessities of daily living to an elder, from food, water…

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Succession Planning: Is it time to pass the Baton?

You built up a successful business. Your clients are happy. Your family is happy. You begin to wonder how long you can keep the dance up. You’re thinking about passing baton- An important aspect of building a successful business is succession planning. A few questions to ponder on. As the business grows, is there a plan in place to protect the business assets if the owner(s) is hit by the proverbial bus?  Is the owner(s) reaching retirement age and considering giving the business to family members?  A succession plan provides the business owner peace of mind and, similar to estate planning, is best formulated early in the process to avoid potential misunderstandings down the road. Recently I spoke with Steven Eliach, JD, LLM, a 25 year veteran and Principal-in-Charge of the Tax Practice at Marks Paneth, a prestigious accounting firm in New York City.  Steven has extensive experience in developing succession…

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What I learned about money from my parents

When I was about five years of age, something incredible happened to my family. We moved from a public  housing project in East New York in Brooklyn, to a brand new, two-family home in Canarsie. My three siblings were thrilled. We were moving from a small apartment to, by comparison, a mansion. How  did this miracle happen? My twin sister and I were clueless. Only much later did we learn the truth. You see, Marcy Projects, where we first lived, was operated by the New York City Housing Authority, which  provided public housing for low- and moderate-income residents. The apartment was rent controlled. In plain English- rent was cheap. Very cheap. To be given the right to rent, the renter was subject to strict  income guidelines. Theoretically, if income increased, you would be asked to leave. Practically speaking, this  rarely happened on a voluntary basis. Who wants to give up a low…

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Behavioral Cents For Women

I was introduced to Carrie Rattle, the creator of the website behavioralcents.com through a mutual friend, one of the great thought leaders in my profession,  Kenneth Haman, Managing Director of the Advisor Institute at Alliance Bernstein. During our first conversation, it was clear that Carrie's mission was to help women become more comfortable and empowered in their financial lives. Through the use of behaviorally-based tools, Carrie created  a unique assessment  which  helps women determine their financial "style."  While Assessment tools can be dry, Carrie brings her own spirit of fun by using female Greek Gods to represent  unique  female styles. Kind of like a portal into one's financial personality through the eyes of Greek Goddesses. Carrie is passionate about helping women change their financial relationship with money. Carrie and I share the same mission. I'm familiar with tools designed to measure and predict  personality traits. DiSC, Myers Briggs, POP, Kolbe. Some are more…

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