Learn What Is True And What Is Not True

RATES OF RETURN

Learn What Is True And What Is Not True

If something you thought to be true was not true, when would you want to know about it? In today’s world, with all the financial information from the media, radio, TV, and websites, the truth can be redefined and actually be transformed into something that is not true. Simply put, if you repeat something over and over again, it will be perceived as being fact. Marketing companies use these tactics when marketing their products. So does the financial services industry. Politicians have mastered the art of double talk, misstatements, misinformation, and repeated lies. They are under the delusion that we continue to believe them and they have the mistaken impression that we really need them. The media feeds us a relentless amount of garbage. The truth has become nothing more than people giving their opinions, and trying to shape society to their image. Of course, all of this is my opinion, not fact. You see when it comes to opinions, you can agree with me or not. Either way, it is okay.

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How Saying 'No' Can Save Your Retirement

Beth Braverman

Tuesday, 23 Jun 2015 | 11:17 AM ET

Fiscal Times

After years of dreaming and planning, you've finally said goodbye to the nine-to-five and retired.

Adjusting to retirement and living with a fixed budget and a more flexible schedule can take months. Experts say one of the key things to do during the early days of retirement is to set limits, on the new demands you may face on both your time and your money.

It's tempting to say "yes" to friends and family who think you now have unlimited time to babysit or run errands on their behalf. And it can be hard to deny requests, especially by grown children, for financial assistance that may have been easier for you to give while you were still bringing home a paycheck.

"We all have different ideas of our lives and what our dream retirement looks like," says Donna Butts, executive director of Generations United. "There are some grandparents or older adults who think that they are being taken advantage of or asked for things too often, but there are many who feel like they aren't asked enough. The most important thing is to communicate ahead of time."

The happiest and most successful retirees have a plan in place around both their finances and their lifestyle before they ever stop working. That may include providing time and money to loved ones, but only as it fits within a retirees' own plans.

Still, saying "no" is one of the most important things you can do to ensure a successful retirement, both financially and emotionally. It may be difficult at first, but it gets easier with practice, and it gives you a chance to say "yes" to the things that can bring you joy. Here are 4 times it's OK to say "no":

1. To family financial needs.

Whether it's your own aging parents or grown kids looking for help launching their own careers, a growing number of Baby Boomers -- more than 43 percent of U.S. retirees -- are providing regular financial support to family members, according to a report in May from HSBC.
If you've got the means to provide the assistance that's fine, but planners say that most retirees are putting their own security at risk by providing that kind of financial assistance. "Retired people who do want to continue to support their children can see what they can afford and make an annual gift to them," says Ryder Taff, a portfolio manager with New Perspectives in Ridgeland, Missouri. "They make it clear that this is all that they will give and it makes it easier to say no when the child asks for more."


If you can't afford, or don't want to continue supporting your kids, talk to them about adjusting their lifestyle so that they need less money or looking into options borrow to cover their costs. (Remember they can borrow money for college or a home, while you can't borrow cash to pay for retirement.)

Saying no to aging parents when aging parents need medical help may be more difficult, but it's worth checking in with your siblings to see if costs can be shared or looking into government programs that can provide assistance to low-income seniors.

2. To time-consuming favors.

You're retired, and suddenly everyone thinks you're free to drive him to the airport or wait around for deliveries. Of course, making life easier for your loved ones is an important part of being a good friend or family member and can offer satisfaction and rewards of its own. And for some people, certain time-consuming activities—like watching grandkids—are the ideal way to spend a retirement.
For others, though, the time commitment of some favors can lead to resentment. "Eventually that resentment is going to squeak out somewhere else," says stress relief coach Ryan West. "Resentment is not a happy place to be, and that's one of the reasons we see so many health problems in retirement."


If that's the case, give yourself permission to set limits on the time you can give to others. Be honest with the person to whom you're saying no, and don't feel guilty. "You don't owe anyone an explanation for anything," West adds.



3. To your boomerang kid.


So much for that empty nest. One in four adults ages 25 to 34 now lives in a multi-generational household, according to the Per Research Center, driven by young adults who have moved back to their parents' home (or never left).
Having your adult children in your home can be costly, especially if it's postponing your plans to downsize or if you kid is not paying his share of the bills. Have a frank discussion with your child about when he or she plans to move out, and start collecting rent. (Teaching your children how to budget for the expense will help once they're on their own. If you don't need the cash, put it into a savings account on their behalf.)

4. To keeping up with the Joneses.

Once you've said 'no' to everyone else, make sure you're able to say 'no' to yourself once in a while as well. If your retired friends are taking lavish vacations and dining out often, it can be tempting to follow their example. After all, you worked hard for decades to get to this retirement.
"Unlike pre-retirees who are still working and may have an opportunity to bring in more income to offset overspending, retirees have a greater need to live within that budget," says James Nichols, head of retirement income and advice strategy for retirement solutions at Voya Financial. "You need to be honest with yourself and with your peers."


You should certainly allot some money in your budget for leisure and vacations, but only after making sure that your long-term retirement security is on track. After all, you never know what the Joneses real financial picture looks like. Maybe, they need to work on saying 'no' also.

Tom Brady isn't the only one that should fear deflation—the economy should too

Tom Brady isn't the only one that should fear deflation—the economy should too

Alex Rosenberg | @CNBCAlex

CNBC.com

      

The specter of deflation is haunting more than New England Patriots quarterback Tom Brady. The whole U.S. economy is now grappling with its effects.


As growth splutters, the world's largest economy is facing the real possibility of a spiral in prices. On Thursday, the Producer Price Index for Final Demand showed that prices fell by 0.4 percent in April compared to March, and by 1.3 percent versus last April. The readings according to the previous-used PPI data series, known as PPI for finished goods, looked even worse, with a monster 4.4 percent year-over-year drop.




Steep price drops can be perilous for the growth of an economy that's comprised of nearly 2/3 consumer spending. While falling prices may sounds attractive from a consumer standpoint, they are bad for the overall economy since deflation encourages people to save, rather than spend, money. After all, why spend a dollar today when it will be worth the equivalent of $1.05 tomorrow?
However—and perhaps unlike the Patriots' embattled quarterback—the U.S. has a good excuse for the potential deflationary shock: Oil.

Crude's slide over the past year has reduced macro price metrics tremendously. And indeed, when energy and food prices are stripped out to produce what's known as the "core inflation" measure, PPI for Finished Goods actually rose by 2 percent over the course of the year. On the other hand, the core PPI for Final Demand number still fell 0.2 percent from March to April.
Simultaneously, some maintain that no matter how noisy the inflation reading may be, there are still bad signs embedded in it.


"The PPI came in well below expectations and trying to pin the drop in wholesale prices on any one component would be a mistake," wrote Steven Ricchiuto, Mizuho's unconventional chief economist. "The loss of upside momentum in prices is broad-based."

Headaches for the Fed?

Getty Images

For Ricchiuto, the number also points to a headache for the Federal Reserve in its quest to raise short-term rates. The central bank has set an inflation target of 2 percent, and no matter what the actual inflation number is, 2 percent does appear to be elusive at this point.
This despite years of ultra-loose monetary policy, which theoretically should spur inflation by making it more attractive to spend rather than save money. If inflation does not pick up, the Fed may not see fit to raise rates.


"The PPI fits with my later-rather-than-sooner Fed call, and further supports my call for a sustained trading range on 10-year notes," Ricchiuto wrote.
That is, a delay in the Fed's rate-hiking plans would mean that Treasury bonds can stay put, instead of trading much lower as yields rise.
The key event for inflation-watchers will come on Friday, when April Consumer Price Index data is released. Economists are looking for inflation of just 0.1 percent, and 0.2 percent ex- food and energy.


But those more bullish than Ricchiuto, such as RBC senior economic Jacob Oubina, say that the April inflation reading should mark the "bottom" for inflation, with core inflation "grinding up" to 2 percent by year-end.


Oubina says that shelter makes up 42 percent of CPI, and since rental real estate "will continue to be in high demand, that alone will support the inflation backdrop as we make our way through the balance of 2015."


PPI is often used to forecast CPI, given that those produced goods will, in theory, be sold to consumers in the future. Yet the weak April reading doesn't spook the RBC economist, largely because it is such a "frustratingly volatile" economic reading.
"Energy and trade services alone pulled this index down. So the pass-through argument just doesn't pass the smell test," he said.

—By CNBC's Alex Rosenberg.

4 ways to outlive your retirement savings

Anna Robaton

Friday, 1 May 2015 | 10:00 AM ET

CNBC.com

Ever wake up in cold sweat at night wondering whether you'll outlive your retirement savings? You're not alone.

Many Americans have spent too much and saved too little, and traditional defined-benefit pensions have gone the way of the fax machine, displaced by 401(k) plans with modest balances.
The median 401(k) plan balance for two-person households nearing retirement (age 55 to 64) is about $111,000, according to the Center for Retirement Research at Boston College. To some, that may seem like a big nest egg, but it equates to less than $400 per month during retirement, assuming a yearly withdrawal rate of 4 percent, adjusted for inflation.

Don Klumpp | Photographer's Choice | Getty Images

To make matters worse, half of today's private-sector workers don't have any employer-sponsored retirement plan at their current jobs, according to the book "Falling Short: The Coming Retirement Crisis and What to Do About It," by Charles D. Ellis, Alicia H. Munnell and Andrew D. Eschtruth. Many of us will need more income during retirement than did previous generations, due to longer life expectancies and rising health-care costs.

"The fundamental problem," when it comes to retirement, "is that most people don't have much in the way of savings," said Anthony Webb, a senior research economist at the Center for Retirement Research at Boston College. "The solution to not having enough is to have a boatload of money. The question is: How do you acquire a boatload of money?"

If you are off-track when it comes to retirement savings, the obvious solution is to begin stashing away a huge percentage of your income, Webb said. But many people in their 40s and 50s are unwilling or unable to make that kind of sacrifice, he added. So then what?
Here are some ideas to consider:

1. Delay retirement. Retirement-planning experts say it behooves us to resist the temptation to call it quits in our early 60s, provided we don't have very physically taxing jobs. Putting off retirement has several potential benefits. It means more time to save and invest and, for better or worse, a shorter life expectancy during retirement.

"If you can work longer, for many people that will be a more palatable solution than saving a crazy percentage of your salary," Webb said.
Working longer also allows you to wait to claim Social Security retirement benefits.
Typically, the longer you wait to claim benefits, the bigger your monthly payments will be, up until age 70. Those who claim benefits at age 70 get a whopping 76 percent more per month than they would if they began drawing benefits at age 62, according to the book "Falling Short: The Coming Retirement Crisis and What to Do About It."

Many people draw Social Security benefits early, figuring they might not live long enough to make a higher monthly payout worth the wait. But that calculus can be problematic, because nobody knows exactly when they'll die, said David Mendels, a certified financial planner and director of planning at Creative Financial Concepts.
"You might die before your life expectancy, and if you do and you claimed early, you made the right call—and congratulations," he quipped. "But if you live longer than your life expectancy, you might end up eating cat food in your old age."

2. Redefine retirement. "Retirement used to be a reward for 40 years of drudgery," said Frank Boucher, a CFP and owner of Boucher Financial Planning Services. "Folks would die shortly after they retired, but that's usually not the case anymore."
Many of us will spend a couple decades in retirement, which gives us ample opportunity to engage in interesting and/or rewarding activities. For many people, that might entail some sort of post-retirement work, Boucher said. Part-time work allows retirees to put off tapping their nest eggs or draw down savings more slowly. Those who are self-employed are also eligible for related tax deductions.
Boucher is living by his own advice. Tired of traveling for work and wanting a change, he retired in 2006 from a national association providing financial education and planning services and started his own practice.
"You can really enhance your retirement finances by focusing on the things you are passionate about and getting paid to do them," he said. "A lot of people actually enjoy the work they do, but not the environment they do it in."

3. Look into buying an immediate annuity to hedge the risk you'll outlive your assets. Immediate annuities, sometimes called income or payout annuities, are pretty straightforward. Basically, you hand over a lump sum to an insurer in return for guaranteed regular payments for a period of time, say 10 or 20 years, or until you die. The payments may be fixed or increase with the cost of living, which helps counter inflation risk.

"Remember that you aren't investing for just the next five years. You are also investing for 20 years from now." -David Mendels, director of planning at Creative Financial Concepts

Sellers of these annuities are essentially redistributing income from contract owners that die relatively young to those who live a long life, said Webb at the Center for Retirement Research. So why part with a chunk of money when you run the risk of falling into the first camp? The rationale, Webb said, is similar to the reason people buy homeowner's insurance: Your house may not burn down, but if it does, you'll be glad you had insurance.

4. Don't ignore inflation and interest-rate risks. One of the biggest dilemmas many older Americans face is how to invest their savings. Mendels at Creative Financial Concepts says it's important to keep in mind that all investments carry risk and that it's okay to take some stock-market risk to help counter the real possibility that inflation will erode your spending power during retirement. Many retirees, he said, wrongly focus exclusively on income-generating investments, which can be volatile, too.
"Retirees jump through these hoops in an effort to generate more income and get into riskier and narrower stuff when they should be focused on total return as opposed to yield," Mendels said.
It is important, he added, to have a long-term perspective and "remember that you aren't investing for just the next five years. You are also investing for 20 years from now."

—By Anna Robaton, special to CNBC.com

 

Anna RobatonSpecial to CNBC.com

Insurance you'll still need in retirement

Once you're retired, you typically don't need disability or life insurance to replace your wages. You'll be living off other sources of income: your savings, any pensions, Social Security (with some exceptions -- more on that in a moment).

However, you really need to keep some policies in place even after you quit working. These include:
Liability insurance. You don't want to get to retirement only to be wiped out by an unexpected lawsuit. Liability coverage pays the costs if you cause an accident, your dog bites someone or you're otherwise found at fault for injury. Financial planners typically recommend having liability coverage at least equal to your net worth and preferably twice your net worth.
Trial attorneys will typically settle for the amount of your coverage if you're adequately insured. If you're not, they'll be motivated to go after your other assets. Your retirement savings are safe from creditors' claims, but other assets -- including some or all of your home equity, depending on state law -- are up for grabs.

Liability is part of your auto and homeowners' insurance, but the limits on your coverage may be too low. If so, consider adding an umbrella or personal liability policy that kicks in once your other coverage is exhausted. The first $1 million of coverage typically costs around $300 a year, with the next million costing about $75 and a third million $50, according to the Insurance Information Institute.

Health insurance. Medicare provides health insurance for the vast majority of people 65 and over, but the federal government program covers only about 60 percent of retirees' health care costs, according to the Employee Benefit Research Institute. Health care spending eats up 15 percent of the typical Medicare recipient's household spending, and EBRI calculates that a 65-year-old couple with median drug expenses would need $234,000 in savings just to have a 50 percent chance of having enough to cover health care costs in retirement.
If you don't have employer or retiree health insurance to supplement Medicare, you might want to consider buying one of 10 available Medigap plans offered by private insurers.
If you're under 65 and don't have health insurance from another source, you can buy an individual policy. If you can qualify for a government subsidy (and most people can), you should shop through an Obamacare exchange -- your state's version, if it provides one, or the federal exchange. Under Obamacare, everyone can get coverage -- you can't be denied or charged more because of preexisting conditions.
Disaster insurance. Even if you haven't quite got your mortgage paid off, chances are you have substantial equity in your home. Your home's value likely is a major part of your wealth and may be a resource you can tap in the future to fund your retirement.
But your homeowners' insurance may not offer enough protection. It doesn't cover floods, for example, or earthquakes in areas at high risk for those disasters. While homeowners' policies typically cover wind damage, you may need separate coverage to protect against hurricanes.
Disaster polices often come with high deductibles, so make sure you have enough cash set aside in an emergency fund to cover those.

Some other coverage you might want to consider:

Long-term care insurance. Medicare doesn't cover most nursing home or other "custodial care" expenses if you're not able to take care of yourself. The cost of long-term care can be astronomical, but so can the cost of insurance to pay for it. The best time to buy this coverage, if you can afford it, is in your mid-50s, according to the American Association of Long-Term Care Insurance and many financial planners.

If you're interested, look for an independent insurance professional who specializes in helping people compare policies. Also consider consulting a fee-only financial planner to make sure it's the right fit.
Life insurance. You need coverage if you still have people financially dependent on you, such as minor, special-needs children or a spouse who wouldn't be able to pay the bills if you died. You also may want a policy if your estate is so large that it would owe estate taxes (currently, estates worth more than $5.43 million). If that's the case, talk to an estate-planning attorney who can help you minimize taxes and find appropriate coverage.

Liz Weston

Liz Weston is an award-winning personal finance columnist and the author of several books, including the best-selling "Your Credit Score." Liz has appeared on "The Dr. Phil Show," "NBC Nightly News," "The Today Show" and CNBC, among other programs. She's on Twitter and Facebook and blogs at AskLizWeston.com

Why even high earners are struggling to save

Kelley Holland | @KKelleyHolland

Thursday, 16 Apr 2015 | 9:16 AM ET

CNBC.com

Even wealthier Americans are struggling to save enough for retirement, according to a new survey.
The report, released Thursday by SunTrust, found that even among households with incomes of $75,000 or more, roughly a third live paycheck to paycheck at least some of the time, and one-fourth of those with incomes of $100,000 or more do the same. 

According to Census Bureau data, less than a third of households across the country earn $75,000 or more a year, though median incomes are higher in some areas than others.
A third of respondents said a lack of financial discipline at least sometimes holds them back from achieving their goals. But older respondents were significantly more likely than the younger cohort to say they were not saving enough for retirement, or were not sure if they were. To some extent, that may reflect lifestyle habits more than financial struggles. Respondents cited spending on things like entertainment, clothing and dining out as affecting their ability to save. 

Pamela Sandy, CEO and founder of Confiance, a financial advisory firm, points to other causes as well. Her clients are contending with such things as student loans, the cost of child care and the need to help family members. "Do I think people are just out there being frivolous? It is damn expensive to live in the country today, and it's damn expensive to raise kids, and that's just the bottom line," she said.

There is also the matter of financial smarts. A survey released Thursday by Guardian Life Insurance found that 401(k) plan participants have a low understanding of financial concepts and practices, which the company said "likely contributes to lower plan engagement and less successful retirement outcomes."

The Guardian survey also found that saving for retirement is low even among those nearing that life stage, with the average 401(k) plan participant over age 50 contributing $9,100 per year. (Tweet This) And only half of all the survey respondents are confident they will reach the level of retirement income they are targeting.

Sandy said low savings rates are to be expected. "We don't really have a problem with savings vehicles," she said. "We have a problem that people don't have the money to save."

Kelley HollandSpecial to CNBC

When our Government shuts down..The Shutdown of 2013

The Government Shutdown of 2013

So, we ended the streak of having 17 years go by since the last time our politicians could not agree on a budget and the federal government was forced to shut down all non-essential services. Thousands of government workers have been furloughed with no end in sight and the "End of the World Preppers" are coming out of the woodwork and predicting a total economic and social collapse!  I guess my wife and I made a mistake when we chose to build a new patio instead of a bomb shelter and buying a year’s supply of MRE’s.

How did we get here?

Each year Congress is supposed to agree on a budget to fund the next years’ worth of government waste (sorry, I mean expenses). The fiscal year ends on Sept. 30 each year, but congressional leaders were not able to agree on how to divvy up all the pork in the budget. So, without an agreement on the budget – which is essentially a law passed by both the House of Representatives and the Senate pay what amounts to trillions of dollars in annual expenses for the next fiscal year, the government effectively shuts down at midnight on Oct. 1st.

With that said, the government has not ground to a complete halt. Services deemed to be essential like tax collection, the mail, and the military will continue to operate. Non-essential departments and employees will be furloughed and attractions like the National Zoo will be closed until further notice.

The last government shutdown was in 1996, when President Bill Clinton and House Speaker Newt Gingrich could not reach a deal. That shutdown lasted nearly a month.

Why can’t we all just get along?

The impasse between the GOP and the Dems centers around funding the Affordable Care Act, or what has lovingly become known as Obamacare. This piece of legislation (passed early in the President’s first term in office) would increase the number of Americans who receive health insurance by requiring them to buy it.  It is no longer a choice to buy health insurance because you will be subjected to paying a penalty if you don’t have health coverage from somewhere.  The responsibility of collecting any penalties for those that don’t purchase coverage falls on the shoulders of the IRS each year at tax time.

The budget stalemate stems from the fact that the House of Representatives are controlled by Republicans and the Senate by the Democrats.  The Tea Party representatives in Congress are adamantly opposed to Obamacare and seem willing to do anything to defund or delay it.  It appears they are willing to derail a still fragile economy, not fund expenditures they passed legislation to pay years ago, and would potentially even cause the country to default on its sovereign debts.

The tennis match goes like this: The Republicans keep passing budgets in Congress that they send to the Democratic controlled Senate for approval but they get rejected on arrival because they include language to defund or delay Obamacare.  Ironically, the government shutdown doesn’t affect Obamacare.  In fact, the online exchanges to buy health insurance went live at midnight on October 1st, just as the rest of the government was being shut down.

So now what happens?

It becomes about who is going to blink first and succumb to the pressure to cut a deal. What does that take you might ask?  It boils down to who wins or loses the public “popularity contest.”  Each side is working day and night to make the other appear to be at fault for the shutdown.  So the winner in this fiasco will be the side that succeeds in making the other side take the blame in the court of public opinion.  It appears that this is the sad state of what has become politics today.

We are all confident the shutdown will end and the drama will subside until the next crisis (right around the corner) becomes front page news.  The sad part is that no matter how this turns out I can’t help but think that America has already lost.  I would opine that our elected officials, most importantly starting with President Obama, have lost their sense of leadership, bipartisanship and doing what’s best for the country in the long run because they seem focused on serving personal interests and agendas over everything else.  Regardless of which party affiliation occupies the White House, I believe it is the President’s role to lead and consensus build to get things that need to be done.  I don’t believe it’s a coincidence that President Obama’s approval rating is at its lowest point at the same time he is providing little to no leadership towards generating a solution to our budget impasse.  I believe that when times get tough, leadership makes all the difference.

In the meantime, I guess we can just shake our heads in disbelief and pray that sound judgment and a mutual compromise will ultimately prevail in the battle of the budget.  If not, does anyone know a good contractor specializing in building bomb shelters?