Category Archives: Fin Independence

What Should I Do With My Inheritance?

This is actually a pretty common question. With many baby boomers aging and leaving their assets to their kids many children suddenly find themselves with quite a bit of money willed to them from their parents. We are in the midst of one of the largest asset transfers in history as baby boomers grow older and do not spend their savings before passing. The heirs are then faced with the question of What should I do with my inheritance? For many, the answer seems obvious. Pay off bills, go on a trip or update the house etc. In other words, spend the money!

Having been the recipient of an inheritance several times, the writer can write from personal experience. The first time my wife and I inherited just enough money to by a car. We really needed a car. Our existing car was on its last legs and we decided to spend our money this way. We got a great car and it lasted for many years, but at the end of its life we had nothing from the inheritance and had to by another car. We spent the money on something that depreciates over time and also was worthless at the end of its life. What did we have to show for it? Nothing!

What should I do with my Inheritance – the Next Time?

We learned a tough lesson in the sense that we really had nothing to show from the inheritance. Don’t get me wrong, it was a nice gift and at least we did not blow it on a trip that lasted two weeks or partied. We could have done that and had distant memories of how we spent the money.

Based on this experience, we decided the next time we received an inheritance we would invest the money into the stock market and take the income generated from the stocks in terms of dividends. We had a variety of bills at the time and we also had a mortgage which we could have paid off, but we learned a lesson that it is very easy to spend the money and very difficult to save it.

We invested in blue chip stocks that pay dividends every quarter. They also had a long history of paying these dividends and raising the dividends as well. In other words, we not only received a regular income, we also got a raise every year. We could have reinvested the dividends, but choose to take this income and enjoy this money.

There have been many ups and downs in the markets over the years. At one point we even had less money than what we started with. We did not sell or change our investments. Over the years the market not only recovered it has topped new levels. The end result is that we now have quite a bit more money than what we started with and we have received income every year for the past 18 years.

For us this was a really great success story and was our answer to the question, what should I do with my inheritance. Everyone makes decisions based on their own situation, but just remember once it is gone, it is extremely difficult to save enough money for later in life.

For more details about inheritances, wills etc. click here.




Manage divorce and personal finances after age 65

Manage divorce and personal financesDivorce is difficult enough at any time in your life. The younger you are when you divorce, the longer you will have to recover financially from the settlement whatever it may be. But when you manage divorce and personal finances after age 65 or after you retire, it can be much more complicated and financially difficult. There is the usual splitting of assets based on age, dependency, support needs and access to the kids. With two people no longer sharing the expenses of running a household, it can become much more expensive for the individuals involved to handle all of the associated expenses. Significant adjustments for all parties are often needed, sometimes with painful financial realities.

A middle aged manager who reported to me who decided that he was going to separate from his wife and move into a place of his own, indicated to me less than six months later that he could not afford to live separately. It was just too expensive. He decided to move back in with his wife and children because it was just too expensive otherwise. Now imagine if you have just retired and are around  65 and have decided to retire. What are the impacts of retirement, divorce and suddenly realizing that you have to split all of your assets and income with your spouse?

Manage divorce and personal finances after age 65

Unless it is way beyond making it work, we suggest that people in this situation find ways to make work for them and recover their relationship. We will not even begin to address what this might mean on an emotional level. It is far too complex and varied to address. We will try to address some of the financial considerations instead. As a couple, you may be financially secure, sharing the expenses and supporting one home, car etc.  We are following this with a list of areas that need to be considered assuming it is a 50 – 50 split which it seldom will be in most situations. Readers can apply this list to their own situation and make adjustments as needed.

Your Home – assume you will either sell your home and split the proceeds or one spouse will buy out the other. Either way you end up with 50% of what you had and all of the expenses. Most people cannot replace their current home with 50% less.

Your Car – if you only have one car, you may have to buy another and split the value of the current vehicle 50 -50. Even if you own two cars, chances are one is worth more than the other.

Your investments

While your investments and pension income may be sufficient to support cohabitating couples, after they are both split 50 -50, will you have sufficient income to live in the manner you have become use to. Not likely and significant adjustments in life style will be needed.

Your debts –  are much the same. If the debts were jointly created then you have 50% ownership. However once divorced your credit rating may fall. Suddenly consumers find themselves unable to find lenders to loan them money to finance their portion of the debt.

Insurance Coverage – do you still need life insurance coverage? Will the insurance costs double because now you need to support two homes etc. Look at all of your insurance coverage to ensure that  affordability is considered, Make sure you have adequate coverage for your needs.

Health coverage and benefits

This can be a huge area especially for consumers in the US. Does one spouse lose coverage after the divorce and do they need to find additional coverage often at considerable expense?

Gifts to the kids – gifts to the kids that were previously shared are now individualized. They may cost more as well when you consider that as a couple you are actually spending more money. Cut backs may be needed in order to survive.

Personal Items – that have significant value are some of the most difficult to deal with. Not only do they have significant sentimental value, it might be difficult for one spouse to buy the other out.

This is a relatively short summary. However the ramifications can be significant for a spouse planning to separate and get a divorce. Especially if it is after they retire after the age of 55. Sometimes it is just much easier to Manage divorce and personal finances after age 65 than it is to actually divorce. Think carefully about what action you want to take before initiating action that cannot be stopped once it begins.

For more on this subject, Manage divorce and personal finances after age 65 , click here.


What is your Financial Life Expectancy

Life expectancyIf we all knew how long we were going to live, planning our finances would be easy. Many people base their estimate on how long their family lived. This can be a good indicator as long as your parents died of natural causes and lived a simalir life to your own. We now know that this comparison is not always accurate for predicting Life expectancy.

With improvements in food, medical treatment and knowledge about how to take care of ourselves, we are all living longer. The question now is what is your real life expectancy and how will you plan for it financially?

Life Expectancy and Financial Impacts

The first step is to figure out your life expectancy based on genetics. Let’s assume both parents lived to age 75. It could be an easy assumption that their children will live until around age 75 as well.

With the help of a financial advisor you could use this age as a guide to calculate how much money to take out if your savings so that it will last until your demise. This is a first step only. You may find you have to work a bit longer to achieve the life style you want while in retirement. Or you have sufficient savings already.

Now assume you will live 10 years longer. Better food, better medical care and a healthier life style could contribute to living 10 or even 20 years longer than your relatives!

Adjust your financial plan for a longer period. Will you have sufficient funds? Will you need to work longer and save more? Perhaps you will need to cut back on expenses to ensure a comfortable life style as you live longer.

Do your analysis now and make some informed decisions to ensue you have sufficient funds to meet your extended life expectancy!

How can I retire early?

Almost everyone at some time in their lives wonders, how can I retire early? They might be having a tough day at work. Or perhaps they are envious of someone who is retired and the life they are able to leave. When you ask yourself this question, how can I retire early, the next step is critical. If you want to retire early, consumers need to put a plan in place and answer the following questions. Then they must work towards these goals to achieve their objective. Unless you are lucky enough to win the lottery, most of us will just have to work hard to make it happen.

Questions to Help Answer – How can I retire early?

These are the questions that will get you started and help achieve your plans. Work with an expert to ensure that you are considering the right questions and making the correct assumptions.

  • How much should I save
  • How should I invest
  • What will my housing cost in Retirement
  • How much will health care cost
  • Manage your tax liabilities

How much should I save – how much income will you need? What interest rate will you assume? How many years do you have to save towards retirement? What pensions will you receive?

How should I invest – Most experts will tell you focus on blue chip, diverse investments that will protect you from catastrophic losses. The market will go up and down.  Over the long term it should continue to increase providing growth in addition to your savings and help with your retirement goals.

What will my housing cost in Retirement – Will you stay where you are, downsize, move in with the kids or live in a seniors home. Each one of these has different costs and must be factored into your planning.

How much will health care cost – this is a huge assumption with huge impacts. What health coverage will you have? What is your co-pay? How will you afford your medical costs.

Manage your tax liabilities  – taxes are present in life and death. Focus on minimizing your taxes. Leave more money in your pocket.

Financial Independence in Retirement 

Financial Independence in Retirement Much was made of the slogan freedom 55. At the time, it signified that a person could retire at 55, living the quality of life they wanted on the savings they had accumulated. Unfortunately, many people lost a lot of money during the recessions in 2000 and 2008/09. Freedom 55 has been set aside for the time being. We all want to have financial independence in retirement. More importantly, we want to be financially independent at a certain point in our lives so that we can make our own decisions about work vs retirement.

In fact, wouldn’t it be nice at age 45 to have sufficient income to allow you to make a decision about continuing to work, changing jobs, or traveling for a while without worrying about money? There is a way to do this, and it is just simple mathematics.

Financial Independence in Retirement

All consumers need to do is invest 10% of their incomes in a diversified group of stocks, regardless of how much they make. They need to be blue-chip stocks, and they need to pay dividends. They should have an excellent record of paying dividends and increasing their dividends. While it is slow and tedious, it is like the race of the tortoise and the hare. The tortoise won because he kept going and finished the race, while the hare fooled around and did not focus on the race.

As your income increases, so should your savings commitment. As your savings grow, there will come a time when the dividend income is larger than the money you add to the account every year from your salary.

If you begin later in life, you must save more to achieve the same result. You might have to work longer as well. But this approach will ensure you are financially independent at some future point.

Remember, save 10%, don’t touch it, invest in blue chips only, diversify, reinvest the dividends, and watch your savings grow!

How to Feel Richer in Retirement

Feel Richer in RetirementMany couples have no idea if they will have enough money when they retire. They worry and want to feel richer in retirement but do not know what to do. They have not taken the time to assess their situation regarding income, expenses, and savings to know if they will be comfortable or not. This is the only way to know if you have saved sufficiently and will have enough pension income. They can stop worrying once they set up a budget and assess their financial situation. But there are always ways to feel richer in retirement regardless of income. Here are a few steps to take.

How to Feel Richer in Retirement

Always ask for discounts – there is nothing wrong with asking for discounts. Many places offer 10% off for seniors or even as much as half-price. That’s a pretty good deal when two people can eat for the price of one.

Stay healthy – avoid expensive medication, trips to the doctor, and worse. Exercise, eat well, and not only will you feel better, there will be more money in your pocket.

Look for supplemental income – if you are short of money, get a part-time job. Many seniors work a couple of days a week. They like the extra income and the social aspect of being around people.

Work longer – once you have completed your assessment, you may need to work longer. That’s ok for many people. Again, they enjoy the social aspect and can build their savings even further.

Save early – start as soon as you get your first job. Set aside 10%, invest it well, and forget about it. Amazingly you will have sufficient savings and income by the time you are 50 to retire or do something different than your current career. It will be your choice.

Invest well – forget the quick rich schemes. Most people lose money. Focus on blue chip stocks that not only pay dividends but increase them regularly as well. You will be amazed at how fast your savings will grow.

Retirement or Independence

Retirement or IndependenceGone are the days when consumers expected to retire at age 65! Many are working far past this age to make ends meet. Many are forced to retire due to health issues or layoffs at work. They are all struggling to live and have enough money even to put food on the table. If you are 55 to 70 and reading this post, it is probably too late to benefit from the concepts expressed further in this post. You will need to keep working and learn to live on what you can earn and what you have managed to save. Younger consumers still have time to reach financial Retirement or Independence and decide when or if they retire.

Retirement or Independence

Fundamentally, consumers should aim for financial independence by the age 45 or 50. This means they have sufficient funds to live comfortably for the rest of their lives. It does not mean they need to retire or will retire.

They might be pleased doing the jobs they are doing. They may decide to pursue their dreams, whatever that might be. The point is that they can make these decisions and not worry about saving enough money when they stop working. How do they do that?

Start saving and investing as soon as you begin working. Invest at least 10% of your income, manage it, and reinvest the dividend and interest income. Let it grow, and if you do an excellent job at saving and managing, you will reach financial independence by the time you are 45 or 50.

By all means, keep working if that is what you need to do. The important thing is you can decide on your next career or lifestyle without worrying about earning money.

Money Management for Kids

Money Management for KidsThis is a continuation of the previous post about teaching your kids about managing money. In this post, Money Management for kids we will explain some of the terms we discussed in the previous post. These are lifetime skills that will help them and even yourself in the long term. One of the most important rules is the 10% rule. Save 10% of all income, including allowances and pay checks. It is never too late to start, but if you can get them to begin as children and follow this rule into adulthood, they will be financially well off by the time they are in middle age, barring other unforeseen emergencies and lifestyle issues. This is one of the single most important guideline money management for kids that your kids and even yourself can follow.

Money Management for Kids

  • Pay an allowance – and teach them what they can do with the allowance they receive. Many will want to spend it immediately, however the power of saving for a goal is a major lifestyle achievement.
  • Assign age appropriate tasks tied to their allowance – money received that is not tied to some kind of performance teaches nothing. Real life ties work, performance and pay checks. They might as well learn now, even if it is just taking out the garbage.
  • Open a savings account to teach about saving – watching their money grow through savings is a powerful tool. While they will collect little interest on their savings at this time, watching their balance grow is still an important lesson.
  • Establish emergency savings – everyone needs to have emergency savings. You never know when you need some money for health issues, major repairs etc.

Goal Oriented Savings

  • Establish goal oriented savings accounts – saving for a new bicycle, trip, car, education or many other items is a great way to establish goals and save towards them.
  • Young adults should start saving for retirement – most people think that retirement is too far away to worry about, however if you start saving early, it takes the pressure to keep working later in life instead of retiring on your own terms.
  • Learn the power of compounding interest rates and income – tied to saving early for retirement, with proper investment, savings can morph into a large number if all income is reinvested – interest, dividends etc.
  • Older teens should obtain a credit card to learn about credit, debt and credit ratings – focus on repaying the balance every month to avoid the high interest rates charged on overdue balances. It also helps to establish a credit rating.

Saving for a Home

  • Start saving for a down payment on a home – if you want to purchase a home, the minimum amount you will need is 10% of the value of the home. Some lenders will want to see 15% or even 20%. The more you have as a down payment, the lower your monthly payments will be.
  • Learn about debt ratios and the 35% rule – most lenders will tell you to never allow your monthly debt payments and living costs (rent , mortgage payments) to be above 35% of your monthly income. This is the maximum for most people to ensure that they have sufficient spending money for utilities, food and clothing.

That is it for this post, stay tuned for more money management posts. For more posts about life style issues, click here.

Teaching Your Kids About Managing Money

Teaching Your Kids About Managing MoneyTeaching your kids about managing money can be among the most important life skills that parents can teach their kids. If you can avoid debt problems and save for things you want as well as retirement, you should have a pretty good life. At least financially. It is never too late to begin teaching your kids about managing money. Even pre-teens, young adults and even older adults can benefit. So what are the things you should do to help people and kids start learning about money? How to manage money and how to avoid getting into problems later in life over money?

Teaching Your Kids About Managing Money

These points are listed in general from an age perspective. However many can be applied even for older teens and adults:

  • Save 10% of all income, including allowances and paychecks
  • Pay an allowance
  • Assign age-appropriate tasks tied to their allowance
  • Open a savings account to teach about saving
  • Establish emergency savings
  • Establish goal-oriented savings accounts
  • Young adults should start saving for retirement
  • Learn the power of compounding interest rates and income
  • Older teens should obtain a credit card to learn about credit, debt and credit ratings
  • Start saving for a down payment on a home
  • Learn about debt ratios and the 35% rule

We will expand on this list. We will also explain some of the items in our next post about teaching your kids how to manage money.

For more posts about lifestyle issues, click here.

Planning Your Retirement Now

Planning Your Retirement NowIn this post about Planning Your Retirement Now we decided to examine all of the elements that many people should consider as part of their retirement planning. You are never too young or too old to put together your retirement plan. You can modify it as life throws various curve balls at you. We believe that consumers should put together an initial plan. Implement the things that need to be done now and then forget about it for a year.

When you revisit your plan, be prepared to make adjustments based on current more up to date information. Don’t forget your own updated plans about your retirement. Revisit your plan at least once per year. Update it with any changes that make sense e.g. family changes, income changes etc.

We put together a list of the things that we believe consumers should be thinking about while they put together their retirement plans.  Not all of them apply at all ages and situations. Consumers will need to  review these and make sense of them in relation to their own situations. The bottom line is start saving now. At least 10% of your pay check each pay. Also set aside money for an emergency that hopefully will never come. We will cover each of these in more detail.

Planning Your Retirement Now – Elements

What are the Elements of Retirement Planning

  • Saving Enough Money
  • How Long Will You Work
  • Where Will You Live
  • At what Stages do Decisions Need to be Made
  • Emergency Plan
  • Early Retirement
  • Health Issues
  • Help From Advisers
  • Diversification
  • Education
  • Get Involved and Make Your Own Decisions

Saving Enough Money

Most people think of a retirement plan as being able to save enough money to live comfortably after they stop working. While this is a very important element, there are many other factors that need to be considered. However the first thing is to figure out approximately how much money you will need to save to generate sufficient income to live the way you would prefer. A good rule of thumb is to use your current income, add inflation factors to arrive at the amount of income that will be needed.

Your income will change over time, however if you establish this initial level and begin saving now when you are young you will be well on the way to achieving your dreams. Ask your accountant, bank manager or financial adviser to calculate how much money you will need to set aside each week to achieve the level of savings that you will need. Use conservative assumptions in terms of interest rate and earnings from your savings. You may be surprised that if you begin saving in your twenties for retirement you will not need to actually save that much each week from your pay check.

Younger consumers should assume they will not receive a pension from any company and save enough money to ensure a comfortable retirement. If a pension plan is available from a company, this can be factored in later on. There are no guarantees regarding pensions these days until you actually start receiving a pension.

Now that you have figured out how much money you think you will need to have when you retire, we will take a look at some other factors that will influence this amount over time.

How Long Will You Work

This is a big question for a lot of people. Some will want to retire as soon as possible, while others may decide they want to work until they are 65 or even older. This is a very personal decision in terms of what you want out of life and also what may be needed financially.

We suggest that you pick 55 as an objective in terms of saving enough money for retirement and not having any income from work related activities after that. If you do end up working past 55 for any reason, then this will be gravy money for you if you have met the rest of your plan.

Health issues may cause you to retire early, while your company may decide to downsize. In case you are a government worker, please do not assume you have a job for life. Just look at what is happening in Greece with government workers losing jobs and being forced to take serious pay check cuts and benefit cuts. If you have to work for another 30 years a lot can happen in those 30 years. I would rather have a plan that is independent of any pension and then be pleasantly surprised.

Where Will You Live

No decision is needed at this time, but forming some sort of idea about where you will live will help to guide you regarding your retirement plan and the money you will need. Some people just want to stay where they are in their current home and have no plans and never want to move from their current home. Other consumers will move to a new city to be closer to their families, have a vacation home and travel while retired.

Your idea of what you will want to do will change over time as well. While you are young, you may have visions of travelling the world when you retire. As you get near to retirement age, these plans may be adjusted based on personal needs, health issues and of course the amount of money that you have available.

This is one of the reasons why we suggest that every consumer re-evaluate their retirement plan every year. As your plans for vacation homes, travel and family change over time, your retirement plan needs will also change.

Downsizing is another issue that many people wrestle with. They have raised their families and now they do not need all of the space that they may have in their homes and they do not want to be tied down to the maintenance and the repairs that will be needed to keep their home looking pristine. On the other hand moving is expensive with real estate fees, legal fees and even moving fees.  Assess the cost of moving and make your decision based on your personal likes, needs and capabilities.

At what Stages do Decisions Need to be Made

If you are young, in your twenties all you need to do is to develop a broad based plan at this time. The main thing to focus on is how much money will you need when you retire and how much money you need to set aside for your savings to achieve this number.

In your forties, your plan needs to get a little more specific. A tentative retirement age should be set, but not cast in stone. A detailed assessment of your financial situation should be done. How much will you have saved and how much income will your savings generate for you. If pension plans are part of your future, you can include these amounts in your calculations, however as we have mentioned before nothing is cast in concrete until the time you actually collect them. Now is the time to focus on paying down debt so that you will be debt free at retirement.

Vacation Homes

Picking up a vacation home might be also considered if this is part of your plan. Finally an assessment of what you need to achieve before you can consider retiring. For example, paying off the house, getting the kids through school and married, paying off the car and any other items that are personal to your situation should be assessed and plan put in place to deal with these items.

As you near your retirement goal, the age when you plan to retire it is time to take a full and complete inventory of your situation. Determine if you are actually ready to retire financially, mentally and emotionally along with the whether your plans have been fulfilled. For various reasons you may decide to retire later even though your plan has been achieved and financially you are ready.

Wouldn’t it be nice to be in this position! You have the freedom to make your own decisions regarding work and retirement and not be forced into a situation of working because you have to. Some people love work and will keep working because they love the challenge and the social aspects that go along with it. Some people want to retire from their career, but keep on working at something that interests and challenges them. Many consultants just want to do a job and not be involved in the office politics at all. There is something for almost everyone and having the financial confidence to be able to turn down jobs that do not fit your plans is wonderful.

Emergency Plan

Life throws all kinds of curve balls at us. Some people seem to lead a charmed life and never have financial or health problems to deal with. Consumers can lead a charmed life. Then suddenly their life is turned upside down with a health issue or perhaps a lay off. Suddenly you are scrambling to find another job or deal with a health issue that may prevent you from working.

This is the time to have an emergency plan. In particular a financial savings plan that is set up specifically to deal with this sort of thing. Experts suggest that consumers should have a minimum of 6 months salary set aside to deal with these sorts of things particularly a job loss. It may take you this long to find another job and get reestablished.  We actually think that something closer to 12 months is better to ensure that there is adequate money for longer layoffs and longer health issues.

Focus on dealing with the problem at hand. If it is a job loss, then focus on finding another. If it is a health issue, do what you need to do to recover. At the same time reevaluate your emergency plan to see if there are other steps you need to take. Focus on preventing falling into a bankruptcy situation or losing your home.

Early Retirement

Over the past 5 years, from 2008 to 2013, many people suddenly found themselves being laid off. Also they had a very hard time finding a new job. Many people who were near retirement were the first to go. As bad as it is, these people had a tough time finding jobs to begin with and jobs that came close to what they were previously earning. Suddenly their retirement plans were in jeopardy. Their living standard was in jeopardy.

Those people who had savings for retirement found themselves retiring early or living on less. Their emergency funds got drained pretty quickly because they did not adjust their standard of living or take jobs that while beneath them would see them through the tough times.

Save Early for Retirement

This is one of the main reasons that we encourage consumers to begin saving for retirement early. If you do start early then there is that cushion to see you through tough times and gives you the flexibility to decide when you want to retire. Most people think that it will never happen to them. Most people think that their company, even the government jobs are for life.

Well the average working life is 30 to 35 years and most people these days will work for a minimum of 3 to 4 companies in their life time. In addition, even governments lay people off as do large companies. Some companies that you might never expect to fail do so. Just look at GM who went bankrupt in the last couple of years and various governments around the world are laying off people and cutting benefits. This is why you must make your own arrangements for retirement. Anything that you gain from employment is a major bonus!

Health Issues

Health is a really big issue, particularly as we get older. We can look at our own families to get some idea of what lies ahead of us. If there is asthma in your family, chances are that you may also have asthma. There are many things that can happen to us over our lives. Many of these health related issues cannot be avoided. This is one of the main reasons why we believe everyone needs to have an emergency fund set aside for:

  • Layoffs
  • Health issues that prevent us from working
  • Health issues that cause us to lose our jobs.

Help From Advisers

If you are not familiar with financing, with retirement planning, investing etc, finding a good investment adviser. He or she can make a world of difference. Follow the golden rules of investing. Never put all of your money into one investment. Always diversify. If it does not make sense or you do not understand what your adviser is telling you, seek a second opinion. Talk to another adviser or even a family member. If it sounds too good to be true, then it probably is. You cannot be too careful with your hard earned cash.


We talked about diversification of your investments. Always place your investments into a variety of bonds, stocks and mutual funds across various industries. Choose blue chip companies that pay well in terms of dividends. If you are investing in speculative stock or investments, be prepared to lose the money even though great profits are promised.


Take the time to educate yourself about investing. What are some kinds of stocks or companies better than others? Why are some strategies better than others? In the end it is a gamble, but the more information you have, the better chance  you have of earning an income and protecting your core investments for retirement. Attend seminars, read the news, read investment books etc and discuss options and strategies with your fellow investors.

Get Involved and Make Your Own Decisions

Some people just hand over their money and blindly trust their investment advisor. For many it works out find, but for many they lose their shirt. At least if you are involved in all of the decisions, you will understand why the decisions were made. Also what the risks are associated with the investment that is being made.


We have covered many tips and issues as well as suggestions for planning your retirement. If even one of these ideas has helped you then we have done our job. Which is to help guide consumers and get them thinking about planning for their retirement.

For more retirement ideas and areas to consider, click here.