Financial Planning, Retirement Issues


The FUTURE is approaching NOW

June 21st, 2017 ernie Posted in Life Style No Comments »

the future is approaching nowThe FUTURE is approaching so fast that they cannot handle it. Many people who read science fiction, will already realize that some of the things that were mentioned in science fiction books a few years ago are now reality. The FUTURE is approaching NOW and we better hang on to our hats because it will only speed up! Technology will change everything. If you brought someone from even 50 years ago into present time, they would be shocked at the devices we have and how our lives have changed.

In 1998, Kodak had 170,000 employees and sold 85% of all photo paper worldwide.
Within just a few years, their business model disappeared and they went bankrupt.

What happened to Kodak will happen in a lot of industries in the next 10 years and, most people won’t see it coming. Did you think in 1998 that 3 years later you would never take pictures on film again?

Yet digital cameras were invented in 1975. The first ones only had 10,000 pixels, but followed Moore’s law. So as with all exponential technologies, it was a disappointment for a time, before it became way superior and became mainstream in only a few short years. It will now happen again with Artificial Intelligence, health, autonomous and electric cars, education,3Dprinting, agriculture and jobs. Welcome to the 4th Industrial Revolution. Welcome to the Exponential Age .

The FUTURE is approaching NOW

Software will disrupt most traditional industries in the next 5-10 years.
Uber is just a software tool, they don’t own any cars, and are now the biggest taxi company in the world.

Airbnb is now the biggest hotel company in the world, although they don’t own any properties.
Artificial Intelligence: Computers become exponentially better in understanding the world . This year, a computer beat the best Go-player in the world, 10 years earlier than expected.
In the US , young lawyers already don’t get jobs. Because of IBM’s Watson, you can get legal advice (so far for more or less basic stuff) within seconds, with 90% accuracy compared with 70% accuracy when done by humans.

So if you study law, stop immediately. There will be 90% less lawyers in the future, only specialists will remain.

Watson already helps nurses diagnosing cancer, its 4 times more accurate than human nurses.
Facebook now has a pattern recognition software that can recognize faces better than humans. In 2030, computers will become more intelligent than humans. (NEVER!/Albert)

Autonomous cars : In 2018 the first self driving cars will appear for the public. Around 2020, the complete industry will start to be disrupted. You don’t want to own a car anymore. You will call a car with your phone, it will show up at your location and drive you to your destination.

You will not need to park it, you only pay for the driven distance and can be productive while driving.

Our kids will never get a driver’s license and will never own a car.

It will change the cities, because we will need 90-95% less cars for that. We can transform former parking spaces into parks.

1.2 million people die each year in car accidents worldwide. We now have one accident every60,000 miles (100,000 km), with autonomous driving that will drop to 1 accident in 6million miles (10 million km). That will save a million lives each year .
Most car companies will probably become bankrupt. Traditional car companies try the evolutionary approach and just build a better car, while tech companies (Tesla, Apple, Google) will do the revolutionary approach and build a computer on wheels.

Many engineers from Volkswagen and Audi; are completely terrified of Tesla.
Insurance companies will have massive trouble because without accidents, the insurance will become 100x cheaper. Their car insurance business model will disappear.

Real estate will change. Because if you can work while you commute, people will move further away to live in a more beautiful neighborhood.

Electric cars will become mainstream about 2020. Cities will be less noisy because all new cars will run on electricity.

Electricity will become incredibly cheap and clean: Solar production has been on an exponential curve for 30 years, but you can now see the burgeoning impact.
Last year, more solar energy was installed worldwide than fossil. Energy companies are desperately trying to limit access to the grid to prevent competition from home solar installations, but that can’t last. Technology will take care of that strategy.

With cheap electricity comes cheap and abundant water. Desalination of salt water now only needs 2kWh per cubic meter (@ 0.25 cents). We don’t have scarce water in most places, we only have scarce drinking water. Imagine what will be possible if anyone can have as much clean water as he wants, for nearly no cost. (wishful thinking???!!!)

Health: The Tricorder X price will be announced this year. There are companies who will build a medical device (called the “Tricorder” from Star Trek) that works with your phone, which takes your retina scan, your blood sample and you breath into it.

It then analyses 54 bio-markers that will identify nearly any disease.. It will be cheap, so in a few years everyone on this planet will have access to world class medical analysis, nearly for free Goodbye, medical establishment.

3D printing: The price of the cheapest 3D printer came down from $18,000 to $400 within 10years. In the same time, it became 100 times faster. All major shoe companies have already started 3D printing shoes.

Some spare airplane parts are already 3D printed in remote airports. The space station now has a printer that eliminates the need for the large amount of spare parts they used to have in the past.

At the end of this year, new smart phones will have 3D scanning possibilities. You can then 3D scan your feet and print your perfect shoe at home.
In China, they already 3D printed and built a complete 6-storey office building. By 2027, 10% of everything that’s being produced will be 3D printed.

Business opportunities: If you think of a niche you want to go in, first ask yourself: “In the future, do I think we will have that?” and if the answer is yes, how can you make that happen sooner?

If it doesn’t work with your phone, forget the idea. And any idea designed for success in the20th century is doomed to failure in the 21st century.

Work : 70-80% of jobs will disappear in the next 20 years. There will be a lot of new jobs, but it is not clear if there will be enough new jobs in such a short time. This will require a rethink on wealth distribution.

Agriculture : There will be a $100 agricultural robot in the future. Farmers in 3rd world countries can then become managers of their field instead of working all day on their fields.

Aeroponics will need much less water. The first Petri dish produced veal, is now available and will be cheaper than cow produced veal in 2018. Right now, 30% of all agricultural surfaces is used for cows. Imagine if we don’t need that space anymore.

There are several start-ups who will bring insect protein to the market shortly. It contains more protein than meat. It will be labelled as “alternative protein source” (because most people still reject the idea of eating insects).

There is an app called “moodies” which can already tell in which mood you’re in. By 2020 there will be apps that can tell by your facial expressions, if you are lying. Imagine a political debate where it’s being displayed when they’re telling the truth and when they’re not.

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Money Management for Kids

September 21st, 2016 ernie Posted in Life Style 1 Comment »

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 rules 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.
  • 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.
  • 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.

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Lifestyle Guidelines

September 7th, 2016 ernie Posted in Life Style No Comments »

As we grow older, and hence wiser, we slowly realize that wearing a $300.
or a $30.00 watch – – – – – – – they both tell the same time

Whether we carry a $300 or a $30.00 wallet/handbag – – – – – – – the amount of money inside is the same

Whether we drink a bottle of $300 or $10 wine – – – – – the hangover is the same

Whether the house we live in is 300 or 3000 sq. ft. – – – – – – loneliness is the same.

You will realize, your true inner happiness does not come from the material things of this world.

Whether you fly first or economy class, if the plane goes down – – – – – you go down with it

Therefore. I hope you realize, when you have mates, buddies and old friends, brothers and sisters, who you chat with, laugh with, talk with, have sing songs with, talk about north-south-east-west or heaven & earth ….. That is true happiness!!

FIVE UNDENIABLE FACTS OF LIFE:
1. Don’t educate your children to be rich.

Educate them to be Happy. So when they grow up they will know the value of things not the price.

2. Best awarded words in London …

“Eat your food as your medicines – otherwise you have to eat medicines as your food.”

3. The One who loves you will never leave you because even if there are 100 reasons to give up he or she will find one reason to hold on.

4. There is a big difference between a human being and being human. Only a few really understand it.

5. You are loved when you are born.

You will be loved when you die. In between, You have to manage!
If you just want to Walk Fast, Walk Alone!

But if you want to Walk Far, Walk Together!

SIX BEST DOCTORS IN THE WORLD:

  1.   Sunlight
  2.   Rest
  3.   Exercise
  4.   Diet
  5.   Self Confidence and
  6.    Friends

Maintain them in all stages of Life and enjoy healthy life  The older we get, the fewer things seem worth waiting in line for

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Teaching Your Kids About Managing Money

July 7th, 2016 ernie Posted in Life Style No Comments »

Teaching Your Kids About Managing MoneyTeaching your kids about managing money can be among the most important life skills that parents can impart to their kids. If you can manage your money, 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, as well as pre-teens, young adults and even older adults. 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 pay checks
  • 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 and explain some of the items in our next post about teaching your kids about how to manage money.

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Banks Failing to Stop Elder Abuse

June 21st, 2016 ernie Posted in Life Style No Comments »

Banks Failing to Stop Elder AbuseIf you are surrounded by a caring and loving family, chances are that elder abuse will not be an issue for most people. On the other hand many people are still taken advantage of by family members as well as scam artists and this is where the banks can help in a number of ways. With baby boomers aging banks failing to stop elder abuse in a financial sense is a real issue. They are assessing placing safe guards in place that will monitor unusual amounts of money being with drawn from accounts and alerting appropriate people.As a senior you have to tell the banks who they should contact and when, so there is a part for the senior and the care giver to play here as well.

Banks Failing to Stop Elder Abuse

While the banks figure this out there are a number of things that individuals can do to manage abuse of your own accounts or on accounts that you are managing for someone else. All banks now offer email alerts that can be set at various thresholds. An email is sent to the specified address any time this threshold is exceeded.

If you are a care giver, this is an excellent way to keep track of what is going on in someones account. As a senior you may want to have more than one person manage the account to avoid temptation for a single care giver.

Make sure that there is a living will that specifies who can manage your affairs if you are incapacitated and set up the safe guards as mentioned to avoid being scammed or finding that all of your money has been removed by someone who you trusted. Tell the bank who this person is and add controls on the account to avoid large sums of money being removed without your knowledge.

Take control of the elder abuse possibility yourself to avoid becoming a victim.

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How Long Should You Plan For Your Nest Egg to Last

May 21st, 2016 ernie Posted in Life Style No Comments »

How Long Should You Plan For Your Nest Egg to LastIn our last post we suggested that consumers should really try to assess how long should you plan for your nest egg to last. What this question is really asking is how long will you live? And also how long will your spouse live. No one really knows, however you can look for indicators such as how long your parents, uncles and aunts lived. This is a good indicator from a genetic perspective. There could be all kinds of external issues such as health and accidents, but you really have to ignore these. No one can tell what will happen in the next 5 minutes let alone years from now.

How Long Should You Plan For Your Nest Egg to Last

If you want to be conservative, take the average age of your parents and add at least 5 years to that life span to reflect we have better health care and we have lived generally in a healthier manner over the years.

Next take a look at your extended family to assess if there are any that lived significantly longer. Compare your health to that person and make an adjustment to the average number you calculated earlier with the 5 years also added.

If you plan to retire at a specific age, you now have an indicator of how long you need your savings to last. This answers the question of how long should you plan your nest egg to last. From here you can use a calculator of some kind that takes into account the income you should make on your investments and how much you should withdraw each year. Our previous post gave a simple method of calculating this number.

The longer answer is that you must take into account your investments, what income you can expect from them, what the inflation rate will be and how the markets will change over the years. This is a complicated calculation and most advisers will be happy to help you with developing a conservative answer.

If you are looking for more ideas about your life style decisions, click here.

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Retiring Abroad – Things to Know

February 21st, 2016 ernie Posted in Life Style No Comments »

Retiring AbroadThe first thing to realize when you are retiring abroad is that it is not a vacation. This is the place where you will be living for the foreseeable future. A home means lots of different things to many people. You cannot judge the location that you are moving to by the same criteria that you would when you plan to go on vacation for a couple of weeks. Yes it should have some of the same criteria that you look for on a vacation: things to do, sandy beaches, warm temperatures etc. Make your list and tick them off, but also include things like finding a doctor, dentist, hospital, banking, groceries, entertainment,  hair stylist etc. This is also part of moving and retiring abroad.

Retiring Abroad – No Place is perfect

Any location you retire to, will not be perfect, however it should meet your retiring abroad criteria sufficiently that you are willing to overlook the other stuff. Some locations are really inexpensive e.g. Mexico, but the lifestyle and culture might be so different that you cannot deal with it. Then there is the language difference to deal with. Many people who retire abroad will simply overlook this angle, embracing instead the warm weather, the local culture etc.

Comfort vs. Happiness is another area that many people strive for. Regardless of how comfortable the new location is, if you are missing the family it might not be that great. There are always solutions to your issues and one is to bring the family with you or at least have them visit often.

The World Is not That Scary – although we here of all kinds of things going in the world, we have to remember that it is a big place and things happen somewhere every day. The important thing to remember is that you need to be street smart, hang around with like minded people and stay away from bad neighborhoods. Just do the same things you would do at home.

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Boomers fueling Self Driving Car Interest

February 7th, 2016 ernie Posted in Life Style No Comments »

Boomers fueling Self Driving Car InterestImagine that you have just turned 80 and are about to lose your driver’s license. Or perhaps you have lost your confidence to drive around the city. Would a self driving car be of interest to you in this situation. Boomers are retiring by the thousands and they are aging as well. It turns out that the market futurists feel that Boomers fueling Self Driving Car Interest is the next big thing. It makes sense. If these cars can actually drive around the city, take you to your destination and find a place to park, what a release of freedom it will be for many that must give up driving a car.

Boomers fueling Self Driving Car Interest – Taxi’s

But they can take taxis. They do not have to take their own cars. They also do not have to worry about buying a car or paying for insurance. Still taking a taxi everywhere can get expensive, especially if the trips are across town or even longer.

A self driving car can provide the freedom for many consumers who are losing their license or just do not feel confident about driving. All you need to do is to get in your car, give voice commands regarding where you want to go and your off. How easy would that be. No more navigation issues, following a map or a GPS. Sit back and relax while the car does all of the work.

It will be a few years yet before we see a lot of these self driving cars on the road, but we think by 2020, when a lot of baby boomers will be facing driving issues, these cars will be on the road. Governments will work out the legalities, insurance companies will work out the liability associated with accidents etc. The technology will not be perfect, but with experience, accident investigations etc, it will improve significantly.

I cannot wait to try one of these self driving cars myself. How about You?

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High Housing Cost Makes it Difficult to Retire

February 14th, 2015 ernie Posted in Life Style No Comments »

High Housing Cost Makes it Difficult to RetireYour home is paid off and yet you are wondering if the high housing cost makes it difficult to retire. When you retire some costs will decrease such as work related costs, however there is a good chance that other leisure related costs will go up since you have more time on your hands. Then of course there are the taxes, utilities and general upkeep on your home that will increase by some amount every year. Depending on your pension and  other income, your expenses could increase faster than your income. For many people this represents a significant problem and may push them out of their homes! In this situation, high housing cost makes it difficult to retire.

High Housing Cost Makes it Difficult to Retire

There are several options however it is important to analyze your costs, how much they will increase year over year as well as your income. Once you have these numbers you can decide on the appropriate alternative to select.

  • You plan to retire and stay in your home
  • Should you down size
  • Sell and Rent

Each of these scenarios should be assessed after assessing the following:

Regular operating costs for things like utilities, heat, electricity and other regular monthly and annual fees that are part of maintaining a home. Some may have HOA fees, while others will hire lawn maintenance. All of these regular fees should be included.

Maintenance costs whether you like it or not occur every year. Small things such as leaking faucet repairs, window repairs, maintenance of lawn mowers etc. While they should not be large amounts they never the less add up over the year.

Housing repairs such as roof replacement, driveway repairs, major appliance repairs or replacement including furnace and air conditioning.  These are big ticket items and need to be budgeted for if you plan to stay in your home. Even if you move, these also could be issues that you need to deal with if you purchase a home that is not brand new.

If you do decide to move, take into account everything associated with the move which could include real estate fees, legal fees, bank fees, land transfer taxes, moving costs, decoration costs, updates and repairs to the home you move to. Even if you move to a brand new home there will be landscaping for example, window coverings, and decoration costs.  Discuss all of these items with your  spouse to make sure that you are agreed on what needs to be completed associated with moving.

Confirm your cash flow in retirement based on the analysis you complete for the above scenarios that reflect your personal situation and then make up your mind regarding which one makes the most sense for your situation.

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The Sandwich Generation

February 7th, 2015 ernie Posted in Life Style 1 Comment »

Sandwich GenerationEver heard of the The Sandwich Generation? We will all go through it eventually unless we are extremely unlucky. This is the situation were you are raising your own family and also have elderly parents who need a great deal of help to manage their finances, their home and in some cases even their health. We are pulled in both directions and it can become quite busy and stressful, however would you want it any other way.  For example you might not have kids and miss out entirely on that side of life. Your parents could already be gone and you will miss them. Regardless of the stage that you are at, take the time to enjoy both your own family and your parents. By including them you will get to enjoy many different aspects of family life that you would otherwise miss.

There are some things that can be done to help make life easier for both parties. It is really up to you regarding how you manage your life and that of your families. Make the most of it while you can.

The Sandwich Generation – Finances

At some point you may have to be approved as a proxy for your parents so that you can pay their bills and manage their day to day expenses. You may have to see the bank were all of the accounts are held and have your parents give you the authority to do this. Many people are nervous about taking this approach since money is involved however at some point there is no choice. A living will is another good thing to consider. A living will spells out how health issues are to be dealt with and how money and bill payment is to be handled. It is all very legal and should be set up using a lawyer.

The Sandwich Generation – Health

As our health begins to fail we can do less and less physically.  Most people want to be independent, however if someone is willing to help, take advantage of the assistance so that you can focus on the things that can be looked after by yourself. if you are a child or care giver, remember that the senior person is most likely has a lot of pride and does not want to admit that they can no longer look after themselves. Be positive about things and make suggestions about what you can do to help, let the person consider it and pitch in whenever you can.

The Sandwich Generation – List of Helpful Activities

  • Day to day managing finances
  • Daily chores
  • Home maintenance
  • Outdoor lawn care and maintenance
  • Paying bills
  • Buying groceries
  • Cooking meals
  • Daily hygiene

 

 

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