Objective information about retirement, financial planning and investments


Retirement: Will You Outlive Your Money?


If you’ve been watching the Olympics, you may have noticed several new Ameriprise Financial commercials with their star pitchman Tommy Lee Jones.  One commercial asks the question on the mind of many folks looking to retire:  


This isn’t about whether Ameriprise Financial is the right firm to help you answer this vital question.  Rather I wanted to discuss some of the factors that will go into the answering this question from the perspective of someone looking to retire.

Your resources 

A good first step is to determine your resources to generate spendable cash once you retire.  Depending upon your situation these may include some or all of the following:

  • 401(k) or similar retirement plan such as a 401(b) or other defined contribution plan.
  • IRA accounts, both traditional and Roth.
  • A pension.
  • Stock options or restricted stock units.
  • Social Security
  • Taxable investment accounts.
  • Cash, savings accounts, CDs, etc.
  • Annuities
  • Cash value in a life insurance policy
  • Inheritance
  • Interest in a business
  • Real estate
  • Any income from working into retirement  

The list above is not exhaustive and you may have other assets or sources of income that you will be able to tap in retirement.

How much have you accumulated? 

This is an important question at all ages for those saving for retirement.  It is critical the closer you are to retirement and this is certainly true if you are within 10 years or less of retirement.

How much will you spend in retirement? 

While this might vary over the course of your retirement you need to take a stab at a spending plan for retirement if you are close to retirement.  Some of the issues to consider:

  • Where will you live?
  • Will you have a mortgage or other debts as you enter retirement?
  • What types of activities will you engage in?
  • What are your costs for medical insurance and medical care?
  • Will you need to provide support for children?  Grandchildren?  Aging parents?
  • What will your basic living expenses entail?  

These questions just scratch the surface, but I think you get the idea.  One other point to remember is that you might spend more on travel and activities in the earlier part of your retirement and less as you age.  However, any savings here might be offset by increased costs for medical care.

Another approach is to figure out what level of expenditure your savings and other resources will support and either work backwards to a budget within that spending level, try to ramp up your retirement savings to close the gap, or perhaps plan to work a few years longer before retiring.  This can be done using any number of retirement planning calculators available online.  With any such tool it is important that you pay attention to the assumptions inherent in the calculator’s model and that you think through any assumptions that you are allowed to input.

A qualified financial planner can help you through this process and this is a key element in a financial plan.

Whatever route you take the issue of outliving your money in retirement is a vital one for you to address.  In my opinion this is the biggest risk retiree’s face and is a bigger risk than losing money in the next market downturn.

Please contact me with any thoughts or suggestions about anything you’ve read here at The Chicago Financial Planner. Don’t miss any future posts, please subscribe via email. Please check out the Hire Me tab to learn more about my freelance financial writing and financial consulting services. 

Approaching retirement and want another opinion on where you stand? Check out my Financial Review/Second Opinion for Individuals service.

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Why Anthony Weiner Would be a Great Financial Services Spokesperson


Anthony Weiner, NYC, May 2011 (Pre-"Weine...

Former New York Congressman and current New York City Mayoral candidate Anthony Weiner is at it again.  Mr. Weiner has admitted to another episode involving his texting photos of a certain part of the male anatomy to a woman who is not his wife.  While this lack of judgment, and apparently a moral compass, will certainly serve Mr. Weiner well in politics, I want to suggest that a major financial services company should consider hiring him as their spokesperson.  He is perfect for the job.

Mine’s bigger 

At the end of the day this is what financial services marketing is all about.  Our services are the best.  Our investment returns are better than the competition.  Our trading costs are lower, we offer more investment research.  Clearly given Mr. Weiner’s proclivity to show off his anatomy he is in fact implicitly saying mine’s bigger, mine’s the best.

Brand loyalty 

Whether it’s the E-Trade Baby or Tommy Lee Jones with Ameriprise, these spokespeople are trying to build brand loyalty for these companies.  Given that not once, but at least twice we’ve seen Mr. Weiner’s wife by his side as he addressed the media, I can’t imagine anyone engendering any greater brand loyalty.  I’ll leave it to others to ask “…what was she thinking?”

The ultimate Super Bowl Ad

Ok this one’s too easy, but I would think some shameless financial services firm would jump on the idea of teaming Mr. Weiner with NFL great Brett Favre in an ad.  Favre holds most of the NFL passing records and is a sure first ballot Hall of Fame inductee when he is eligible.  Favre, of course, allegedly texted photos of his male anatomy to female members of the New York Jets organization.  What a sensational tie-in!

Ignore the advertising hype

Clearly this will never happen and it probably shouldn’t.  My point is that while financial services commercials are often fun (I love the E-Trade Baby) they are designed to sell the advertiser’s products and services.  No matter who the firm is, I hope that nobody would actually go ahead and do business with any financial services firm based just upon an ad without doing their homework and due diligence.  Moreover find a financial advisor who is right for your unique needs.  Find a custodian who offers the services and investment vehicles that are right for you at a reasonable cost.

Please feel free to contact me with your questions. 

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Should You Buy Financial Services From Tommy Lee Jones?


Français : Tommy Lee Jones au festival de Cannes.

I recently noticed the return of Tommy Lee Jones as the TV pitchman for Ameriprise Financial.  Tommy Lee Jones is one of my favorite actors, loved him in the Men in Black movies as well as other such as the Fugitive and No Country for Old Men.

Jones comes across as credible and trustworthy.  His closing line “Together for your future” is masterful and powerful.  As I’ve written here and elsewhere in the past, I’m not a fan of celebrity pitchmen for financial services and financial products.  Case in point was a post about Mike Ditka hawking equity index annuity products.

At the end of the day advertising is about building awareness.  I’m assuming and hoping that nobody reading this would actually contact Ameriprise or any other company and say “… sign me up…” based upon a celebrity endorsement.  Rather this might prompt you to check out the company or product being advertised. Here are some basic questions to ask both yourself and a perspective advisor for starters:

Ask yourself this before Engaging a Financial Advisor

  • What issues are really bothering me?
    • I’m worried about retirement.
    • I want help managing my investments.
    • I need answers to a specific financial question(s).
    • I need a comprehensive review of my financial situation including a financial plan with actionable suggestions.
    • Having an understanding of the areas in which you are seeking help is a key first step in selecting the right financial advisor.

Questions to Ask a Perspective Financial Advisor/Firm

  • What makes you qualified to provide me with advice?
  • Do you normally work with clients whose situation is similar to mine?
  • How will you determine the right course of action for me?
  • What areas of financial planning/financial advice are your specialties?
  • Will I be dealing with you or some lower level employee?

Questions Regarding an Advisor’s Compensation and Potential Conflicts of Interest

  • How will you be compensated if we work together?  Are you willing to disclose all forms of compensation that you will receive?
  • Are there any conflicts of interest such as restrictions from your firm or the manner in which you are compensated that would impact the financial products that you might recommend to me?
  • Are you compensated via commissions; fees (Fee-Only); or a combination of the two (Fee-Based)?

Choosing the right financial advisor for you and your family is critical.  You want to do your best to find someone who is competent, whose compensation method is made clear and is transparent, and who you feel that you can trust.  Don’t be afraid to ask direct pointed questions and don’t settle for half-answers.

Please contact me with any thoughts or suggestions about anything you’ve read here at The Chicago Financial Planner. Don’t miss any future posts, please subscribe via email. Please check out our resources page as well.

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