Thursday, April 22, 2021

More Miscellaneous Insights From Recent Webinars


As I mentioned in last week’s post, I love learning new things and often attend webinars and podcasts to gain knowledge and/or continuing education credits for my CFP® and AFC® as well as to connect virtually with others. 

Below, in no particular order and on a variety of topics, are seven “nuggets” that I heard recently:


¨      Retirement Spending- Spending in later life is not a scientific process. It is a human endeavor grounded in behavioral finance biases. Many theoretical assumptions and expert retirement recommendations are not embraced by retirees. The biggest reason that older adults do not spend down assets is saving for unforeseen costs (e.g., long-term care or LTC) according to research by the Employee Benefit Research Institute. Another factor is bequest motives. A suggested work-around is earmarking chunks of accumulated savings for specific purposes (e.g., LTC or bequests) so you can see that you have enough and can feel comfortable spending.


¨      Alzheimer’s Disease- 5.8 million Americans are living with Alzheimer’s and there is no current cure. The biggest risk factor is age and, after age 65, risk doubles every five years. Warning signs include an inability to calculate a tip, struggling to find words, and reading something and immediately forgetting what you read. No two individuals progress the same way. Lifestyle factors can reduce a person’s risk of disease and “things that are good for your heart are also good for your brain” (e.g., diet, exercise, sleep, and social engagement).

¨      Investment Fraud- According to the FINRA Investor Education Foundation, studies have found that social isolation can make people susceptible to fraud for several reasons. First, isolated individuals are separated from social networks and community resources to run details about questionable “opportunities” by. Second, loneliness has been found to correlate with lower levels of cognition, which increases scam susceptibility. FINRA research also found that short video and text messages (as outreach methods) can help reduce fraud.

¨      Retirement Planning- Retirement is the most expensive purchase people will ever make. People can live 20 to 30 (or more) years in later life without a paycheck versus attending college, typically for 4 or 5 years. In addition, people cannot take out “retirement loans” to cover their living expenses. For many people, two or three “legs” of the proverbial “3-legged stool” (savings, employer pension, and Social Security) are wobbly or non-existent. What to do? Any savings is better than none. If need be, start small and increase the savings amount by 1% or 2% per year. Lifestyle adjustments like working longer or downsizing may also be needed.

¨      Women and Money- A new documentary film, Savvy, explores why it is critical for women to take control of their personal finances instead of abdicating control to others or ignoring key financial decision-making topics such as credit and investing. The film features a mixture of financial experts and case studies. A key message is “when women are financially independent, the world becomes a better place” and viewers are encouraged to “be the CEO of your financial life” rather than “live one accident or illness away from financial ruin.”

¨      Later Life Time Use- A common error is viewing retirement as a “20-year vacation.” Another is thinking you can “just wing it.” People crave meaning and structure, especially “control freaks” who are used to planning and those whose identity is strongly tied to their job. People receive five things from a job, besides a paycheck: identity, status, purpose, structure, and socialization. A key challenge in retirement is answering the “who am I now?” and “what do I do?” questions, which takes thought, planning, and practice. One good place to start is to remember what you enjoyed doing when you were younger according to Joe Casey from Retirement Wisdom. Another planning strategy is talking to people who are doing things that you want to do in the future.

¨      COVID-19 Retirement Impacts- The pandemic rocked people’s worlds, including their finances, and changed many personal plans to retire. Some people decided to work longer because they could work remotely and avoid long commutes, while others were laid off or decided to leave their jobs earlier than planned. Research by the American College of Financial Services found that Americans, on average, have a poor understanding of the amount of annual or monthly income than a certain amount of savings translates into. Financial educators and counselors should highlight this more in their interactions with clients. Also, focus on things that people can control: spending, gifting, saving, their investment risk profile, and tax management. Things that cannot be controlled include longevity, market returns, inflation, and the economy.

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