Estate Planning

Your Retirement Journey- How It Compares To Climbing Mount Everest (Part 1 of 4)

May 6, 2020 by Tom Theodore, CFP®

Avalanche

Reading Time: 3 minutes

The Slippery Slope of COVID-19- Navigating the Bear Market

Sadly, for many retirees, the slippery slope of retirement transition just got a lot more dangerous.

Unfortunately, as the world scrambles to deal with this pandemic medically, the economic fallout is also beginning to be felt. For those senior employees just a few short years away from retirement, it may be necessary to plan for an early exit. Most of us don’t work for companies making masks or vaccines and job security has become a real concern. While our thoughts and prayers are with patients, families, doctors, nurses and first responders, the medical crisis will certainly cause financial hardship for many. What we thought to be a walk in the park or a short hike has just become mountaineering. Retiring during a bear market or recession is something we can plan for, but it is quite different than planning to retire during a bull market.

We founded Intelligent Investing to minimize financial stress to maximize our clients’ lives, especially during these current stressful times. We combine world-class credentials and experience in both financial planning and investment management, along with over thirty different technology integrations to help our clients cope with their major life events.

Climbing Mount Everest successfully has been a goal of many people. Few have attempted it, and fewer still have done so successfully. Mt. Everest was first conquered by Sir Edmund Hillary and Nepalese Sherpa mountaineer Tenzig Norgay in 1953, and Hillary still features prominently on the New Zealand five-dollar bill. Even though Nepal issued a record 381 permits in 2019, last year’s climbing season had a limited number of good weather days, leading many people to set out at once when the skies cleared and the winds seemed calm. Unfortunately, this caused crowding, and at least 11 people died last May, even though most were experienced trekkers.

What caused those deaths, and what lessons can we apply to retirement and investing? There are many parallels between the climbers of Everest and retirees making a retirement transition. We will be covering additional parallels in future blogs, but to start, here’s the first one we observe.

The Descent Is Riskier Than the Ascent

One of the interesting things about Everest is that many deaths occur on the descent, not the ascent. In fact, depending on the years measured, over half of deaths are on the descent, and almost 20% occur to climbers who turn back.

Climbers spend their energy getting to the peak and are tired and less focused on the descent. Many die because they become careless once they reach the summit. After all, the goal is not just to climb to the top, but to make it down the mountain to be able to tell about it.

When it comes to careers and investing, many people have successfully climbed the corporate ladder and have a sizable nest egg. They faithfully contributed regularly to their retirement plan, or perhaps they were fortunate enough to have a pension plan. The natural compounding of their investments over their careers has produced a decent nest egg. Now they have reached the time to successfully spend down their nest egg in retirement or preserve it for the next generation.

Often, these successful executives and pre-retirees come to the realization that they aren’t sure what their next step should be as they perhaps planned more for their European cruise, than their actual retirement goals. When they step back or are forced to exit corporate America, they haven’t thought about how their nest egg will produce their retirement income and whether it will be enough. They haven’t thought about how expensive retirement can be, how many years they will be in retirement, and if their portfolio will be sufficient.

Successfully descending the other side of the retirement mountain and spending down our assets is often riskier than the accumulation phase of our lives. If we slip (go through a bear market or have an emergency need) while we are young, we can recoup the loss through our earning potential and our financial investments have more time to bounce back. In retirement, our income potential has fallen and our time horizon is shorter. The thought of running out of money while in retirement can be scary, and you don’t want to be forced to reclimb the mountain by getting another job, or worse going into debt.

Running out of money in retirement can be disastrous and affects our finances, our lifestyle, our health, and our loved ones. Many people work by choice in retirement, but working out of necessity or going into debt are not great options. The retirement transition is a slippery slope indeed.

Therefore, having a plan for both your ascent and descent is critical to success.

In our next blog, we will cover the next parallel between climbing Mount Everest and transitioning into Retirement.

Schedule a short discovery call or meeting

Common Mistakes by Pre-Retirees

February 26, 2020 by Hans Blake, CFA, CPA

Podcast: Play in new window | Download

Reading Time: 2 minutes

On today’s Intelligent Money Minute, we’ll interview Larry Swedroe on common mistakes made by pre-retirees. Larry discusses several mistakes he has noticed made by pre-retirees. To begin, he states the well-known phrase, “Those who fail to plan, plan to fail.” Though a pre-retiree may have a well-thought-out investment plan, a plan must be made for a successful life after retirement. This can create a complex problem because necessary “ingredients” are left out. Important issues to consider are estate planning, long-term care, and elder abuse. Most noted is the need for a good wealth advisor or quarterback. A good wealth advisor incorporates all of the issues and creates a comprehensive plan. In conclusion, the financial advisor should coordinate with all involved: the tax advisor, the estate planning attorney, the family members, and, most importantly, the client.

We know you’ve worked hard over the years to accumulate wealth, and you probably find it comforting to know that after your death the assets you leave behind will continue to be a source of support for your family, friends, and the causes that are important to you. But to ensure that your legacy reaches your heirs as you intend, you must make the proper arrangements now. We’d love to grab a coffee to see how we may best serve you and your family.

Schedule a short discovery call or meeting

We’ll be interviewing Larry on several podcasts regarding markets, passive investing, and diversification, so be sure to subscribe to our Intelligent Money Minute podcasts.

Larry was among the first authors to publish a book that explained the science of investing in layman’s terms, “The Only Guide to a Winning Investment Strategy You’ll Ever Need.” He has since authored seven more books.

Larry Swedroe Bio

Since joining the Buckingham Strategic Wealth in 1996, Chief Research Officer Larry Swedroe has spent his time and energy educating investors on the benefits of evidence-based investing.

In his role as chief research officer and as a member of the firm’s Investment Policy Committee and Board of Directors, Larry regularly reviews the findings published in dozens of peer-reviewed financial journals, evaluates the outcomes and uses the result to inform the firm’s formal investment strategy recommendations.

Larry’s dedication to helping others has made him a sought-after national speaker. He has made appearances on national television shows airing on NBC, CNBC, CNN and Bloomberg Personal Finance. Larry is a prolific writer, contributing regularly to multiple outlets, including Advisor Perspectives and ETF.com.

Before joining Buckingham, Larry was vice chairman of Prudential Home Mortgage and senior vice president at Citicorp.

Larry holds an MBA in finance and investment from NYU and a bachelor’s degree in finance from Baruch College.

Practical Tips for Lump Sum Recipients

December 18, 2019 by Hans Blake, CFA, CPA

Podcast: Play in new window | Download

Reading Time: 2 minutes

On today’s Intelligent Money Minute, we’ll interview Rick Ferri on practical tips for lump sum recipients. During this episode, Rick divides lump sums into two different types and explains practical ways to handle both situations. He spends time on the emotional considerations that come with lump sums because there can be regret. Intelligent Investing believes we all have purposes in life and have been given money to help accomplish these purposes while building relationships along the way. We’d love to share the different wealth management options available to you. Read more here.

Check out our previous podcasts with Rick on Practical Tips for Pre-Retirees and Three Military Discipline Investing Values. We’ll be interviewing Rick on several podcasts regarding index investing, behavioral finance, and practical tips for retirees, so be sure to subscribe to our Intelligent Money Minute podcasts.

Rick Ferri is a fellow CFA Charterholder, Marine veteran, author, and owner of Ferri Investment Solutions. He continues to write books and articles, provide educational webinars, and teach financial lectures.

Rick Ferri Bio

Rick Ferri earned a B.S. in Business Administration and an M.S. in Finance. He also holds a Chartered Financial Analyst (CFA) charter through the CFA Institute. After college, Rick served as a U.S. Marine Corps officer and fighter pilot for 20 years of active duty and reserve service.

Rick’s investment career spans three decades and offers a history of empowering people to achieve their goals. He landed in the brokerage industry in 1989 where he learned the wrong way to invest. As a result of 10 frustrating years, Rick founded one of the country’s first low-fee investment advisory firms. Rick’s firm grew to a sizable business over the next two decades due to the explosion of interest in low-fee investing. This growth provided good-paying jobs to dozens of people and allowed Rick to take on business partners with whom he generously shared his equity.

Ferri Investment Solutions is Rick’s new firm. This modern concept provides even greater value to investors by “unbundling” adviser services whereby clients pay only for the time it takes to assist them. In addition, Rick’s industry consulting firm helps other advisers build their investment practices, and he has launched Core-4 Portfolios to provide simple model portfolios for use by a wide variety of investors.

You’re Not Alone When Placing a Parent in a Nursing Home

July 25, 2019 by Hans Blake, CFA, CPA

Podcast: Play in new window | Download

Reading Time: 2 minutes

On today’s Intelligent Money Minute, we’ll interview Beverly Flaxington on realizing that you are not alone when placing a parent in a nursing home. Making the decision on whether or not to place a parent or spouse in a nursing home can be complicated and burdensome. The life adjustment that will ensue can take a significant toll on the family, so you need to be prepared. During this episode, Bev stresses the importance of implementing a network of friends and family to provide emotional and physical support. Our previous podcasts with Bev highlighted Should You Put Your Parents In Assisted Living? and How to Handle Long Term Care Regret.

The Hardest Decision a Child Will Make is a blog that talks about this tough subject. We’ll be interviewing Beverly on several podcasts regarding behavioral finance, and the emotional journeys one can embark on during retirement, so be sure to subscribe to our Intelligent Money Minute podcasts.

Beverly Flaxington, American businesswoman and founder of The Collaborative, holds the trademarked moniker, Human Behavior Coach®. She received this title for her years in professional consulting and the human behavior development industry. Also, Flaxington has authored seven books on personal and professional development.

Beverly Flaxington Bio

In addition to being a coach on changing human behavior, she is a three-time bestselling and Gold-award winning author, an international speaker, behavioral expert, and business development expert.

Bev has created a number of proprietary approaches to changing human behavior and helping companies reach excellence. In addition, she blogs for Psychology Today and answers human-related questions in Advisor Perspectives Magazine.

In 1995, Bev co-founded The Collaborative, a sales and marketing consultancy. The firm provides strategic and tactical support to help financial services and wealth management firms reach higher levels of effectiveness. The Collaborative specializes in delivering effective coaching, training, and proprietary consulting services.

How To Handle Long Term Care Regret

June 6, 2019 by Hans Blake, CFA, CPA

Podcast: Play in new window | Download

Reading Time: < 1 minutes

On today’s Intelligent Money Minute, we’ll interview Beverly Flaxington on how to handle regret when placing a parent in a long-term care facility. Guilt and regret can arise after deciding to place a parent into assisted living. During this episode, Bev provides practical steps to navigating through regret while making this emotional transition. To gain more insight on this topic, here is a previous blog on The Hardest Decision a Child Will Have to Make. Our previous podcasts with Bev highlighted Emotionally Transitioning Into Retirement and Should You Put Your Parents In Assisted Living?

We’ll be interviewing Beverly on several podcasts regarding behavioral finance, and the emotional journeys one can embark on during retirement, so be sure to subscribe to our Intelligent Money Minute podcasts.

Beverly Flaxington Bio

In addition to being a coach on changing human behavior, she is a three-time bestselling and Gold-award winning author, an international speaker, behavioral expert, and business development expert.

The Hardest Decision a Child Will Have to Make (Part 1)

August 22, 2018 by Hans Blake, CFA, CPA

One of the hardest decisions a child will have to make is the decision to place their parent into assisted living, memory care, or a nursing home. Our family recently went through this with my grandpa before he passed away in March.

“Call me when you can,” was a recent text I received from my mom.

When I returned the call, my mom was on the line, crying. “We have to put grandpa in a nursing home.” Amidst sobs, she told me that she and dad could no longer lift or move him from room to room. “What do I need to do?” was her next question.

This situation is happening all over America and will continue to happen indefinitely. When it comes to moving elderly parents, and bringing up the “nursing home” or “assisted living” conversation, experts say it is probably one of the hardest decisions a child will ever have to make. Many children will have parents move in with them, but there may come a point where taking care of them is no longer an option.

Living in a Fantasy World

Many seniors unrealistically believe they can take care of themselves for the rest of their lives. This is where children or other family members can be the catalysts in identifying the problem and prompting change. No matter what the age of your parent, now is the time to begin communicating about the future. If you open the lines of communication early on, words like “nursing home” lose their sting later.

Managing Stubborn Parents

My grandpa was from New Hampshire. If you think that talking to your parent is difficult, try talking with a stubborn New Englander whose modus operandi is “Resist change no matter what.”

Unfortunately, there are no magic strategies or tricks for convincing an elder to move. Placed under duress to change, we typically resist, regardless of the other person’s arguments. Often, we will dig our heels in further, if it feels like the other party is threatening us. If you say “you have to do this, or do that,” you won’t get very far. Instead try, “Dad, I’m concerned about you; it makes me worried to see you like this.”

When a parent continually refuses to entertain the idea of moving, the child may need to back off for the time being. This doesn’t mean you have to give up but look for other conversation openings to raise the issue again.

Unfortunately, sometimes things must get worse before they get better. Often, it is little things that add up until one incident causes a tipping point in the situation. For my parents, it was the time when they realized they could no longer lift and move my grandpa from one room to another. For others it may take a parent falling or having the water turned off because he forgot to pay the bills, or the realization that a parent can no longer safely reside in the home.

If there is a willingness on the parent’s part to visit a senior housing facility, the child should proceed quickly to set up visits at local facilities. You may also want to see if these facilities will allow an aged individual to try living in them for a week or a month before the person has to decide whether to sell his house and stay in the facility or return home.

The Importance of Regular Family Communication

The problem is we procrastinate and don’t want to face our biggest fears. Most of the time, children only talk about the situation when they are in crisis mode. It’s a recipe for potential chaos as you mix confused elders, disorganized yet well-meaning children, and a crisis situation.

Avoid the crisis situations by having regular conversations with your parent about what the future holds. Most parents don’t want to burden their children. Often, parents will hide things from their adult children because they don’t want to surprise or scare them. However, if you show them compassion and that you are their advocate, it can make all the difference.

At Intelligent Investing, one of our key tenets is to unify families on communication. We attempt to bridge the communication gap between husbands and wives, and multiple generations and would love to help you bridge the gap between you, your siblings, and parents. Our financial planning software provides tools for children and parents to know questions such as: What may mom and dad be able to afford? How will I preserve the proceeds if I sell a parent’s home? How will moving into a nursing home integrate into an overall financial plan?

At Intelligent Investing, we strive to bridge the communication gap between family members. Click To Tweet

In part 2, we’ll talk about how to make sure your siblings are unified, how to deal with the guilt, and how to form a care-giving team.

How to Have an End-of-Life Family Meeting

June 7, 2018 by Hans Blake, CFA, CPA

Reading Time: 4 minutes

Over the next several decades, the biggest and wealthiest generation in U.S. history will transfer roughly $30 trillion in assets to their Gen X and millennial children. At Intelligent Investing, one of our four unique factors is to improve financial communication between families. We do that by being a communication bridge between generations. Every generation thinks differently than other generations. Knowing how to communicate with multiple generations is vital. Many families do not want to discuss this topic because of blended families or past bad experiences. However, here are some helpful considerations for creating a family meeting that will allow you to talk to your heirs about your end-of-life decisions.

Discuss your Family Legacy

One of Intelligent Investing’s Core Values is Legacy. We believe it is more important to pass on family values than it is to pass on valuables. The head of the family should take some time in recounting stories of your family history. Perhaps you can share what values are important to you, and a time in your life when those values were challenged. By sharing your values with your children and grandchildren, you are setting them up to be better managers of the resources you may be entrusting to them. What better time to impart nuggets of wisdom you have attained over the years. Perhaps you want to instill a sense of hard work, persistence, patience, or other virtues into the younger generations. Perhaps you could write down, “Five lessons I’ve learned over the years related to money.”

We believe it is more important to pass on family values than it is to pass on valuables. Click To Tweet

Create Proper Expectations.

The key to any communication is to set proper and transparent expectations. It is important to address preconceived expectations as well. Once you have found a neutral private location for the meeting, you may want to begin with two questions:

The family head answers, “Why are we doing this?”
He asks the family members, “What would you like to get out of this meeting?”

By setting the right expectations for the meeting and allowing time to listen to everyone’s responses, you will set the right tone.

Answer Heirs’ Questions

As the family head learns what the others would like to get out of the meeting, he can address them specifically. Many times family members will have been contemplating questions or issues but will not have addressed them in the past. Perhaps they have addressed them with other heirs or siblings, but not with the family head. This is a great time to get the questions on the table to hear the family head answer them directly.

Wealth Transfer Process and Plans

A primary goal of the family meeting should be to clearly communicate the family head’s intentions regarding his or her estate plan. Be sure to clarify important details, such as who is the executor (personal representative) of your estate, where your will and important information is stored, and, of course, who will get what. You don’t want families to split and siblings not speak to each other after mom and dad pass away due to missed expectations. Explain the process you have gone through in order to arrive at the decisions you are sharing. Explaining the “Why’s” behind the decisions can be valuable as sharing the “What’s” and “How’s.” How do you hope the estate resources will provide new opportunities for the family members?

If there are some financial complexities, such as trusts, insurance policies, beneficiary IRAs, or other accounts that have tax ramifications, we can bridge the gap and explain how these various accounts affect the next generation and ways to mitigate potential traps.

Healthcare

This meeting may be a time for the patriarch or matriarch to share his or her end-of-life desires. Perhaps he wants family members to know that he has a do not resuscitate (DNR) clause. A DNR also known as no code or allow natural death, is a legal order written either in the hospital or on a legal form to withhold cardiopulmonary resuscitation (CPR) or advanced cardiac life support (ACLS), in respect of the wishes of a patient in case his heart was to stop or he was to stop breathing. The DNR request is usually made by the patient or health care power of attorney and allows the medical teams taking care of them to respect his or her wishes. The head of the family may want to discuss his or her long-term care insurance policies, whom he has appointed as health care power of attorney, or his nursing home preferences and wishes.

Lifetime (Current) Giving

There is nothing wrong with making inter vivos (Latin, “between the living”- a legal term referring to a transfer or gift made during one’s lifetime) gifts. In fact, it can be very satisfying seeing your children and grandchildren using the resources you have given them to make financial decisions where you see the fruit of those decisions. Some families make giving a family affair, choosing the charities collectively. If your children are involved in the decision making, they will gain firsthand exposure to your generosity, and may be more apt to continue the generosity you have established. At Intelligent Investing, we can setup a Donor Advised Fund or Foundation and let all family members participate in choosing which charities and non-profit ministries are important.

Next Steps

Our clients can host a multi-generational family meeting in which Intelligent Investing bridges the potential awkwardness while addressing specific financial questions and emotional topics. We can assist the family head in creating an agenda for the meeting but may take a back seat when the discussions begin. We think this is a vital meeting to have before a family crisis forces the conversation at a more awkward time with higher emotions present.

We work predominantly with high net worth individuals and institutions who have between $500k to $5M of investable assets. If you’d like to learn more about becoming an Intelligent Investor, click here to call or set an appointment.

Complex Charitable Giving Strategies

If you are interested in learning more about various charitable giving strategies, consider downloading our Charitable Giving article below.

Taking too long?

Reload document

Open in new tab

Download [1.37 MB]

What are the Differences between a Revocable and Irrevocable Trust

February 26, 2018 by Hans Blake, CFA, CPA

Podcast: Play in new window | Download

Reading Time: 2 minutes

Ever wonder what are the differences between a revocable trust and an irrevocable trust? Listen to Chad Groover, elder law attorney from Upstate Elder Law, talk about the differences between a revocable and irrevocable trust on our latest podcast. Consider joining us at our next First Friday Networking at Noon event (FFN@N) to hear Chad speak on this and other topics.

You may have seen our prior article and podcast about the probate process. Or perhaps you read our post and heard our podcast on ways to avoid probate. Whether you’re seeking to manage your own assets, control how your assets are distributed after your death, or plan for incapacity, trusts can help you accomplish your estate planning goals. Their power is in their versatility–many types of trusts exist, each designed for a specific purpose. Although trust law is complex and establishing a trust requires the services of an experienced attorney, mastering the basics isn’t hard.

What is a trust?

A trust is a legal entity that holds assets for the benefit of another. Basically, it’s like a container that holds money or property for somebody else. You can put practically any kind of asset into a trust, including cash, stocks, bonds, insurance policies, real estate, and artwork. The assets you choose to put in a trust depend largely on your goals. For example, if you want the trust to generate income, you may want to put income-producing securities, such as bonds, in your trust. Or, if you want your trust to create a pool of cash that may be accessible to pay any estate taxes due at your death or to provide for your family, you might want to fund your trust with a life insurance policy.

When you create and fund a trust, you are known as the grantor (or sometimes, the settlor or trustor). The grantor names people, known as beneficiaries, who will benefit from the trust. Beneficiaries are usually your family and loved ones but can be anyone, even a charity. Beneficiaries may receive income from the trust or may have access to the principal of the trust either during your lifetime or after you die. The trustee is responsible for administering the trust, managing the assets, and distributing income and/or principal according to the terms of the trust. Depending on the purpose of the trust, you can name yourself, another person, or an institution, such as a bank, to be the trustee. You can even name more than one trustee if you like.

To learn more, consider downloading our Trust Basics Article

Intelligent Investing does not provide any tax, legal, or accounting advice. Any material in the email or attachments has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.