I was a bit surprised in late July when the Social Security Trustees
released their annual report. The report itself wasn’t so much of a
surprise as the fact that it was not mentioned by any of the news
media.
Such lack of attention rattled my mind like a car alarm. These days,
when most people hear an alarm, they simply think of it as an
annoyance. Many don’t even bother to turn their heads to see what, if
anything, is going on. In fact, I doubt many people stop to wonder if
someone is actually trying to steal a car.
It seems to me that the same phenomenon is going on with Social Security
. The can has been kicked down the road so many times, I don’t think
people even hear the aluminum can bouncing off the road and hitting a
brick wall.
We’ve heard it bouncing and rattling for so long we’ve simply become accustomed to the noise. Such complacency,
I fear it could prove to be a dangerous mistake.
Just over a year ago, I wrote an article about Social Security
Disability. I questioned whether or not all the recipients were really
disabled.
Since I wrote that article, I’ve received a number of e-mails from
various legal firms offering their services to help me qualify for
Social Security Disability. These aren’t occasional offers; they come
on an almost daily basis.
The number of people receiving Social Security Disability Insurance
(SSDI) recently reached a new high and now exceeds 11 million people as
of this past May. That represents an increase of eighteen percent since
January 2009.
There are all sorts of arguments and debates as to the causes. Is it
the economy? Is it political? Is it changing demographics? Are we
getting sick or injured at an alarming rate? Have the eligibility
rules changed? Quite likely, it’s some combination of these
postulations.
But whatever the reason for the surge in disability claims, I think it’s
time to stop ignoring the tin can clattering off the walls. I say this
because, according to the Social Security Trustee Report, the SSDI
program will only be able to pay full benefits through 2016. That’s not
very far off. After 2016, there would only be sufficient funds to pay
just over 80 cents on the dollar.
As a financial advisor, I always come back to the math. If the math
indicates the numbers do not add up, it is likely a problem. But
problems can be solved.
According to the Social Security Trustee Report, the SSDI problem is
just over a year away. Even more alarming, the retirement portion of
the Social Security program is in jeopardy not too many years later.
I’m puzzled as to why the trustees’ annual report receives such little
press. The mathematic realities of the entire program need to be dealt
with now.
If they continue to be glossed over, the lead story in the news will
soon be the announcement of a major Social Security crisis. At that
point, everyone will wonder how it happened and why we weren’t aware
that a crisis was imminent.
Within two years, some tough decisions need to be made, because
borrowing more money to pay promised benefits is not a prudent
mathematical decision.
Wednesday, August 27, 2014
Monday, August 18, 2014
How to save like a hero: Train yourself
Being a financial adviser isn’t just a job; I also consider it to be a
lifestyle. It’s an occupation that requires one to be a technician and
also to have the skills to interact with people. For me, it’s a badge I
carry proudly and enjoy thoroughly.
I periodically attend education conferences that help me stay current with investment trends, economic forecasts, and the onslaught of new and constantly changing rules and regulations. There’s no question that the variety of classes is valuable, but what I find even more valuable is what I learn from my peers from other parts of the country and from the featured speakers from outside our profession.
My most recent seminar was in Nashville. It featured two outstanding speakers: Marcus Luttrell and Chesley “Sully” Sullenberger. Lutrell was a Navy Seal from Texas who survived Operation Red Wings on the slopes of Sawtalo Sar, a mountain in Afghanistan. He was the only survivor of the mission and his book, “Lone Survivor,” was made into a movie. His talk was intense and from the heart.
Sullenberger, the other featured speaker, was also quite newsworthy. He was the pilot who landed his passenger jet on the Hudson River when it lost all engines due to a bird strike shortly after takeoff. His ability to bring the aircraft down safely was truly incredible and witnessed as it happened on national television. Sully spoke with the eloquence of a college professor.
In many ways the speakers were complete opposites. Marcus was a fairly young man with young children. Sully, on the other hand, has grown children and was near the end of his career when he piloted the aircraft to a safe landing. They were total opposites in their backgrounds and education.
So why mention these guys in a financial column? Because of what they shared in common, something of value to all people, including investors. Years and years of training that helped them survive.
For Marcus, it was physical Navy Seal training that pushed his body to the limits. For Sully, it was the technical training of a pilot. Sully pointed out that flight simulators didn’t have water landings, but his many years of training simply kicked in during the time of crisis.
As investors, we may not need the physical toughness of a Navy Seal, but we do need to have the mental training. For example, you can mentally train yourself to be a saver. And maintain that mindset regardless of the financial circumstances.
A person that deposits a dollar in a piggybank every day is a simple example. So is someone that contributes every payday into his or her retirement plan.
It’s easy to find a reason not to save. But with strong financial discipline and the ability to keep emotions in check, anyone can do it. You just have to train yourself to act that way.
If either Marcus or Sully had panicked in their situations, they would not have survived. I have written many times that investors need to keep their emotions at bay. In most instances, if you panic and make emotional decisions with your money, you lose.
As an investor, you need to be mentally tough and keep your emotions in check. All it takes is the proper training.
I periodically attend education conferences that help me stay current with investment trends, economic forecasts, and the onslaught of new and constantly changing rules and regulations. There’s no question that the variety of classes is valuable, but what I find even more valuable is what I learn from my peers from other parts of the country and from the featured speakers from outside our profession.
My most recent seminar was in Nashville. It featured two outstanding speakers: Marcus Luttrell and Chesley “Sully” Sullenberger. Lutrell was a Navy Seal from Texas who survived Operation Red Wings on the slopes of Sawtalo Sar, a mountain in Afghanistan. He was the only survivor of the mission and his book, “Lone Survivor,” was made into a movie. His talk was intense and from the heart.
Sullenberger, the other featured speaker, was also quite newsworthy. He was the pilot who landed his passenger jet on the Hudson River when it lost all engines due to a bird strike shortly after takeoff. His ability to bring the aircraft down safely was truly incredible and witnessed as it happened on national television. Sully spoke with the eloquence of a college professor.
In many ways the speakers were complete opposites. Marcus was a fairly young man with young children. Sully, on the other hand, has grown children and was near the end of his career when he piloted the aircraft to a safe landing. They were total opposites in their backgrounds and education.
So why mention these guys in a financial column? Because of what they shared in common, something of value to all people, including investors. Years and years of training that helped them survive.
For Marcus, it was physical Navy Seal training that pushed his body to the limits. For Sully, it was the technical training of a pilot. Sully pointed out that flight simulators didn’t have water landings, but his many years of training simply kicked in during the time of crisis.
As investors, we may not need the physical toughness of a Navy Seal, but we do need to have the mental training. For example, you can mentally train yourself to be a saver. And maintain that mindset regardless of the financial circumstances.
A person that deposits a dollar in a piggybank every day is a simple example. So is someone that contributes every payday into his or her retirement plan.
It’s easy to find a reason not to save. But with strong financial discipline and the ability to keep emotions in check, anyone can do it. You just have to train yourself to act that way.
If either Marcus or Sully had panicked in their situations, they would not have survived. I have written many times that investors need to keep their emotions at bay. In most instances, if you panic and make emotional decisions with your money, you lose.
As an investor, you need to be mentally tough and keep your emotions in check. All it takes is the proper training.
Monday, August 11, 2014
A day in the life of a financial planner
Early Monday morning I was at the gym when I crossed paths with a nice
elderly gentleman who went out of his way to tell me how much he enjoys
my column. He said that, even at his age, he picks up valuable and
useful information.
I graciously accepted his kind words. One of the things I really enjoy about the financial services industry is that it requires me to stay current with the continuous barrage of rules, regulations and trends in this ever-changing world.
What I didn’t mention to the gentleman was that later in the week I would be attending an educational seminar for three days. Three days where I would get to listen and learn from some of the most respected financial people in the country.
Later that same morning, I learned that a dear friend died unexpectedly while on a camping trip. And finally, still on Monday, I met with some clients who proudly shared their child’s plans for college.
In a nutshell, that one Monday summarized why thorough financial planning is so important. First, statistics clearly show that people are living longer than ever before. The challenge is to make certain that retirees do not outlive their income.
But, sometimes you can be on the wrong side of statistics. The call I received later in the morning about a friend’s unexpected death is a reminder that no matter how thorough your retirement planning, your family’s world can change in a heartbeat. It may be difficult to discuss, but life insurance and estate planning are a critical part of the planning process.
Finally, planning for a son’s or daughter’s higher education should begin the day they’re born. Having the funds to pay for college isn’t something that just happens. It’s a goal that needs to be achieved. One that takes hard work and financial sacrifice on the part of mom and dad.
There’s no question that the world we live in is complex and there’s no one-size-fits-all solution. For example, years ago a retiree could live relatively comfortably on the interest he or she received from bank deposits. Now, interest rates are so low that retirees need to find additional sources to generate income.
As far as college education goes, I can still recall an auto executive telling me that, while in college, he could come home for the summer, walk into the plant and make enough money to pay all his college bills and then some.
In today’s world, college costs have skyrocketed and high paying summer jobs are few and far between. This national trend of higher costs and less income has resulted in a staggering amount of college debt that’s choking recent grads.
The one constant in the world is change and it’s changing faster than ever. Tax rates, interest rates and economic conditions change rapidly. Life situations can change faster than the blink of an eye.
Without planning, your chance of success is limited. In order to achieve your goals and objectives you have to take the time to plan. And you need to plan for the good (child’s education), the sad (sudden death), and the likely (long life).
That’s why I, along with most reputable financial advisers, study hard to help clients achieve their goals.
I graciously accepted his kind words. One of the things I really enjoy about the financial services industry is that it requires me to stay current with the continuous barrage of rules, regulations and trends in this ever-changing world.
What I didn’t mention to the gentleman was that later in the week I would be attending an educational seminar for three days. Three days where I would get to listen and learn from some of the most respected financial people in the country.
Later that same morning, I learned that a dear friend died unexpectedly while on a camping trip. And finally, still on Monday, I met with some clients who proudly shared their child’s plans for college.
In a nutshell, that one Monday summarized why thorough financial planning is so important. First, statistics clearly show that people are living longer than ever before. The challenge is to make certain that retirees do not outlive their income.
But, sometimes you can be on the wrong side of statistics. The call I received later in the morning about a friend’s unexpected death is a reminder that no matter how thorough your retirement planning, your family’s world can change in a heartbeat. It may be difficult to discuss, but life insurance and estate planning are a critical part of the planning process.
Finally, planning for a son’s or daughter’s higher education should begin the day they’re born. Having the funds to pay for college isn’t something that just happens. It’s a goal that needs to be achieved. One that takes hard work and financial sacrifice on the part of mom and dad.
There’s no question that the world we live in is complex and there’s no one-size-fits-all solution. For example, years ago a retiree could live relatively comfortably on the interest he or she received from bank deposits. Now, interest rates are so low that retirees need to find additional sources to generate income.
As far as college education goes, I can still recall an auto executive telling me that, while in college, he could come home for the summer, walk into the plant and make enough money to pay all his college bills and then some.
In today’s world, college costs have skyrocketed and high paying summer jobs are few and far between. This national trend of higher costs and less income has resulted in a staggering amount of college debt that’s choking recent grads.
The one constant in the world is change and it’s changing faster than ever. Tax rates, interest rates and economic conditions change rapidly. Life situations can change faster than the blink of an eye.
Without planning, your chance of success is limited. In order to achieve your goals and objectives you have to take the time to plan. And you need to plan for the good (child’s education), the sad (sudden death), and the likely (long life).
That’s why I, along with most reputable financial advisers, study hard to help clients achieve their goals.
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