Author: Dr. Daniel Levine

Deciding What You Want in Retirement

The day will come when you’re going to walk through an invisible golden portal with a golden portfolio to match, and you’ll begin to live the life of your dreams. Imagine having your condo on the beach in Waikiki and every day is a combination of tropical fruits, coconut sunblock lotion, paradisal music, and sunset barbecues. No? Oh, okay, so maybe instead of a tropical paradise you prefer a snow lodge on a small ranch in Colorado where you can ski for miles and entertain your grandchildren with toboggans and horse-drawn sleighs, a warm fire in your livingroom’s wood-stove and summers filled with blue skies and big-horned elk. No? So what exactly do you want? If you don’t know, the chances of your having it diminish. Yes, of course you can always build a gigantic retirement fund and hope you have enough for what you’ll eventually decide you want to have. However, think about how much more empowering it is to set your goals on precisely what you do want to have, and then work toward achieving a dream life come true. The key reason it’s important to identify your retirement goals is not only because it’s so empowering to achieve them, but also because you can stop driving yourself into deep neurosis wondering if you have enough cash for whatever ambiguous cloud of retirement images are rooted in...

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5 More Rules for Your Retirement

Last month’s focus was on the first five of 10 rules for achieving a comfortable retirement lifestyle. The recommendations included shifting into your projected retirement lifestyle a few years before retirement to get used to living on a different budget and down-sizing your behavior to make the eventual shift more familiar; developing new sources of income to compensate for Social Security’s inability to provide all your financial needs; developing an estate plan to care for your loved ones in case of your demise or disability; considering relocation to warmer climes or to be more proximate with your family; and being mindful of communications from the entities managing your wealth. Here are the second five suggestions for achieving an anxiety-free retirement lifestyle which we hope will stir your interest and inspire you to take the necessary steps for the best wealth management for your circumstances. Rule #6: Make funding your retirement goals your first priority. Your retirement years could be as many as 25…30…even 35 years. With medical improvements occurring yearly, it’s possible that many Americans will live into the first decade of their 100s. This should be a blessing, not a curse! If you and your spouse or partner will be living longer, you’ll need more financial resources to live independently and not under the authority of the government or through the generosity of your family. Currently life expectations...

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5 Rules for Your Retirement

This week’s focus is on the first 5 of 10 rules for a comfortable retirement lifestyle. Most people want to enjoy a good life through the length of their adult years while building a retirement nest egg to sustain them into their 90s, and also leave a legacy for their families. Achieving this goal isn’t horribly difficult if you follow some basic rules and “keep your wits about you” as Filch advises Harry Potter. Here are the first five suggestions for achieving an anxiety-free retirement lifestyle. Rule #1: Many people like to live the life they can afford before they retire, and then also expect to enjoy a similar lifestyle afterward, though in many cases retirees must live more conservatively. Therefore, there is wisdom in moving your pre-retirement lifestyle to a level that’s similar to the lifestyle you’ll live in retirement, making the segue easy by preparing yourself emotionally and financially for your new post-work life. Rule #2: Your Social Security benefits are intended to provide approximately 40% of the income you’ll need during retirement, so it’s up to you to secure the remaining income you’ll need. Remember also that this 40% number is based on a lower income model for average Americans, meaning that if you’re living at a higher level now, Social Security benefits will provide even less of your expectations. Aside from all the rhetoric that...

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Your 2018 Investor’s “NFL” Playbook

Successful investors know when to buy, how long to hold, and when to sell. They know when to pass, when to kick, and when to fake. They know whether they should use the shotgun, or if a nickel defense is their best bet. How is investing like NFL football? The coaches have a playbook, they know how to read signs, and they know the odds. The difference between a rookie and a veteran is that success is based on cold, hard planning. As exciting and terrifying as investing can be, veteran investors remove themselves from emotional play-making and follow the rules they’ve made to play their game. Just as you would never build a house without a set of blueprints, you should also not invest until you and your financial advisor have developed an Investment Policy Statement (IPS). With an IPS, you are completely clear about your investment goals, the constraints you are likely to face, and the impact these constraints may have on your portfolio so you can achieve your required rate of return (RRR). Your Investment Policy Statement contains your investment philosophy which guides you with crafting your investment goals. For example, you may decide to invest only in companies that help people, or because of your professional background in technology you may choose to only invest in companies developing new technologies because this is an area...

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The Dark Side of Compounding

Compounding is the continual growth of money based on an ever-expanding sum consisting of the initial principal and the ongoing accumulation of interest. Most of us are familiar with compounding interest, an experience that often begins in childhood as the funds we deposited in our savings account grew slowly over time by just sitting there. Albert Einstein referred to it as the eighth wonder of the world! However, just as money compounds in a positive way, it can also compound in a negative way, causing damage to your portfolio and teaching you a harsh lesson about protecting your assets from losses. The consequence of losses in your investment portfolio is harmful not only to your bottom line, but also sabotages your effective use of time which then even further diminishes your portfolio’s growth. A wise investor seeks gain on one hand and loss-prevention on the other. This may seem obvious, but human emotions can sabotage your best intentions. Understanding the effect of negative compounding may result in changing the way you think about investing, accepting risk, planning your investment strategy, your expectations of results, and ultimately the quality of life you can achieve with more diligent reflection and wiser decision-making. Negative compounding is not a familiar term to most people, yet it is an ever-present danger for investors. Whenever you suffer an investment loss, negative compounding is present. You...

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