Our Retirement Bloggers

Jean ChatzkyLaurie NordquistKaren WimbishRenee BrownLisa ArdreyNatalie BlakeneyChelsea Castner

How do you feel about saving money?

The answer – it turns out – is completely dependent on how you read the question. If you took saving money to mean getting a deal, a discount, a screaming buy on a purchase, then you likely reacted positively. And that’s true whether we’re talking about a designer handbag for half off or 10 Greek yogurts for $10 – as long as they’re both something you want.

If on the other hand, you took saving money to mean putting funds away for some time in the future, the question probably landed with a thud. “When you buy something you want, the pleasure centers in the brain are activated in the same way as when you have any other pleasurable experience,” says Kit Yarrow, author of Decoding the New Consumer Mind, out next month. “You get an immediate effect. When people save by trying not to spend money, they’re after a very long term benefit. That’s harder for all of our brains to process.”

Just how much harder is clear when you look at the findings from the seventh annual survey Assessing Household Savings, out today from the American Savings Education Counsel and the Consumer Federation of America. The proportion of people with a savings plan with specific goals dropped from 55% in 2010 to 51% in 2014. Likewise, the proportion of people with a plan that allows them to save sufficiently dropped from 46% in 2010 to 40$ this year. No wonder only about one-third of individuals surveyed are making good or excellent progress toward their goals.

What can you do to get over the hump?

First, take the pain away, says Yarrow. The problem with saving for tomorrow is that it means you’re likely not getting something with that money today. “Try not to focus on that,” she says. “Instead, make it so you don’t notice it.” The best way to do this hasn’t changed, by the way. Automate your savings so that you can make the (perhaps somewhat painful) decision not to spend a single time but reap the benefits for years to come.

Don’t fret too much about this. You’ve probably noticed that when you get a raise, you don’t necessarily feel much wealthier than you were before. That’s because we tend to increase our spending to the level of our income. But we can adapt down as well. In fact, after the recent two-year-long payroll tax holiday was ended, research showed that half of Americans didn’t even notice that 2% had disappeared from their paychecks. What that says to me is that half of us could likely save 2% more and not notice that either. Assume you’re among them and increase your deferrals into tomorrow’s stash.

Focus on your progress. When you buy something you want, you have the benefit of being able to see it. You can sit in a new car, wear a new dress, and get complimented by your friends on both. That sort of satisfaction is harder to come by with the balance in your 401(k). Try to replicate it anyway. Make a once a month appointment to check in with your burgeoning balances. Then, Yarrow suggests, plug your numbers into a savings calculator like the one, to see that at, a return of 8%, that $2000 you’re putting away this year will be worth 10 times that much 30 years from now.

Know what you want. Finally, Yarrow notes, for most people “a big wad of money is meaningless. It’s not a mortgage payment. It’s not food. It’s kind of amorphous.” She’s totally right. So – despite the fact that you may change your mind in the future – do yourself a solid and save for something tangible. A week in Hawaii? A house in the mountains? Doesn’t matter one bit. What does matter is that it’s something likely to make your brain light up.

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America Saves Week – a little help with budgeting

America Saves Week serves as an annual opportunity for organizations to promote good savings behavior and a chance for individuals to assess their own saving status.

America Saves Week serves as an annual opportunity for organizations to promote good savings behavior and a chance for individuals to assess their own saving status.

If you have ever read one of my posts you know how I feel about following a budget. I believe in the concept, I can create a solid plan, but as soon as I see the limitations on my open wallet lifestyle I shut down.

This year however I have decided is a year to pay off the small amount of debt I have and boost my savings account to a number that makes me feel secure in case an unexpected event were to happen such as a health emergency, job loss or major home repair.

With this goal in mind for 2014, I decided to do some research and I came across America Saves Week. This week (February 24th thru March 1st) serves as an annual opportunity for organizations to promote good savings behavior and a chance for individuals to assess their own saving status.

To support America Saves Week, the 2013 Annual National Survey Assessing Household Savings Report was released, which revealed that only about half of Americans reported good savings habits. This of course made me feel a little less guilty about my savings habits.

Some of the other statistics noted were:

  • 54% said they “have a savings plan with specific goals.”
  • 43% said they “have a spending plan that allows you to save enough money to achieve the goals of your saving plan.”
  • 50% of those not retired said they “save for retirement at work through a 401(k) or other contributory plan.”
  • 49% know their net worth.

Seeing these statistics made me feel better since I am actually doing two things very well. I know my net worth and no matter what my day-to-day expenses are, I always contribute the maximum amount to my 401(k). I also have a specific savings plan for this year which is forcing me to look at my spending in a new way. A way that makes me see my open wallet lifestyle is causing me issues in the levels of my emergency funds. Let’s just hope an emergency doesn’t present itself prior to my savings being at a comfortable level.

If you are just starting out, or, are like me and need some guidance in the savings/ spending plan process, here are some links to tools to help you start your journey:

My Retirement Plan – provides a realistic savings goal tailored to you — and a realistic plan for pursuing that goal.

How to create a budget in 5 easy steps – whether you’re building a budget for the first time or simply need a refresher course, here’s a step-by-step guide to get you started

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Put the personal in personal finance

Because while there’s a lot of standard advice out there when it comes to your money, ultimately, you have to make the decisions that are best for you. That may not be what’s right for your sister, or your mother, or your best friend or your coworker.

Because while there’s a lot of standard advice out there when it comes to your money, ultimately, you have to make the decisions that are best for you. That may not be what’s right for your sister, or your mother, or your best friend or your coworker.

One of my favorite Money Rules is Money Rule #1: Personal finance is more personal than it is finance. I wish I could take credit for it — as I wrote in the book, it comes from financial planner Tim Maurer, one of the many people I tapped when I was gathering rules for the book.

But I love the sentiment so much I tend to share it often. Because while there’s a lot of standard advice out there when it comes to your money, ultimately, you have to make the decisions that are best for you. That may not be what’s right for your sister, or your mother, or your best friend or your coworker. But when it comes to your finances, the last thing you want to do is follow the crowd. Often you’ll show up too late — as is frequently the case when people hop on an investment bandwagon — or you’ll make a decision that isn’t in your best interest. Below, a few scenarios in which this rule plays out:

  • Building a bigger cash cushion. No, money in the bank isn’t going to pay you a great deal of interest these days — you’ll be lucky if you snag above one percent. Standard advice, given by me and other financial experts, is to keep three to six months of expenses in there anyway, so you have cash to fall back on in an emergency. But what if you don’t feel like that’s enough? Maybe you think a years’ worth of cash would help you sleep at night, or you’ve thought about your expenses and you know that nine months is the right number for you. That’s fine, too. Your money won’t get the growth it would elsewhere, but your contentment is worth it.
  • Chasing the biggest strategy. We’d all like to earn more. But it’s also okay to turn down a higher-paying job because it will leave you limited time to spend with family, or because you don’t feel that it suits your interests as well as your current role. And it’s fine to leave a higher-paying job for a lower one because you think you’ll enjoy the work more — as long as you’ve thought it through, consulted your budget and talked to your family about your decision. A big, flashy salary isn’t the end all be all if you’re forced to sacrifice your happiness. And — unsurprisingly — taking on a role you won’t enjoy doesn’t often lead to success.
  • Setting your own retirement age. Yes, 65 is the standard. But maybe you’ve set yourself up with some strong savings efforts early on and you’ll be able to pull back at 60. Or you want to work a few extra years to foot the bill for your kids’ college education, so they’re not saddled with loans. Or maybe you never want to retire completely, because you enjoy your work too much (I often fall into this camp). It’s your choice to make.
  • Paying bills automatically. You probably know I’m a big fan. It keeps me organized, and makes sure bills get to their destination on time. But if you like writing those checks each month, and you prefer to continue to do it manually, that’s okay too. Some people get nervous at the prospect of money being pulled out of their checking account without them physically triggering the transaction. If you want to sit down on a set date each month (preferably one close to when the bills arrive) and write out those checks or click the keys to send the money on its way, you should do it the way it works best for you.
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When is your child ready for social? 10 questions to consider

As we celebrate Social Media week, I share one of the most common questions I receive from audiences on social: what is that magic age where you release your child into the social-sphere? I hate to break it to you, but no one answer will work for every parent or for every child. The most critical variables rest in the maturity of the child and the ability of the parent to trust their young adult to stay in guardrails you set.

Our children are growing up as digital natives and that is a great thing! By the age of one month newborns have social shadow from folks posting photos, name and birth information in their networks. So, we cannot hide from this new truth. According to the American Academy of Child and Adolescent Psychology, more than 60% of 13-17 year olds have at least one profile on a social networking site, many spending more than 2 hours per day on social networking sites. More than half of adolescents visit a social media site more than once a day, and 75% have cell phones. Here are 10 questions for you to consider in determining the age for your child:

As we celebrate Social Media week, I share one of the most common questions I receive from audiences on social: what is that magic age where you release your child into the social-sphere?

As we celebrate Social Media week, I share one of the most common questions I receive from audiences on social: what is that magic age where you release your child into the social-sphere?

  1. Are you ready to join every network your child joins? Parents need to experience each social network personally, whether you want to or not!
  2. Does your child have a healthy sense of self? If that answer is “no” they are not ready to enter networks where any unmet emotional needs could make them vulnerable.
  3. Are they independent thinkers or do they do whatever peers tell/ask them to do? If they are prone to not apply critical thinking, they are not ready.
  4. Do they understand the difference between an advertisement and an interaction? Most digital destinations make money on ads and understanding subtle differences is an important distinction.
  5. How much time each day will you allow your child to play in digital spaces? Clear expectations are critical on time of day and where you will allow digital interactions.
  6. Is your child willing to share their passwords with you and have you monitor their profiles, if you ask?
  7. Does your child see this as a privilege or an expectation?
  8. Does your child uphold healthy boundaries of what is private and what is public?
  9. Is your child ready for their first employer, teacher, principal or their grandparents to read every text and post?
  10. Would a contract with your child drive a healthy conversation? The action of signing a contract binds them to behaviors such as sharing with you if something happens that should not of in the digital space.

Our daughter cannot join any social network until she is 13 (she says it is unfair btw), and we will have her sign a contract, as she did when she got a smart phone. She has shared one occasion of something inappropriate happening online, and due to that maturity we feel she will be ready in three years; but again, each parent needs to consider a number of variables in making this decision. Tell us other questions you are considering….

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Love and money

I’m not going to pretend money is romantic. But many of the things you can do with money are romantic: The average person will spend close to $131 on Valentine’s Day, taking their loved one out to dinner, on a quick weekend trip, or buying flowers and candy.

All of those things are nice — and probably deeply appreciated. But I would argue that even more romantic is making plans for the future together, and that initial discussion, at least, doesn’t cost a thing. I’m not talking about this year’s summer vacation; I’m talking about retirement. A study from Hearts & Wallets last year found that only 38% of couples are planning for retirement together. That means the bulk of people surveyed haven’t talked with their spouse about when (or if) they plan to leave their job. They haven’t discussed where they want to live — if they want to move at all. They haven’t talked about how they want to spend their time in retirement, and whether they see it as an era to putter around the golf course, rock on the front porch, or travel the world.

This is one conversation about money that is fun — provided you’re at least remotely on the same page. You get to dream together and map out your future. Not only that, but research shows that visualizing retirement, and specifically how we will spend our time and what sort of lifestyle changes we want to make, can give us the impetus we need to save more.

If you’re struggling to talk to your partner about retirement plans, here’s how to get the conversation flowing:

Pick the right time. Just like any conversation about money, I think this one should occur when both of you are as relaxed as possible. That means when you walk in the door from work, or on your way out the door in the morning, isn’t the best. Broach the subject during your next dinner out, or on your Valentine’s Day getaway.

Talk about wants and needs. Maybe you want to travel the world, but you need to at least leave your job by a certain age. Or you want to move closer to your kids, but whether you do that by moving to the nearest beach town is up for debate. It’s helpful to think about your feelings on these subjects before your bring up the conversation, and allow your partner time to think about his before giving a response. Many people haven’t really thought about how they plan to spend retirement, not least because many feel they’ll never get there.

Compromise. You want to leave work never; he wants you to leave by age 65. Or maybe it’s you pulling him out the door. Either way, meet in the middle. And if you can’t agree on where you’ll end up? Search for new possible locations that you could get excited about together.
Keep the conversation going. You don’t have to write out a plan in ink right now. This initial conversation is just a brainstorming session, so you can get a feeling for where you stand. Once you know that, you can start researching your options and thinking about how you’d feel if you had to change your vision slightly to meet up with your partner’s. Talk about it again in six months, and see how things have evolved.

Be flexible. Retirement is something you can’t completely plan. Not only because you don’t know how long you’re going to live or how much money you’re going to spend, but also because you don’t know what health problems or career changes might be coming down the pike. You might agree to retire at age 65, only to be confronted with an amazing job opportunity at age 63. The idea is to get a framework in place, but aim to keep it fluid and so you can tweak as things come up.

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A year to get clear

Morgan Castner is a Financial Advisor and also happens to be my older brother, whom I have on speed dial for all my financial questions.

Morgan Castner is a Financial Advisor and also happens to be my older brother, whom I have on speed dial for all my financial questions.

At the start of the New Year we all proudly wear badges of optimism, vowing to change our bad habits and adopt new ones. Health and fitness always seem to top the resolution charts, but over the past few years I’ve overheard many conversations about the desire to clean up our own personal money mayhem.

The first hurdle to overcome in the journey to financial freedom is being willing to ask for help, it’s the only way you will find the answers to your questions. If you’ve made a commitment to yourself this year to get clear and gain control of your money madness, I hope this advice from my go-to financial advisor will help to get you off on the right foot.

Morgan Castner is a Financial Advisor at Wells Fargo Advisors, LLC. and also happens to be my older brother, whom I have on speed dial for all my financial questions. I sat down with him to get the answers to a couple questions I’ve been hearing my peers ask for years.

Chelsea: Can you explain why it’s so important to start saving for retirement in our 20’s?

Morgan: Absolutely. A lot of people just starting out have trouble saving money, paying their rent, grocery bills, etc. and that’s totally understandable. I’ve talked to numerous people your age and they tell me: “look I can’t afford to pay my expenses and save money.” And I tell them you really can’t afford not to start now. You need to save your money as early as possible. The time value of money and the power of compounding interest are so great, even saving a little bit each month and putting it to work is crucial to simplifying your retirement path down the line. You’re the employee of your boss; make your money your employee. Put your money to work, and do it early.

Chelsea: That’s a great way to think about it! I also hear from my peers a lot about the confusion around how and why they should open a 401k plan within their company. The motivation seems to be lacking, especially since they were just handed a packet with financial jargon they can’t understand, it’s easier to just forget about it. How could my peers start thinking about 401k’s differently?

Morgan: When someone gets that stack of paper for signing up for a 401k they take it and say I’ll deal with this later, but later usually means never. The worst thing you can really do is take a problem like this and sit idle, doing nothing. A lot of companies have contribution matching, whether they match 3% or 5% that’s a question you need to ask, but that’s free money. You’re company is giving you money to pay your future self. I know it’s tough to save the money, but do everything you can to start now; it will make your life so much easier in the future.

Chelsea: That’s a really good piece of advice to help people focus more on the money coming in rather than the money going out, even if you can’t touch it for a while. Thank you Morgan for talking with me, and I hope that your insights will help to motivate others, like it did for me, to put a solid retirement plan into place.

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Making 2014 a financial turning point

There is ample evidence to show that most New Year’s resolutions don’t make it past the beginning of February (one of the latest pieces of research, from Gold’s Gym, named February 7 the Fitness Cliff — that’s the day when most people seem to fall off the wagon, according to their membership data). That means that by now, there’s a good chance you’re snoozing through your alarm, spending the money you were supposed to be saving, or nagging your husband (again).

So I’d like to make an argument for the February resolution: The pressure’s off, by this point. You’re not struggling to ease back into work after a week or two of holiday vacation. Your daily routine is back to normal. And you’ve already started scaling out of the holiday spending binge, which means you’re already on your way to being back on track and you don’t have to drop the credit cards cold turkey.

Yes, now is the time to grab 2014 and make it a financial turning point in your life. Here’s how to do it:

Recover from the holidays. If you haven’t already paid off your debt hangover, that’s your first focus. I like to see this wiped out by the end of February, if not before (and of course ideally, you wouldn’t go into debt for holiday gifting at all). Take some time to scale back your spending by focusing on the little things you likely won’t notice — change your latte order to a regular coffee and add your own milk, pack your lunch not once a week but three or four times, skip the manicure or your hair cut this month. As you do these things, immediately transfer the money you’ve saved into a savings account, or use it to make even a small payment on your credit card. So say tomorrow, you decide to brown bag it when you’d normally buy a $6 sandwich. As soon as lunch is over, get that $6 out of your checking account before you spend it on something else.

Visit your savings account balances. I like to do this monthly, and I think that once you start, you will, too. It is what makes something that generally isn’t any fun — saving — a lot of fun. Sometimes just seeing how much the little bits of money you’ve squirreled away have amounted to can give you the boost you need to put away even more. So make some time to sit down and take a tour of the accounts you have set up for retirement, college, health savings, emergencies, and even other short-term goals.

Edge up your contributions. The last point should give you the motivation you need to do this. I’ve found that in most cases, you won’t miss 1 or 2% of your salary. You may notice a slight difference at first, but you’ll quickly adjust. So my suggestion for eventually maxing out your retirement account or increasing your savings for other goals is to bump up your contributions by 2% every year. If you’re lucky, you can align this with a raise, but even if you’re not, you’ll still be able to spare the extra income if you put it out of your mind (and your checking account) before you have a chance to touch it. Automatic transfers are the best way to make this happen.

Pay attention to what’s coming down the pike. The key to not being blindsided by events, like a summer vacation or even next year’s holiday spending, is to plan for them in advance by putting aside a little bit of money every single month. (Do this for a vacation, and it can end up feeling like you’re on an all-expenses-paid trip — because you don’t have to scrape together the money right before, or pay off the credit cards after, it feels almost free and will make the trip all the more relaxing.) Then you plan your spending based on the money you’ve been able to put aside. If you manage to save $1,000 for your summer vacation, you’re going to Florida, not Hawaii.

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My 2014 challenge

And despite my work in retirement and speaking to many women about preparedness, I couldn’t say that I was organized with regard to my personal documents.  Yes, all the pieces and parts were there, but like my office, they were scattered in multiple locations and not easy to locate.

And despite my work in retirement and speaking to many women about preparedness, I couldn’t say that I was organized with regard to my personal documents. Yes, all the pieces and parts were there, but like my office, they were scattered in multiple locations and not easy to locate.

I spent the day after Thanksgiving giving my office a thorough, long overdue cleaning. It was awful, I have to admit. But in going through my bookshelf, I came across Elizabeth Bradford’s book, The Painted Journal. This book was given out at a conference several years ago, and during my break from cleaning, I flipped through the pages again. Ms. Bradford tells the story of deciding, on her 40th birthday, that every year thereafter she would give herself the gift of a new accomplishment. She started small, learning to bake a cake. But as she gained more confidence, she took on everything from using a skill saw to make repairs to her property to learning about the stock market to painting a picture every single day for one year.

I became inspired with the thought of taking on an annual challenge for myself, and started thinking about what I would do in 2014. I recalled a colleague, younger than I am, who passed very suddenly several months ago, but who was remarkably prepared in terms of her personal affairs. And despite my work in retirement and speaking to many women about preparedness, I couldn’t say that I was organized with regard to my personal documents. Yes, all the pieces and parts were there, but like my office, they were scattered in multiple locations and not easy to locate.

So – this is my personal challenge for 2014. Organize my financial documents, passwords, statements, even information about family heirlooms and their respective stories – in one place where my family can quickly put their hands on everything. Maybe this sounds a little grim, but I bet, when I’m done, I’ll feel just as good about it as I did when I finished organizing my office. And while I know I’ll feel great about it when I’m done, I do plan to make my 2015 “accomplishment gift” to myself something a little more exciting!

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When to step in and takeover your parents finances

According to research from the Indiana University School of Medicine, about a quarter of people age 65 or older have at least slight cognitive impairment. For many adult children of this group, the stat brings up an important question: When should you step in and take over – or at least assist with – your parents’ finances?

It’s a question Elly knows well. She says she’s at the beginning stages of helping out, checking in periodically to make sure her mother, who is still living independently, is on the right track. She’s also helping her sell some property and generally making sure her mother’s bills are paid – at this point it’s more about prompting and reminding her mother to pay them, rather than stepping in and writing the checks.

How do you assess where your parents stand – and how much help they need?

Check out the bills. Are there piles all over the house? If you remind your parent to pay, have they already done so or have they forgotten? As in Elly’s situation, bills can tell you a great deal about whether your parents are staying afloat. Make sure they are opening their mail, staying on top of what needs paid when, and actually making the payments on time. If they’re not, it’s a sign they need some help.

Watch purchases. If a steady stream of expensive items are flowing through their doors – particularly if there is no rhyme or reason to the purchases – it may raise a red flag that spending is out of control. Many people don’t realize the reality of making their money last in retirement – it can feel a bit like a vacation with no end date. Get them on a budget that allocates how much they can spend each month, both on fixed expenses and discretionary items. Then help them stick to it.

Take note of calls from creditors. This is obviously a red flag and a signal that the bills aren’t being paid and spending may be out of control, particularly if your parent seems confused about why the calls are happening or what they are in reference to.

Recognize a lack of mobility. Being unable to get around in general may also mean your parent is not able to get to the bank or the post office. Consider it a call for you to step in and help. People in this age range may not be able or willing to bank online, so you can either set up and manage that system for them, or help them get to and from the bank or ATM as needed.

Get a power of attorney. It’s important to put a power of attorney in place to handle financial matters sooner, rather than later. Whether that’s you, a sibling, or another family member, get the documentation set up so someone will be authorized to make decisions down the line. Likewise, it’s important to talk through all of these issues before they come up.

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Have you really thought about what your retirement will look like?

My friend has accomplished her dream of building this amazing home, and I couldn’t be happier for her.

My friend has accomplished her dream of building this amazing home, and I couldn’t be happier for her.

I have a friend I’ve spoken about her many times before. She gave up her life here in North Carolina to take a job up north, so she could start taking actual steps towards her retirement dream of a building a house in a small town in Vermont.

My friend has accomplished her dream of building this amazing home, and I couldn’t be happier for her. But a funny thing happened a week or so after moving in. She fell on some ice,broke her wrist, and now all of her plans for getting the final details of her dream to become a reality are on hold.

She of course is going stir crazy, loving the house but having a difficult time not being able to do the things she had planned. We had a conversation a few days ago and she mentioned she now knows she will have to have some sort of serious hobby or part time job to keep her occupied once she retires because she can’t stand the empty hours.

This started me thinking, what do I plan to do with my free time once that day rolls around? And do I have enough money to cover the plans I have and enough to cover the “what if’s” that arise like breaking your wrist?

As I thought about her situation, as well as my own, a webinar created by our retirement partners came across my desk and I thought now this is perfect timing. Why? Because the very things I was pondering: what will I do in retirement, how will I have enough money to afford those things and how about the “what if’s”, are covered.

Here’s the link to the webinar replay (just register for the webinar and the recording will begin). I think it’s a great overview of the unique challenges and opportunities that women face as they seek to prepare for the future. Some of the topics are:

What retirement means to you – important questions to ask yourself

Considerations and challenges – how will you balance everything on your plate?

Retirement realities – Some facts we know about today to help you plan for tomorrow

Wisdom for all ages – some key points to consider by decade no matter where you stand in your financial life

Whether you are nearing retirement or just starting to plan for it, it’s never too late, or too early, to take that first step. This webinar will be that first step for you and will guide you in the right direction to help start your retirement planning journey. Whether you’re saving in a 401k or elsewhere, the concepts apply to anyone looking for better ways to save and plan for their future.

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