As part of our continued effort to move the financial services industry in a more sustainable direction, I had the pleasure of participating in eMoney’s “That Makes Cents” podcast. eMoney is our financial planning & client portal partner, and I was proud to collaborate with them in our shared mission to bring financial advice into […]
Common Interests is very proud of the holistic nature of our work and has now created a Cadre of Allied Professionals in order to fully meet our mantra of “Empowering Financial Wellness.” We are actually driven to make sure our clients and their families have their entire financial houses in order! In this regard we have discovered that we need to have a group of ‘experts’ to turn to for the “heavy lifting!”
Senior Care Specialists
This group of professionals (who are all MSW, LCSW, C-ASWCM, or similar) is very proficient in helping families create a plan for their aging adults. They liken themselves to the “Healthcare General Contractor” to build this needed program. They will be with the family every step of the way, from initial assessment to determining the level(s) of care needed, to implementation of the plan.
Medicare Planning and Insurance
These days there are many plans and solutions to solve the Health Insurance problem for Seniors. And, more and more rules and deadlines all the time! These experts are trained to help find the proper solution, in the correct time frame, with the correct benefits to fit the clients needs. They will fully discuss the options, educating the client and building the plan with your needs and concerns in mind.
Student Coaching Service
This service is able to help college bound students with Test Prep, Scholarships and financial aid, applications, essays, school selection, interviewing and resume writing and tutoring in specific subjects that may be needed. We work with professionals that are members of the IECA, who are held to a higher ethical standard.
Mortgage Origination Experts
These experts know their way around the mortgage business and have multiple mortgage options which helps them ‘shop’ for solutions. These folks handle both Forward and Reverse Mortgages (which are tricky, but have enabled a number of our clients to retire with dignity when used properly), as well as Lines of Credit. They are able to tackle the really tough situations, and have helped rescue some financial situations.
Attorneys and Elder Law Attorneys
These Attorneys have special practices set up in order to work through the legal maze of documents needed. Elder Law, especially, has a lot of unique problems that need to be solved in order to protect and pass a family’s estate correctly. We will help direct you!
We are pleased to be working with a number of CPAs with varying specialties. Accounting is a huge field and we decided long ago to find CPAs with different focuses. We will direct you to a firm that fits your needs, from simple returns to complex estates.
In the case of all of professionals above we have worked judiciously to select the person(s) who will relate well with our clients, can fulfill the needs in each case, and be part of the team. We also wanted to have professionals in various geographic regions. Lastly, and most importantly, our RULE is that “They work for the client. The client pays them for their work and Common Interests does not receive any payment from them or from our client. There are No Referral fees, No ‘Kick backs,’ No Non-Cash Compensations. We do not want our clients to be paying any more for this work than they ordinarily would if they dealt with these professionals directly! Also, in this way there will No Conflict Of Interests! To use a sports analogy, Common Interests is the Quarterback, these professionals are part of the team, and we all get paid according to what we do and how well we do it! This keeps it very clean and problem free!
We have a table in our Conference Room with the brochures and business cards for all of these people. During our meetings we will introduce these professionals if their services are needed. If you need a referral, just give us a call and we’ll be happy to point you in the right direction!
We are very happy to have built this Cadre to help add the abilities to help more people “Empower (Their) Financial Wellness.”
Although we’ve tried to make this clear in the text above, there are a few things our Compliance Department wants you to know in connection with this program: The Cadre’s professionals are not employed by or associated with Common Interests or Vanderbilt Securities, LLC or its’ parent companies or subsidiaries (“VFG”). Neither Common Interests nor VFG are responsible for the advice provided by any of the Cadre’s professionals. By design, neither Common Interests nor VFG receive any remuneration of any kind from the Cadre’s professionals. Membership in the Cadre is based only on our experiences working with the Cadre’s members, and the roster of members can and will change if we feel our clients would be better served by such a change.
We all need to face the fact that with modern medicine plus the desire of many people to stay active and fit that the length of our retirement, once we start it, is probably going to be a lot longer than it was for previous generations!
Let’s take a look at the current mortality tables and see what we learn. A male 65 has a life expectancy to live to 82.2, but if he does his life expectancy now goes to age 88.9 and if he gets there his life expectancy is now 93.2! You Go Guy! A female age 65 has an expectancy of 84.9, then it goes to 91.3 and then, lord willing, to 95.4! You Go Girl! The essential thought here is that we stand a good chance of being retired for a long long time! And, we better be prepared for that!!
The secret, in our mind, is to set up and tend to your Money Buckets. Yes, buckets, and there need to be at least three of them! Sometimes a fourth is appropriate, depending on the retiree’s goals. Let’s look at each bucket and its purpose in the big retirement picture.
Bucket # 1: Holds money for the early years of retirement: traditionally age 65 – 75. This bucket’s first job is to SUPPLEMENT the fixed portions of retirement income such as Social Security and Pension payments and any other regular guaranteed income streams. This bucket has a FAUCET from which is taken a steady stream of money so that the retiree’s make ends meet each month. Its’ second job is to have enough additional money so that all of the newly retired pent up needs get met: that could be painting everywhere, installing new everything, taking that long-awaited cruise, etc. Each bucket will have a DIPPER just for this purpose: dipping out some cash for “needed” items or adventures. Important thought: It Is OK if this bucket is empty when you get to Bucket # 2! That thought is LIBERATING! That means that you and an enjoyable early retirement during the GO GO YEARS!
Bucket # 2: Holds money for the middle period of retirement: traditionally ages 75 – 85. Its job for the first 10 years is to grow. This takes advantage of time, compound interests, and market cycles. When it is time to open its FAUCET it too will supplement the income stream from Social Security and Pensions, etc. Its job is the same as the first bucket, making ends meet. It too has a DIPPER, but it is more for emergencies and opportunities: to pay for the first and facilitate the second. These are the SLOW GO YEARS!
Bucket # 3: Holds money for the LONGEVITY ISSUES. There are several jobs, potentially, being done by this bucket. First, is the overall concern about paying for Long Term Care. Not a happy thought, but it will help preserve the rest of the money for Legacy and Philanthropic plans which would be a second reason for this bucket. A third reason would be to generate an income for this period because by then buckets number 1 and 2 may have run dry. Frequently people also want this income guaranteed for life for both of the spouses. In other words, and income that neither of them will ever outlive. This is done with an Annuity and often the Annuity can also take care of the Long Term Care needs, or a portion of them, as well. These are the NO GO YEARS!
Of course, each bucket has to be designed to meet the RISK TOLERANCE of each person. This system gives us more flexibility – because there are several buckets, we can manage each differently because their respective jobs are different and the last two have a long ‘runway’ before they are needed.
The diagram above will help you sort this all out and clearly depict the job, and the respective size of each bucket. I hope this helps, and feel free to call us with any questions, thoughts or observations you may have!
My Partner and I are proud to be Social Entrepreneurs. Therefore, every day we talk about Sustainable, Responsible and Impact Investing (SRI). We also talk about Environmental, Social and Governance (ESG) screening and scoring. More importantly, we talk about managing risk, rates of return, portfolio growth and retirement planning. That’s our business! Making money for our clients in a Sustainable and Responsible way.
All of these subjects come from the same source – STEWARDSHIP! That’s ultimately the foundation of the discussion. We can ask ourselves: “Will future generations have what they need to live a full and productive life in the future?” The answer is evidenced by each of us, every day. The decisions we make in our daily lives tell our story; good or bad. We will follow this truth: If it is to be it is up to me!
Stewardship means mindfully behaving in such a way that if everyone did the same, we would all be better off and our future would be bright!
How can we do this stewardship thing? First, we must learn about the Circular Economy where there is NO Waste! Second, we should examine the supply chain management of corporations we buy things from. This will uncover hidden problems or harmful behaviors along the chain. The United Nations gives us a very good road map. They created the Sustainable Development Goals. They speak directly to the subject of Stewardship and show us what needs to be solved!
We can also turn to Shareholder Advocacy. This actually FORCES Stewardship when needed! This involves posting resolutions for corporate shareholders to vote on, in terms of continuing or stopping various corporate behaviors. This is the ‘walk softly, but carry a Big Stick’ approach to stewardship. Believe it or not, aberrant corporate behavior can be, and IS, changed every year by shareholder vote, or the threat of a shareholder vote! We can make a difference!
There is definitely a need for an overwhelming theme of planetary stewardship. Fortunately it is built into the SRI/ESG world by definition. I think we should actually start taking credit for it! My first step is to start actually using the STEWARDSHIP word aloud in public.
A new report out from the U.S. Department of Education, Office of the Inspector General (click here to read – it’s a long one) found proof of something we’ve been talking about with clients for a long time- Student Loan servicers, the companies responsible for managing and advising loans issued by the federal government, have been failing to give accurate information to borrowers for years.
A significant amount of the counseling we do on student loans relates to this exact issue. Many borrowers are confused by the options available, and are either looking to decrease their payments, or pay off their loans faster. Every borrower’s goals and ‘constellation’ of loans is different and requires a different approach, which makes the fact that loan servicers aren’t giving complete information that much more difficult to swallow. Even worse, there appear to have been no consequences for providing bad information to borrowers, and the government wasn’t even tracking when servicers received complaints or were out of compliance with the rules.
It still gets worse! The report finds that income driven repayment plans have been mis-calculated, resulting in higher monthly payments than borrowers would have otherwise been responsible for (an especially bad situation when working towards loan forgiveness) AND the servicers weren’t even informing people about loan forgiveness programs that they may be eligible for! A significant amount of the work we do on student loans revolves around loan forgiveness and strategies to get loans forgiven.
Even with all of that, this report still misses out on the single dirtiest trick that student loan servicers use against borrowers (because the trick is completely legal and the report examines compliance with the law, not dirty tricks): Applying excess payments to next month instead of principal. Basically, the fine print of many of the letters we’ve seen from loan servicers says that, unlike a mortgage, if you send them extra money above and beyond what you owe, rather than applying the excess to the principal of your loan (and thereby reducing the amount you owe), instead they’ll apply the excess payment to next month’s payment (which doesn’t change how much you owe – you’re just letting them hold on to your money interest free until they apply it to your loan).
If you’re in this situation, the The Consumer Financial Protection Bureau has a loan servicer letter template you can use to force your servicer to treat you fairly. Just make sure you keep good notes! We can’t know whether this applies to you (as you’re just reading our blog!), so if you have questions about your loans and would like us to review them for you, just click the button in the bottom right corner of the screen to book an appointment.