Since I wasn’t born or brought up in the US, I’ve noticed that my perspective on personal finance is a bit different than the avererage American. Coming from a hard-working middle-class family from Brazil, I lived part of my life under hyperinflation and economic turmoil, and because of that I do have some insights on how to manage personal finances.
Did you know that half of the women who are now 65 will live until they are 85?Statistically women have a longer life expectancy than men, on average they live 7 years longer – therefore they have to plan for a longer retirement.In addition they also tend to earn less money than men for doing the same job (remember ERA did NOT pass in the 1970’s.)
Here are some humbling statistics taken from WISER’s website
For me, the word innovation brings to mind things like the iPhone, velcro, biofuels and defibrillators. Banking and trading stocks does not rank too high on this list.
Financial services, as an industry, is traditional and competitive around a couple key metrics like transactional costs, assets under management and rates of retention. While the insurance channel may be an extreme example, aversion to risk is the general rule and taking chances on new products or new approaches to services is generally not part of the culture. There are some large companies initiating innovative new programs, like ING, Citizen’s Bank of Canada and BofA, but they are largely the exception.
(Randy is a Certified Financial Planner with 20 years of experience as an investment banker and he will be contributing weekly to the Boulevard R blog)
I very frequently get asked about life insurance. There are few areas in financial planning both as important and as confusing as the subject of life insurance. While a thorough explanation of the various life insurance products available could fill a book, I’ll try to highlight the differences between two of the most common types, term and whole life, in more simple terms.
(Every Monday, Mariette will share what she’s learning about retirement. Enjoy!)
I’d never thought about saving for retirement before, it just wasn’t on my radar. I also figured the chances are that I won’t retire - that was my retirement vision, I would just work until the end and since I’m an artist it didn’t seem too onerous a task. I woke up when I was diagnosed with Uterine Cancer last year, I’m 39. My prognosis is excellent, the chances that I will die from this are very slim, less then 10%, but it has certainly made me re-evaluate my life and my choices. Fortunately I had health insurance.
One of the best features on Fidelity’s Retirement Quick Check is that it allows not just an individual, but also a couple to plan for retirement. This is key because your retirement funds need to last as long as the oldest person lives. For example, let’s say a husband (54 years old) and wife (48 years old) are planning for retirement. Let’s say that the couple wants to assume that the wife lives to be 4 years older than her husband. So if the husband effectively has to add 10 extra years of expenses for a single elderly person. It’s great that Fidelity takes this into account, since most tools ignore the fact that in retirement planning your forecasting for the oldest person.
Recently there were a couple articles that appeared in Kiplingers and the Wall Street Journal evaluating different online retirement planning tools, including:
ChooseToSave.org (Free)
ES Planner ($149-$199)
Fidelity’s Retirement Quick Check (Free to registered Fidelity.com users)
Financial Engines ($150-$300)
I asked two of the Independent Financial Advisors that are helping us to develop our next-generation retirement planning service and one of them came up with this analogy:
