Retiring, Even More Difficult...

We have always said that you can not rely on Social Security for retirement. Beyond that, we've always preached that you need to prepare yourself if you wish to retire in comfort at all. Now, that is looking to be even more true. It used to be that if you worked long and hard at a company, they would take good care of you when the time came. Now that is no longer true. While not quite as bad as the government, they aren't much better.

Geraldine Picha knew that her pension would be modest, given her tenure of just 15 years at the phone company.

What she did not expect was that her retiree health premium would eat up every penny of that pension — and more.

"It's frightening," said Picha, 63, whose former employer has raised her medical insurance bill steadily since she retired in 1998. At $560 a month, it now eclipses the $514 pension check Picha earned from her years at what was then AT&T Corp. and a spinoff, Lucent Technologies Inc.

OUCH! To think that you now are PAYING for the 'privilege' of being retired! How utterly ridiculous!

Let's look at more!

Over time, some maintain, growing legions of the elderly will find themselves with thousands of dollars in additional costs — posing difficult personal choices over care and new pressures on a federal government that already faces a vast, uncovered liability for the old-age needs of the baby boom generation.

"Across the board, retirement benefits are on the chopping block," said Daniel D. Doyle, an attorney for former Monsanto Co. employees whose benefits shrank after their division was spun off and filed for bankruptcy protection. "As companies try to restructure and squeeze out shareholder value, they are going to rely more and more on Medicare and other government programs to fill the breach."

Retiree health benefits first took a big hit more than a decade ago, when new accounting standards required companies to more clearly disclose those costs — prompting many employers to trim their offerings. More recently, the benefits are falling victim to rising healthcare expenses and corporate cost cutting.

On average, retirees account for 29% of the corporate medical bill for large employers that offer such benefits, according to Hewitt Associates, a benefits consulting firm. And like other medical costs, those for retirees have risen steadily — as much as 10.3% from 2004 to 2005, according to a survey of large private employers by the Kaiser Family Foundation and Hewitt.

Retiree medical benefits are now offered by just 1 in 3 large employers, down from 2 in 3 in the late 1980s, according to a study by the Kaiser foundation and the Health Research & Educational Trust.

For those that still provide such benefits, past commitments are being scaled back, and even steeper cuts are in store for future retirees. General Motors Corp. last fall announced a plan to save $15 billion in future healthcare liability for its retirees, for the first time charging retirees from hourly jobs a range of out-of-pocket costs for their medical needs.

"The double-digit cost pressures have been relentless," said Frank McArdle, head of the Washington research office of Hewitt Associates. "In many years, the annual increases for retiree healthcare have actually been greater than for active employee healthcare."

Such realities may provide little comfort to people who thought they earned the benefits when they were working and counted on them for security in old age.

"I thought I was going to live the good life," recalled Pete Wilson, 69, who took early retirement from Peoria, Ill.-based Caterpillar Inc. in 1992. He bought a 30-foot trailer and traveled the Southwest with his wife and friends. He even withdrew home equity, taking out a loan on his paid-off home, bolstered by a faith that his medical costs would never be a burden.

But last year, Caterpillar began charging Wilson $125 a month for his medical insurance premium. This year the bill jumped to $172. There is talk of future increases, Wilson said, although the company declined to confirm it. His medical bills continue to mount, most recently for a mysterious weight loss Wilson's doctors are trying to pin down.

Medicare covers most of the costs for Wilson and other Americans 65 and over. But patients are required to share Medicare costs for doctor visits, hospitals and prescription drugs, potentially exposing themselves to thousands of dollars in bills.

Private insurance helps, but it doesn't cover everything. Wilson recently had to pay $88 toward a magnetic resonance imaging procedure. His budget, meanwhile, has been strained by other expenses, such as a new furnace and air conditioner.

"We can't go to Arizona anymore," said Wilson, whose pension from his 33 years at the factory is about $1,000 a month.

Folks, it can't be much more plane. If you want to retire in comfort, you are going to have to be responsible for the majority of the money needed. Don't pout, don't be upset, just realize that it is up to you! If you need some help, not quite sure how to start? Give us a call, we are there to help you!

What it Takes to be Rich

Money magazine has a fascinating article on what it takes to be rich. Let's take a look at it together.

Lesson 1: Make your own luck
Successful people create their own opportunities.

Jason, 66, had a 40-year career as a character actor in television and movies, and he could easily play the part of a soothsayer who lives deep in some medieval forest: He's small and good-natured, with a soft voice that suggests both wisdom and curiosity. (Incidentally, we're cheating a bit here; Jason lives and works a few blocks outside 90210 proper. But we're not holding that against him.)

Jason knows everybody in the business (he's married to Pamela Franklin, who once died on-screen in Brando's arms), but a decade ago he decided that he was ready to ease into a retirement gig.

He was in Eureka, Calif., of all places, when he had the revelation, filming Steven Spielberg's The Lost World: Jurassic Park, in which he played a dinosaur tracker. Jason had visited a bookstore and was examining his loot when Spielberg looked over his shoulder.

"Steven, I'm going to open a bookstore," Jason told the director. "I'm doing it."

Jason was comfortable, but he didn't want to lose money on a new undertaking.

Soon after opening Mystery Pier, he dedicated a corner to books that had been made into films - marrying the two things he was passionate about. He spread the word among that vast network he had built up, and business took off as Hollywood A-listers stopped in for first editions of books that they or their friends had made into movies.

Robin Williams, Jude Law and Bono became regulars. When I went in, Jason had everything from a full set of the Harry Potter books signed by J.K. Rowling ($40,000) to Humphrey Cobb's Paths of Glory inscribed by the star of the film version, Kirk Douglas ($6,500).

"It was really an inadvertent thing," Jason said of the profitable market niche he had stumbled on. After a moment, he added, "If I made a list of all the things in life I thought were coincidences and then looked back at them, I would see that they weren't coincidences at all."

BINGO! That is very important to understand. Things didn't just happen, Jason made them happen. He made good decisions. He had the ability to look at a situation and see it for what it was, either a good opportunity or bad opportunity. That is so very important, looking at a situation, seeing it for what it is and then making the proper decision.

Let's keep looking.

Have a growth mind-set
Lesson 2: Failing at something is the best way to ensure success at it the next time.

Carol Dweck, a psychologist and professor at Stanford University, studies the connections between people's outlook and their willingness to take risks. "The view you adopt for yourself profoundly affects the way you lead your life," she writes in her book "Mindset," which was published earlier this year. Dweck identifies two types of people: those who have fixed mind-sets and those who have growth mind-sets.

People with fixed mind-sets believe that they were born with a certain amount of intelligence, and they strive to convince the world of their brilliance so that no one finds out they're not actually geniuses.

Growth-mind-set people believe that intelligence, knowledge and skill need to be "cultivated" by trial and error. Failing at something, they believe, is the best way to ensure they'll succeed at it the next time.

Excellent! We meet people in the first category ALL THE TIME! The special ones are the ones in the second category. Those who are constantly growing, learning and becoming! It is also important to realize that it is okay to fail, just as long as you use it as a learning experience and keep on growing!

Never stop learning
Lesson 2, Corollary 1: Successful people are always on the look out for new experiences that they can later build on.

First I met Heidi Roizen, 48, a managing director at Mobius Venture Capital, a Silicon Valley firm with investments in the tech industry of around $2 billion. She's in the business of assessing risk, and I asked her if there are any lessons for the rest of us in the way she examines potential investments.

"Often when you mention risk, what people think of is the downside. Danger. That's not the entrepreneurial mind-set," she said. "The entrepreneurial mind-set is that risk is the heightened probability that there is a big range of possible outcomes."

Losing, she says, is no fun, but it's also essential to winning. When an investment doesn't work out as planned, Roizen analyzes her decision-making process to figure out what went wrong. She compares it to dissecting her performance after she delivers one of her frequent talks to Stanford M.B.A. students (building her network, as you've gathered by now).

"I usually spend a half hour telling my husband what went right or wrong," she said. "If I sit and think and talk out loud about what worked or didn't work, that becomes part of my psyche for how I figure out how to do the next lecture. I do the same thing in business."

Dweck, the psychologist who studies growth mind-sets, created an experiment to demonstrate how persistence and the pursuit of knowledge leads to success. She posed a series of trivia questions to a group of people with fixed mind-sets and another with growth mind-sets.

After each answer, one and a half seconds passed before the participants were told whether they were right or wrong, and, if they were wrong, another one and a half seconds lapsed before they were given the correct response. Their brains were monitored with electrodes the entire time.

Dweck found that the people with fixed mind-sets cared a lot about whether they were right or wrong but not at all about what the right answer was. The growth-mind-set participants stayed interested until the correct answer was given, showing an interest in learning new information rather than in simply validating their intelligence.

When the test was repeated right away, only the growth-mind-set group performed better.

Again, the focus is on growth and growing. Don't stop, keep going, realize that you can grow until the day that you die!

Their list goes on but these are the ones that we found to be very important. Each and every one of you has what it takes to be rich. We firmly believe this. It might take some time, you might make some mistakes at first, but that is okay. Keep striving, keep persevering, have a great attitude and put a smile on your face; your going to make it!

If your doing all this and still feel you need a little help, give us a call. Helping make people rich is one of the things we live for!

Insurance and Health Care

Having good health is so very important. We have seen the other side of this issue as most of you know. That is one reason that we work so hard to insure that all of our employees have good health insurance. We try and offer the best available at an affordable rate. As employers, we see this as one of our responsibilities. Others seem to want to ignore it which is just wrong.

Individual health insurance — often touted as an alternative to employer-based group coverage — may be an option for the healthiest and wealthiest. But a study due out today suggests that the poor and sick need not apply.

The overwhelming majority — 89% — of working-age adults who shopped for health coverage in the individual market over the last three years were rejected for health reasons or found it too expensive, according to the study by the Commonwealth Fund, a private foundation that sponsors independent research on health and social issues.

Coverage was not affordable for 58% of the applicants, and 21% who had a medical condition were turned down, charged a higher premium or sold a policy that excluded the existing problem from coverage, the report said.

Individual insurance also is less affordable than employer-sponsored coverage, the study found. Two out of five people with individual coverage spent 5% or more of their income on premiums, compared with one out of seven people with employer coverage.

The study is the latest assessment of individual insurance, which is seen as an increasingly important form of coverage as employers drop health benefits for workers and their families because of the cost.

Most of the increase in the number of uninsured Americans — who now total, by some estimates, 46.6 million — was because of a decline in workplace coverage, said study author Sara Collins, an executive at the New York-based foundation.

This is just horrible. Here we live in the best country in the world with the highest quality health care and there are millions who can't access it. We are doing our part to make sure our employees are covered. If you are an employer, are you doing the same? This is part of living abundantly. Sure, we could make more money if we didn't offer health care, but what kind of scarcity mentality is that?!? Our employees are too important to us, they are like family.

This is an issue that we continue to watch. A solution for universal health coverage needs to be found, but it needs to be one that falls under the umbrella of abundance and not scarcity. We are confident that a solution is just around the corner, just waiting to be discovered. We are sure it will happen soon!

Fireman, Policeman, professional athlete?

A little off the beaten path, but it is interesting to see what professional athletes make on average. A recent edition of Sports Illustrated went through the average salaries of athletes in various sports.

Here they are:

* Basketball (NBA) -- $5,000,000
* Baseball (MLB) -- $2,800,000
* Football (NFL) -- $1,750,000
* Hockey (NHL) -- $1,500,000
* Men's Golf -- $973,495
* Women's Tennis -- $345,000
* Men's Tennis -- $260,000
* Women's Golf -- $162,043

Interesting eh? So, when your child says they want to be a pro-athlete, at least you won't have to worry about them financially.

Now all they need to do is work with us so they know how to handle their money properly!

September 11, 2006

Today we honor those who lost their lives in an incident that has changed us all forever. We mourn for those who lost loved ones. We salute those brave firemen and policemen who rushed in, knowing the buildings could fall at any moment. Our hearts are with the families of those brave passengers on flight 93 who vowed to retake their plane or die trying. Our prayers are with the soldiers who continue to fight for our freedom.

May God bless them all and everyone of us. Let us never forget what happened on that dreadful day. Let us learn from those events and live lives that help keep it from happening again.

God bless our heroes, those who have died and those who continue to live on, being shining examples for all of us. Who are those heroes? They are probably different for each of you, and that's fine. It's good to have heroes and we hope that each one of you has someone who you look up to that gives you inspiration.

Take care today and say a prayer or have a thought in your heart for those who have given their all either on this day or the days since.

DON'T pay cash for your home!

Wow, we'll bet that headline shocked a few of you. Here we are, the biggest evangelists in the world for paying off your mortgage, and we are telling you not to go out and pay cash for your home. Why in the world would we do this? Well, the following article nailed a lot of the reasons why. We'll quote the parts we agree with.

(Q) DEAR BOB: I plan on paying cash for my next residence. Are there any hidden dangers in paying cash? -- Mark N.

(A) DEAR MARK: Please don't do that ...A better alternative is to pay a 20 percent or 25 percent cash down payment and obtain a fixed-rate 15- or 30-year mortgage for the balance of the purchase price. Then, just in case you have purchased a bad house or a bad condo, you won't have all your nest egg tied up. After a few years of owning and living in the home, if all turns out well, then you can pay off the mortgage. (Of course, be sure it doesn't have a prepayment penalty.)

I still recall a nightmare letter I received a few years ago from a retiree who bought her retirement condo for all cash. Only after moving in did she discover that the complex was badly managed and occupied by about 50 percent renters, who caused many problems.

When she tried to sell her condo, she discovered that mortgage lenders either refused to loan to new buyers or charged high interest rates because of the high risk with so many renters. The only way she could get her cash out was to sell to another all-cash sucker.

So there you have it. While we are huge advocates of paying off your mortgage, we are also advocates of being smart with your money. Unless you know everything about the home you are purchasing and the neighborhood where you are purchasing it, you are wise to give yourself some time before the big payoff.

Picking the Right Planner...

Working single mom Kathy A. Gambrell has had no problem finding a lawyer to write her will or a certified public accountant to prepare her taxes -- professionals she found by asking friends and family for recommendations.

But a four-year quest to find a financial planner has left the editor of the District-based CongressDaily baffled, angry and, worst of all, unenlightened on how to find someone good to help her manage her money. Three weeks ago, she fired her latest adviser after he recommended she quit her job, fire her babysitter and yank her child from Montessori school -- then let him manage the money she would save, along with a small inheritance she's about to receive.

"As if!" says Gambrell, 46. "He had no idea what I was about."

This sounds far too familiar! We hear horror stories like this constantly from our clients. How can you find a planner that is out there for you and not for his own commissions! How do you know if the person is reliable? What are his/her qualifications? The list goes on and on and on and this article does a great job tackling the issues. Let's look at it some more!

Much of what makes hiring a financial planner so bewildering is the motley nature of the industry. There are more than 80 certifications or degrees advisers can place next to their names. Most were created since the 1980s, when financial planning came into its own, but only a few carry widespread recognition.

"It's a joke," says Ellen Turf, chief executive of the National Association of Personal Financial Advisors, an industry trade group. "Our goal is to have financial planning be a profession, but it's not quite there yet. We don't have a system like doctors or lawyers or accountants, where you know what to look for."

The absence of a uniform industry standard means that consumers must do their homework before they hire anyone. Experts say it is essential to know whether a prospective adviser accepts commissions that could influence which products he recommends. And equally important: Consumers should also ask whether that adviser is the kind that by law must put his client's profit ahead of his own. And consumers should check with federal and state regulators to see if that adviser has registered and whether he has been the subject of any recent complaints or disciplinary actions.

Can you believe that? For something that is so important, there is little organization. No wonder it is nearly impossible to find a reliable financial advisor! It gets even MORE confusing as we look further. Get a load of this next part!

As consumers wade through lists of prospective advisers, they will encounter many professional credentials. Three of the best-known designations are certified financial planner, or CFP; certified public accountant/personal financial specialist, or CPA/PFS; and chartered financial consultant, or ChFC.

Each of these credentials requires its bearer to complete an approved course of financial-planning studies, pass a certification exam and attain a minimum level of experience. But these designations, just as in any other profession, don't guarantee that someone is good or will act with your best financial interest in mind, consumer groups and government financial regulators caution.

As they look for a planner, consumers should remember two key legal designations created by the federal government. The first is that of registered investment adviser . With one important exception, this is anyone who charges money for giving advice on which securities to buy or sell. They must file as a registered investment adviser with state or federal securities regulators, and by law they are what is known as a "fiduciary." A fiduciary can recommend only those investments she believes are in your best interest -- even if she might make more money by selling you something else.

The second legal designation is that of stock broker , which the law defines as anyone who buys or sells securities for someone else. In general, brokers are not fiduciaries. They don't have to recommend a product that is best for an investor -- only one that is suitable. For example, three mutual funds might be suitable for you, given your investment goals and tolerance for risk. A broker could legally steer you to the one that will pay him a higher commission, even if its returns have not been as good as the other two.

To further confuse things, an adviser can be both a registered stock broker and a registered investment adviser. That means he or she could apply different standards at different points in your relationship, at times acting as a fiduciary recommending a mutual fund that will give you the best return, at others acting as a broker, recommending a fund that's suitable but perhaps a bit riskier.

An additional wrinkle was added last year, when the Securities and Exchange Commission decided to allow stock brokers, who traditionally have been paid with commissions and have given limited investment advice, to perform those same functions for a fee, without having to become fiduciaries by registering as investment advisers.

That decision angered many registered advisers, who argue that the policy allows brokers to appear to offer unbiased advice without in fact having to act in a consumer's best interest. One trade association, the Financial Planning Association, has sued the SEC over the issue.

Federal regulators, acknowledging the potential for confusion, require these fee-paid brokers to disclose potential conflicts of interest to customers. But a recent study by the SEC found that customers often don't understand such disclosures. The agency plans a larger study before it decides what to do next.

To cut through the clutter, Barbara Roper of the nonprofit Consumer Federation of America recommends that people hire a registered investment adviser. It provides an extra level of probability that the person will act in your best interest, she says.

Wow! Again, how do they expect the average joe to find what and whom he needs? Answer, they don't! You're dead meat if you go into this blind.

This next part is something that we discuss constantly and is the big reason why you just can't trust so many of the so-called 'financial advisors.'

Advisers can be paid with fees, commissions or a combination of both. Someone paid by commission -- for example, by a mutual fund or an insurance company -- is acting as a salesman. Someone paid only a fee is acting more like a lawyer, charging you for his time and expertise; he will not make more money by steering you towards one product over another.

The commission system still appeals to many consumers who can't afford or don't want to pay upfront fees, says Robert E. Plaze, associate director in the SEC's Division of Investment Management. But clearly, experts say, the popularity of fee-based services is growing.

In the past, fee-only planners tended to cater to wealthier clients, charging a rate that was a percentage of assets, usually about 1 percent a year. Clients often had to have assets of $1 million or more.

BINGO! There you have it. Most of the advisors that are available to the average person make a commission. Because they are making a commission they are NOT working on your behalf!

That is one area that we focus heavily on, teaching you how to invest. We'll never tell you what to invest in. We'll never give you a 'hot' stock tip. We won't tell you which companies to use or not use. What we will do is give you the knowledge needed to make your own, intelligent decisions.

Now, take a deep breath, go out and have a great and abundant day! Give us a call if you'd like, we'd love to talk with you!