Recent entries by Karen H. Wimbish

When I first met my husband, I remember being impressed that he was only 27 but already owned his first home. In the years since we've been married, we've built four homes together (yes, we stayed married through it all!) and always had a profit after each sale... until 2011, when we relocated to Charlotte. We all know how devastated the real estate market has been for the last 3 years, so we were fortunate to be able to sell our home after seven months on the market - and the longer you are trying to sell your house, the more accepting you become to lowering the price to a number you would never have considered when you first listed your home.

But buying a house in today's market can be daunting. It used to be a no-brainer: Buy, don't rent, so that you can gain the tax benefits and appreciation on your investment. Real estate has long been considered a prudent means of diversifying your assets; many used to see their equity as their "retirement nest egg". But in today's market, people in their 50s or older really have to pause and think about whether or not the investment makes sense for them.

Initially, it was very strange yet freeing to no longer have a house, with a mortgage, upkeep expenses, and grass to cut. We put most of our furniture and possessions in storage, keeping just enough to furnish the apartment we leased until we could really decide on our next step. Did we want to reinvest in real estate, given the material downturn? Was it time for a condo or townhome? Should we stay in the apartment and search for our ultimate retirement home? Is this the right time to buy for the right reasons or should we wait longer? These are among the questions my husband and I grappled with over the six months following the sale of our house, which marked the longest period of time we had rented, not owned real estate in our married life.

We found that as you near retirement, the real estate decision gets harder instead of easier. And it wasn't just about the real estate market. There were more personal issues. Do we take this opportunity to downsize? If so, what do we do with all of our furniture and family heirlooms currently in storage? Many of our furnishings were handed down from previous generations and carry significant sentimental value. There are items and belongings we want to pass on to our children, but they're not settled enough at this point to use or store these items.

Another "downside to downsizing" is determining where everyone will stay when they come to visit from out of town. At times like Thanksgiving and Christmas when we all spend time together as a family, it's important to me that we have enough room for everyone.

Determining whether or not to take on a mortgage close to or in retirement is another important consideration. Many people who choose to downsize are seeking to downsize living expenses as well as space. We could purchase a smaller home or condo and eliminate the need for a mortgage and realize other savings from lower utility costs, lower taxes and less maintenance.

When we were younger and raising our family, to buy or not to buy was never even a part of the decision making process. It was all about where to buy, how much room we needed and what the schools were like. So what to do?

We eventually made the decision that we wanted to downsize some but weren't ready for the condo or knew enough yet about where we might want to have our retirement home. We also decided to buy a house large enough to comfortably accommodate our "stuff" as well as our kids and grandkids when they come to visit. Only time will tell if we made the right decision but for us it feels just right. And we are now in unchartered territory, buying a 75 year old home close to the city center which needs some renovation!

It was an interesting process though. We found ourselves weighing a whole new set of criteria, balancing both rational and emotional factors that we'd given little consideration to before.

Have you recently been in a similar position--trying to determine if downsizing is the right choice or if you should rent instead of buy in or nearing retirement? I'd love to hear your thoughts and insights.

My mother loved Evangeline, A Tale of Acadie , the epic poem by Henry Wadsworth Longfellow, published in 1847. The poem, set in Nova Scotia, follows an Acadian girl named Evangeline and her search for her lost love Gabriel.

My mother had a bit of Evangeline in her. She loved to walk and hike with no particular destination in mind, purely to discover what was on the other side of the next hill. My father's health after he retired did not allow him to do much more than walks around the neighborhood. While my mother was devoted to his care, I knew she missed this favorite pastime of hers.

Shortly after my father's passing, I told my mother to pick a place and I would take her hiking. And so she chose Nova Scotia, having read the story of Evangeline while in high school in Colorado, where she was born and raised. So on the first anniversary of my father's death, we found ourselves in Acadia National Park hiking through the cool, misty forests which are accessible only on foot. It was such a special trip for me on a number of fronts, but having grown up with five siblings, it was rare for me to have "alone" time with my mother and the talks we had on our hikes were so very precious to me, even today.

And so my mother and I began what would become a series of memorable trips together over a ten year period. I took her hiking in the Canadian Rockies, the Grand Canyon and Italy, among others, sometimes joined by one or two of my sisters or a special friend. But we didn't need an exotic location to enjoy our time together. A simple walk around the block yielded equal pleasure, sharing each other's company and conversation.

It was on a hiking trip in the Czech Republic with one of my sisters that we noticed my mother seemed to be having the issues that would shortly afterwards be diagnosed as Alzheimer's, and two years later she required full time care in a nursing home. But almost to the end, she would walk the sidewalks and halls with us, striding out even when she had lost her ability to communicate. After she passed, I took great comfort in the memories of our special times together on the trails. Now when I think of her, the time we spent walking and hiking purely for the sake of moving forward to discover what lay ahead are among my most cherished memories.

I have to say that one of the things I am most thankful for is that we didn't put these trips off until "one day". We took time while her health was good (she could cover 10 miles easily even as Alzheimer's was claiming her mind) to take some trips of a lifetime.

So I guess I'd say that while I think about what retirement will look like for me, I don't want to put everything off until then. I want to enjoy my life today rather than deferring things until after retirement. I don't know what's over that next hill, so I'm going to enjoy the hike as much as reaching the destination.

What about you? Are you finding it possible to incorporate new experiences and learning today rather than "someday"? How are you thinking about your life pre- and post-retirement?

The Wells Fargo/Gallup Investor and Retirement Optimism Index results were just released saying optimism surged to positive 40 from negative 45 last fall. On top of that good news is the notion that the majority of those surveyed see 'plenty' of opportunity in the US. Despite investors' optimism, a majority of them (58%) feel they have "little" to "no" control over their ability to build retirement savings.

John Papadopulos, head of Wells Fargo Retirement, said, " It's great to see Americans feeling positive, but it is combined with a sense that saving for retirement is not in their control. We don't want that to become a self-fulfilling prophecy because retirement preparation is, ultimately, their responsibility, and we want people to embrace this mindset."

Here are some more bright spots on the results:

Plenty of Opportunity in US

The majority, (71%) of all investors say they are "better off" than their parents were at the same age. A majority of the non-retired (66%) and the retired (79%) say they are better prepared financially "for retirement" than their parents were at the same age. Do you feel you are better prepared for retirement than your parents were?

Spending and Investing

A majority of Americans (55%) say they enjoy "saving and investing" versus 42% who describe themselves as a person who "enjoys spending money." Asked about their behavior over the past year, 45% of investors said they have been spending "less money" than they did prior to the recession in 2008. Of those spending less, 74% said their reduced spending is part of a new normal spending pattern while 24% said it is a temporary change. Could this mean that learning to save and invest is getting into people's mindset? Are you spending less/more and investing more/less?

7% Increase in Written Plans among Non-Retired

Although the majority of those surveyed have not created a written retirement plan, three out of ten (31%) of the non-retired respondents and just over a third (38%) of those retired said they have a "written" plan for retirement. In February 2011, 24% of the non-retired attested to having a written retirement plan. Of the non-retired who do have a written plan, 66% said they have either a "great deal" or "a lot of confidence" they "have a good estimate of the money needed to live comfortably" in retirement, versus 38% of those who do not have a written plan or any plan at all.

It feels like investors are starting to feel better about the markets and understanding the need to take responsibility for one's own retirement. For those beginning this journey, by taking a few simple steps on spending/investing and having a written plan for retirement, one's confidence on the future will increase. How confident do you feel about your ability to retire in comfort?

In my last post, I talked about how 70% of American workers will fund their own retirement¹, primarily through employer-sponsored defined contribution plans like 401(k) and 403(b) plans. What you may not be fully aware of is what this means to us as women.

Because we are living longer than ever before, a 65-year-old woman today can expect to live, on average, another 20 years. In fact, current trends suggest that 12% of women who reach age 65 will live to be 95². (I just completed an on-line tool that gave me my estimated life expectancy of 91!)

Until recently, financial advisors estimated that most retirees would need 80% of their pre-retirement income for each year in retirement. But with increases in longevity and escalating health care costs, many are raising that recommendation to 100% of pre-retirement income for women.

That may seem like a lot but I know from personal experience how quickly circumstances can change in retirement. My experience with my mother who was diagnosed with Alzheimer's and eventually required long-term care provided invaluable first-hand knowledge. Her monthly expenses in retirement more than doubled once she required round the clock care in a nursing home. It's not something we want to think about in terms of our own futures, but this may be a reality for many of us.

The good news is that while we can't predict the future, we do have the ability to plan for certain scenarios or potential outcomes. The best case scenario is usually when you begin saving as early as possible. I've included an example here that I find particularly powerful, using "Jennifer" and "Valerie" to illustrate what an extraordinary impact saving early can have over time.

Jennifer began saving $500 a year at age 22. When she turned 30, she stopped contributing to her savings account but left the full amount in the account until she retired at age 65. She contributed a total of $4,500 over that 9 year period.

Valerie didn't begin saving until she was 40-years-old. She also saved $500 a year. Valerie saved the same amount annually for a period of 26 years for a total of $13,000.

To keep things simple, both women in my example earned a hypothetical 6% return over the time their monies were invested. By age 65, Valerie's account value was $33,628, more than double her $13,000 in contributions. Jennifer, on the other hand, saw her account value grow to $53,303, or nearly 12 times the amount she invested over the course of 9 years.

That's the power of compounding. It's more about how long you save it than how much you save. Because earnings in this hypothetical example compounded over the 43 year period from when Jennifer made her initial investment at age 22, and she did not withdraw money from her savings, she realized exponential growth. Valerie also realized significant growth through the power of compounding but did not have the amount of time on her side that Jennifer did.

Time is truly your best friend when saving for long-term goals. The earlier you start the greater the potential to reach your goals. Time can also help you ride out market volatility which is why financial advisors generally recommend that younger people, 10 years or more from retirement, consider a more aggressive allocation than people nearing or in retirement.

When it comes to retirement planning, time is not just your friend, it can be your BFF.

I'd like to hear your thoughts on the hypothetical example provided. Did it surprise you that Jennifer saved for only 9 years, yet realized an account value more than double Valerie's? Does this example inspire you to begin saving now or to begin saving more?

Calculations used in the example are for illustrative purposes only. They are based on hypothetical rates of return and do not represent investment in any specific product. They may not be used to predict or project investment performance. Unless noted, charges and expenses that would be associated with an actual investment are not reflected.

¹McKinsey & Company, 2011.

²National Women's Law Center

Employer sponsored retirement plans are among the best options available for saving for retirement today. But here's the rub: participation in defined contribution retirement plans like 401(k) plans is voluntary. So while you don't have to participate, here's a compelling reason to do so: nearly 70% of American workers are now responsible for funding their own retirement.*

Why is this important? In 1980, 60% of American employers offered a defined benefit (DB) pension plan. DB plans are funded by the employer and can offer a reliable income stream in retirement if you meet certain vesting requirements. In 1980, 23% of employers offered both DB and defined contribution (DC) plans. DC plans allow the employee to contribute a percentage of pay on a before-tax basis up to a set maximum each year. Some employers provide matching contributions as an incentive but are not required to do so. Only 17% of employers offered DC plans only in 1980.*

By 2010 the tables had turned dramatically. A full 69% of employers now offer DC plans only, and a mere 9% offer DB plans only, while 22% of employers offer both. That means that nearly 70% of the American workforce is now responsible for funding their own retirement.* That's huge!

It's especially important for young people to start saving and taking advantage of a 4-1(k) plan if one if available to them. And they need to start saving with their very first job, if not in a 401(k) plan then through a contributory IRA. How much you should be saving for retirement is not simply a matter of what can you afford to save today, but how much you think you'll need to meet your goals for retirement. You should take into consideration other income sources that may be available to you like Social Security, your anticipated life expectancy and other factors.

Beyond Today provides a broad variety of tools, calculators and resources to help you develop a plan to meet your needs, take manageable steps toward your goals and adjust your strategy over time. Take a few minutes now to check these out. Then use the comment section below to let us know which resources you found most useful.

*McKinsey & Company, 2011.

Have you ever procrastinated taking action on something because it just seemed too complex or outside of your comfort zone? I'm guessing most of us have at one time or another. Yet complexity should never be an excuse for not moving forward, especially if the situation could have serious financial repercussions.

Here's a good example. When my mother passed away this summer, she had an IRA in her name that bypassed her trust. Her six children (me and my five siblings) were the beneficiaries. The proceeds in this situation are distributed directly to the beneficiaries in equal shares.

But here's where it gets complex. In the case of non-spouse beneficiaries on an IRA, each beneficiary should open what's referred to as an inherited IRA. Once opened, they must, at minimum, begin taking "required minimum" distributions based on their own life expectancy numbers. These distributions are taxable as ordinary income but are not subject to the IRS early withdrawal penalty. It also matters whether or not the original IRA owner had begun taking the required minimum distributions. What made our situation even more complex was that one of my siblings lives outside of the country and only had a 90-day window of time under regulatory guidelines to initiate the rollover to an IRA in her name.

Since I'm the one who is executor of my mother's estate, it fell to me to help my siblings understand how this works and encourage them to open the appropriate IRAs in their names, allowing the distributions to be rolled over accordingly. To make it even easier, I arranged for a financial advisor to help them initiate the rollovers, help calculate their required minimum distribution amounts based on their individual life expectancies, and answer any additional questions they may have.

Sounds simple? Well, one look at the forms absolutely paralyzed them all. My sister residing in Ireland went into the office on a visit to the USA to get help with her documentation, and her account was opened relatively quickly. But then her 90 day clock started to tick.....

Despite repeatedly encouraging the others to get this done and use the resources provided, (okay, I might have been just a teensy bit bossy at one point, but this was important!) it wasn't until my Irish sister's timeline was running down that the other four FINALLY decided to take my advice and get some help. One sister then called the financial advisor and found how much easier it was with help from experts. Fortunately, once she told the others how simple the process was with help, they got on board as well.

Life is always going to present us with complex situations and circumstances. But ignoring them or disengaging isn't the answer. Instead, seek competent help or guidance and face the situation head-on. In the end you'll not only be relieved that you took action and it's behind you, you may potentially reap greater rewards.

That's certainly true where planning your retirement savings and retirement income strategies are concerned. No matter what your age, allowing yourself to freeze and do nothing because something seems complex or overwhelming will only hurt you in the long run. Seek out resources available to you through web sites like Beyond Today or from a financial advisor. There are numerous individuals and organizations available to help you no matter what your financial situation or challenge.

Working with a financial professional can help you understand how to break complex matters down into simple, actionable steps that make sense to you and don't overwhelm. So no more using complexity as an excuse. Get the help you need to improve your choices of living the life you want in retirement.

Tell us about your experience planning for retirement. Have you ever felt frozen in place because it seemed too complex? Did you take steps to get the help you needed to take the mystery out of the process? If so, what changed your mind and lead you to take advantage of the resources available to you?

We recently announced the Wells Fargo Affluent Retirement Study and learned that affluent Americans are very concerned about their retirement. From the results, we find the rich versus poor narrative in the U.S. is more complex than we might expect, with fears and concerns about retirement felt along the income spectrum. Even among those considered 'well off,' many seem to fear a sharp drop in their post-retirement standard of living due to insufficient retirement savings.

I know this may sound basic, but I'm certain that if those surveyed had a retirement plan in place, they may feel a lot more confident. A basic plan should consider a budget, how much savings will be withdrawn each year, life expectancy and how long the savings will need to last.

What was more striking was the breakdown by gender. Despite the fact that women hold half the high paying managerial positions in the U.S. workforce and they make a majority of household buying decisions, women continue to lag behind men in their confidence in preparing for retirement and this is particularly true for single women. Twice as many affluent women as men see themselves working until at least age 80. Can you envision your life at 70 and still working? What do they think you'll be doing? Would you stay in your current job or seek to follow a passion or hobby?

Click here to read the press release.

A number of years ago when my mother was first diagnosed with Alzheimer's disease, our family reached a difficult decision - she could no longer live independently in the home that she had shared with my late father for the prior 26 years. The downsizing of her life was overwhelming to her and sorting through her possessions was a task that she dreaded. My brothers and sisters and I worked hard to help her through this very painful journey, and it was a labor of love that would have a lasting impact on me and my siblings. She decided to give away some of the things that meant the most to her in life for the purpose of preserving her most precious memories.

While Alzheimer's eventually claimed her memory and her life, it was my mom's decision to pass on her dearest possessions early on that succeeded in cheating the disease from stealing the stories and memories that meant the most to her. This allowed her to pass on her legacy on her terms.

My mother was born in the year of the Great Depression and grew up on a farm in Colorado, the seventh of nine children born to German immigrants. Her upbringing was simple, her earliest memories pulling weeds in the sugar beet fields when she was only four years old. So she was a frugal and resourceful woman, a trained nurse, master seamstress, queen of making casseroles out of most anything, and never one to covet possessions. But she did have some things, gathered over the course of her very rich life which carried great meaning to her. As her children, we wanted to know the stories behind those most cherished items, so while still in the early stages of the disease, my mother sat the six of us in a circle around those items. In birth order, we selected one item at a time, and then listened to her story about how it came to her. Many of the items had no significant monetary value, but all had tremendous emotional and sentimental value to both my mother and in turn to each of us.

I chose a necklace that my father had given to her when they first married, along with a hand-crocheted table cloth made by her mother. While neither of these items would have much value to anyone else, they both had tremendous value to my mom and now to me. And that emotional value was increased exponentially with the opportunity to hear her stories and life experiences in her own words.

These items formed the threads of our family memories and my mom's unique legacy. More importantly, upon my mother's passing, they were no longer simply items pulled from a drawer. They're part of a living history to be passed down to our children and grandchildren, accompanied by my mother's words shared with us during a very poignant weekend.

For my mother, the opportunity to ensure these memories lived on gave her a tremendous sense of relief. To her children, the experience was simply priceless.

How has your family taken similar steps to preserve a legacy and ensure family memories are passed along from one generation to the next?

In a recent post I talked about my thoughts and experience after attending my 40th High School Reunion, Class of '71. One of my biggest "ah-has" was the realization that we are all entering the last third, not last half of our lives, and time is moving on.

Not that there's anything wrong with that. Like me, I'm sure most of my peers are thankful to have gotten this far and look forward to another 20 or 30 years. To be clear, it's not about getting older; it's the realization that life is no longer deferrable.

Nearing retirement is a milestone in its own right. It's a time when you realize you can no longer put off dreams and goals. If there's something you want to achieve or accomplish, you need to at the very least make concrete plans to do it now. When you're young, in your 20s and 30s, it feels like life will last forever. Eighty years old is still 50 or 60 years away. That's a lifetime in itself! However, when you're nearing 60, you realize that 80 is looming much larger.

Many of my friends are now thinking about their lives and careers with that in mind. They are beginning to leave long-standing, high stress jobs and exchanging them for ones more fulfilling or energizing in their newness. I recently had dinner with a dear friend and her husband, both classmates of mine from college. He had very recently left a position he had held for many years, and moved to a small start-up in a similar profession. Hearing him talk about jumping up every morning at 5 am, anxious and excited to get to work in a way he hadn't felt in years, was inspiring. I remember thinking, "there's still time for us to live our passions!" But like anything else in life, you need a plan.

One of the ways to make sure you will have the chance to do something similar is to start preparing yourself for the day when you spend your time around your passions. The ability to take a chance to follow your dreams in a lower paying job, or a volunteer role, may be predicated upon having other sources of income to supplement your financial needs. I keep reminding my children, teammates, and frankly, anyone who will listen, that you can't start too early. The compounding effect of saving over many years has a dramatic impact on how much you're able to accumulate for future income needs.

No matter where you find yourself on your retirement journey today, however, remember that it's never too late to begin making up for lost time. Revisit your dreams and life goals frequently and you'll find the motivation to save more or make necessary adjustments along the way. The more personal you make it, the more likely you'll find ways to fund the things you want most in life and for your retirement years. Here's an easy plan to follow: keep increasing deferrals to your employer's savings plan if you have one until you reach the age where life is no longer deferrable. That will help you to not only be better prepared financially, but mentally prepared to live life on your terms for the last third of your life.

For more ways to take realistic steps toward your goals in life, visit the Tools & Checklists tab on the Beyond Today site.

What do you see yourself doing the last third of your life? If money was no obstacle, would that have a significant impact or only a slight impact on your answer?

What a difference a couple of decades can make! I recently attended my 40th high school reunion - the last one I went to was my 20th, and there's a lot that happens in a 20 year span. While I was really looking forward to it, I found myself feeling a little sad on the way home, which is certainly not an emotion I was expecting. In the days since, I've thought a lot about why that was.

I think some of it was what I'd call life and the passage of time. At my 20th high school reunion, my classmates and I were in the prime of our lives and career - most of us were feeling young, enjoying life and working toward our life goals. We were in our late 30s and still had a lot of living ahead of us. Most of our parents were still with us and many of us had small children or teenagers.

Fast forward 20 years to the 40th reunion. The first thing I realized was that I couldn't recognize many of my classmates. Several people had our old yearbook, which I hadn't looked at in years. As I flipped through the pages, I recalled many of my classmates looking at their senior pictures; but I sure would have struggled to pick out very many of them today without name tags! While there were a couple that I still recognized, many looked like strangers to me. The aging process is funny that way. The physical aspects creep up on you gradually so you don't notice all the little changes over time in yourself and those you spend time with regularly. However, seeing the changes in people my age that I hadn't seen regularly or at all over the past 20 years was eye-opening.

The hard truth is that we've all changed a lot, and not just physically. Many of us had lost one or both parents since we last met, some had been laid off or displaced, almost all were empty nesters, and instead of talking about our parent's health problems, we were talking about our own. And almost 30 of our classmates were no longer living.

I suddenly realized that "we were it." As a generation we are becoming the matriarchs and patriarchs of our families. We are community, civic and business leaders; church elders, grandparents and, for some, retirees. And the "somedays" no longer stretch as far out ahead of us as we always thought they would.

It felt strange to suddenly realize we are the generation that younger generations now look to for strength, guidance, leadership, wisdom and experience, much as we looked up to our parents' generation in the past. That's quite a responsibility if you think about it, and not a little daunting.

Has a recent event or milestone in your life caused you to reflect on where the years have gone and where you find yourself today? What was the catalyst for you and what revelations did you find most surprising?