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The Government Shutdown

As you’ve probably heard by now, our government has officially shut down. After weeks of failed negotiations and threats from both sides of the aisle, the deadline for coming to agreement on funding various government agencies has passed. With today being the first day of the shutdown, and seemingly little progress toward Congress passing a funding bill, you likely have many questions about how all of this could affect you.

First of all, if you are one of the 533 members of Congress, don’t worry, everything will be OK. You will still get paid regularly throughout this whole ordeal and your congressional paycheck will not be interrupted, even though you couldn’t do your job and affected hundreds of millions of people. As the old saying goes, “if at first you don’t succeed in passing a funding bill, make a half-hearted attempt to try again, point your finger at the other side, and then shut down the government.” Now, if you’re not one of the lucky 533, then here are some points to keep in mind…

To start, it’s important to realize that a shutdown isn’t exactly what it sounds. If I was to compare it to a computer, instead of being completely turned off, the government has entered screensaver mode: it’s still on, just not really doing all that much. Some government agencies like Department of Housing and Urban Development, Environmental Protection Agency, and NASA, for example, will have to furlough most of their employees while keeping just a small percentage on board, who are absolutely indispensable. Other agencies will have to scale back some of their work, but will still continue to provide the most essential services to the public. For example, the Social Security Administration will still work to make sure that benefit checks are sent out, but won’t be able to help with less urgent services, like replacing Social Security and Medicare cards, or issuing proof of income letters. The Department of Health and Human Services will have to operate on only about half of its workforce. Just imagine if the company you work for had to furlough half its staff – what quality of service would the customers receive?

On the other hand, the Postal Service will still remain open because it has a completely independent source of funding and will not be affected by the shutdown. This is something to keep in mind in case you’d like to stroll over to your local post office branch, slap a stamp on an envelope, and send an angry letter to your congressman (or congresswoman) to get their act together!

Whatever your point of view (and whoever you think is to blame) the bottom line is that this stalemate within the walls of the Capitol will have significant impact on the country, especially if it lasts more than a few days. Depending on how long this lasts, the impact on the economy to be in the hundreds of millions of dollars. But more importantly, this raises a question of what will seniors, and those nearing retirement, do if the shutdown becomes a prolonged debacle? Sure, Social Security checks may keep coming for now, but what if you lose your benefits card? What if you need to schedule a disability hearing? What will happen to the services offered by the State, that depend on federal funding to operate?

To me personally, this is proof, once again, that when it comes to the well-being and security of you and your family, you cannot depend on anyone but yourself. Our legislators have shown over and over that they can’t agree with each other or learn how to compromise. They’ve taken the country to the brink more than once in the last several years, and you have to ask yourself: “Are these the people I would like to trust with keeping me safe in my retirement? Will they really do everything they can to make sure that I and my family are taken care of and that I will receive the benefits I was promised, and for which I paid taxes?” If your answer is “yes,” then no reason to worry. Keep your head firmly buried in the sand, and keep your fingers tightly crossed. Remember, if you don’t see it, then it doesn’t exist, and you have nothing to worry about.

But if you’d like to be the one in control of your future, if you’d like to know that you can keep yourself and your family financially secure during difficult times, start taking steps today to build a better future for yourself, so that you’re not so dependent on the whims of Washington. Start budgeting better and setting aside more money for retirement. Contribute more to your 401(k) and build an emergency fund in a savings account. Review your retirement portfolio regularly to make sure you’re not exposing yourself to too much risk for your age. Every little step will help you build a more secure retirement, and will help you take better care of your family in an emergency.

Now what are the possible implications of the government shutdown on your retirement savings? Attend my workshop. Don’t rely on the government! Click here to register.

Crystal Oculee No Comments

Persistence in Retirement – It’s all about believing in yourself!

Diana Nyad - Persistence!

You may have already heard the recent news about Diana Nyad’s huge achievement of swimming from Cuba all the way to Florida. This is a fascinating story because of how challenging this was for Diana, and the amazing achievement it represents. Think about it… She is 64 years old, and she covered 110 miles of ocean by swimming for almost 53 hours! To top it all off, she was in the water without a shark cage, and had to deal with jelly fish stings and other hazards.

But what’s really amazing to me about this story, is the incredible amount of persistence this woman has. The first time she tried to make this trek was in the 1970’s, and had failed at it four times! But she just kept trying. She kept pursuing her goal. Think about it, the first time she tried and failed, she was in her late 20’s. Most people would have given up eventually. Especially as we get older, we start to give up on some of our dreams because we feel like it’s just too hard to achieve them, or maybe we just missed too many previous opportunities. But that’s absolutely the wrong attitude, and Diana’s accomplishment is a great example of where persistence can take you.

When you look at what she did, the question to ask is how she could have swam for so long, and how she could put up with such a grueling ordeal. Is it because she’s in great shape and trained hard? That’s definitely part of the equation. But there’s no way she could have accomplished this if she didn’t believe in herself. There’s no way she could have stayed in that water, just pushing forward, minute after minute, if she didn’t believe in her heart that she could do it. And that’s what many of us forget on a daily basis. Whatever dreams and goals we have, we just have to believe in them wholeheartedly, and work toward them step by step, little by little.  

This kind of attitude can make a huge difference in anything you do, including building a secure retirement for yourself. Whether you are already retired or are thinking about it, you have to realize that it’s never too late to start working toward a better future for yourself. It doesn’t matter if you’ve had setbacks before. It doesn’t matter if you lost a huge chunk of your savings in the market crashes. And it doesn’t matter if you regret not having set more money aside in previous years. Do you know why? Because all of that was in the past, and you can’t do anything about it anymore. So you accept any mistakes you may have made, you learn those lessons, and you move forward. Why? Because unlike trying to fix the past, you actually CAN do something about your future. You can save more NOW, you can budget better NOW, and you can plan better NOW. So the next time you’re feeling a little down, or maybe a little discouraged about not having a large enough nest egg; cheer up, and think of all the people like Diana who achieved something seemingly impossible. And then realize that the task before you is actually not as impossible as it seems! Looking over your bills on a monthly basis, cutting spending, setting aside more money for the future, and building a good retirement for yourself may be tough, but it’s WAY easier than trying to swim 110 miles for 53 hours, with jellyfish stinging your face all the way. 

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Working after retirement – It’s Harder than you think!

Ok, so you know how I’m always talking about the fact that saving is important because you never want to run out of money in retirement? And you know how I’m always saying that you want to spend your retirement years doing the things that you love, rather than having to settle for a minimum wage job just to make ends meet? Well, there’s a really good reason for that… You see, the idea of what it means to retire has changed drastically over the last decade.

It used to be that the average person worked three or four decades, earned Social Security and pension benefits, and just retired at the age of 65. Things were simpler, retirement planning was easier, and medical care didn’t cost as much. But we don’t live in the same America anymore. People are living longer, medical costs are skyrocketing, and Social Security is facing major issues, which include potentially running out of money in about 20 years. Unfortunately, the financial troubles of the last decade or so didn’t help either… Ruined nest eggs, layoffs, and the slowing in our economy all added to the mix of troubles.

But there’s an even bigger problem looming, and few are taking steps to address it seriously. The wave of retiring baby boomers just started to grow, and over the next decade or so, it will become a tsunami. Like it or not, America isn’t just facing a fiscal cliff, we’re facing a retirement cliff, when an entire generation of retirees will have to deal with a brand new reality of lower pension benefits, longer lifespans and skyrocketing medical costs.

Over the last few years, I started to notice an interesting trend when talking to women about these issues. Many of them are seriously considering continuing to work part time after retirement, so that they can supplement their pension and Social Security benefits. But what I’ve found over and over again, is that they have completely unrealistic expectations of the future! Many of them are confident that they will just get some nice little part time job somewhere so that they make the extra income they need, while still being able to enjoy themselves. But they don’t realize (or maybe don’t want to realize) how difficult it could actually be for a retiree to find a decent part time job.

For example, there’s age discrimination to deal with, there is a lack of technological skills that will likely lower your chances of being hired once you already exited the workforce, and you will also probably have to take a huge pay cut from what you were making before you retired. If your plan is to work after you retire, you absolutely have to keep this in mind and be realistic about your future.

For example, a recent USA Today article showed staggering statistics on this subject! According to the article, 60% to 80% of pre-retirees are sure that they’ll work after retirement. Yet only about 18% of people over 65 are actually working! Realistically, what do you think happens to all the other ones who thought they’d find a job, but didn’t? Did they find a mini fortune and no longer need to work? Or did they have to drastically change their lifestyle just to make ends meet?

That’s why I always say: you don’t want to depend on anyone during your retirement, except yourself. Not your Social Security benefits, not your children, and not the hiring manager at a company where you want to get a part time job after retirement. The only one you can depend on is yourself, so make sure to take the steps that you need to protect yourself, and don’t wait too long. Remember, when it comes to building sufficient income for yourself during retirement, time is one of your biggest allies.

Crystal Oculee 1 Comment

Having Enough Retirement Income = Living Worry Free

I saw a great video on CNN the other day, in which Money magazine’s George Mannes picked random people walking around in New York and asked them about what their ideal retirement would be like. As I was watching this video, I saw the commonality of what everyone wanted, no matter what their age was. Most people talked about family; spending time with the grandkids, being able to be comfortable and not worrying about tomorrow so that they could focus on their families. Pretty much everyone he interviewed would say that they just wanted to enjoy time with their loved ones and be surrounded by love and warmth, and not to worry about money! One guy summed it up really nicely by saying that an ideal retirement isn’t just about the financial comfort of being able to pay any bills and whatever expenses you have, but to do it without ever having to worry about where the money is coming from!

How true is that? Isn’t the ideal retirement all about having the right amount of income and not to worry about where your money is coming from?   

But as I was watching the video, I noticed one interesting thing. Most of the young people who were interviewed would say that retirement is too far away for them to think about it, but at the same time the people who were older kept saying that they were indeed really concerned! Do you see the problem here? When people are in their 20’s and 30’s, they just don’t plan all that far ahead. And by the time they’re a few years away from retirement, it becomes too difficult to do anything about their situation with the limited amount of time and money they have.

To me, the key is to teach the next generation to start planning for their retirement income early.  And I’m not just talking about young adults in their 20’s but people in their 40’s! It’s amazing how many 40-something year olds consider themselves far enough from retirement to not be worried! Well the answer is to start thinking about it now! 

So whether you are 30, 50 or 65, start thinking about your retirement income today, because an ideal retirement is one that has all the income you need, without headaches or worry. And like all worthwhile things in life, it takes time to build it well.

Crystal Oculee No Comments

Retirement Savings & FGA Charges – Are your retirement savings being short changed?

If you could easily save $200 per year, with very little effort, what would you spend it on? “$200 per year?” “Little Effort?” I know, I know… The only place you’d usually see those two words in the same sentence is on a late-night infomercial. But seriously, what if you could have an extra $200 in savings for retirement, by spending just a few minutes a month looking at your bank statements, and then a few more minutes on the phone? It would totally be worth it, right? Well, if you want to know what the magical formula is, I’m referring to eliminating “black hole” charges (or “FGA Charges”) that hit your account directly, without any benefit to you!

Let’s look at it this way:  FGA Charges are “Forgotten, Guilty or Automatic” charges that are withdrawn right from your account without requiring your authorization each time!

They usually hit your wallet because of three main reasons! And these are reasons, by the way, not excuses!

1.  You forgot you signed on for the membership/service
2.  You pay them because you feel guilty
3.  They are automatic renewal charges

Let’s discuss the “Forgotten” ones… For example, you were applying for a store credit card, decided to get the free copy of your credit report and so you checked that box that asked you if you wanted to sign up for a credit score membership. Of course, you intended to cancel the membership as soon as you got your free credit report, but life got in the way and you just forgot about it, so voila, $30 was magically withdrawn from your account. Or maybe you were on a Napa weekend getaway, and signed up for a wine club to receive monthly bottles of wine. And of course, you intended to cancel that too, after trying some wine, but then forgot about it, and found yourself with a brand new, non refundable, wine membership for a year!

The “Guilty” charges are even worse! For example, you know you need to go to the gym to be healthy, and so you sign up for a gym membership. After the first few weeks of intense exercise, you kind of skip a day, and then two days, and then a few weeks… Then you realize that it’s been two months since you went for a workout… But yet you still pay your membership. You just refuse to cancel because you feel guilty since cancelling will mean that you admitted defeat and that you accept the fact that you won’t go to the gym! And so you keep being charged every month without any benefit to you at all, but you don’t want to feel guilty so you keep the membership around.

Now, let’s discuss automatic renewals that have a tendency to stick around for years! You sign on for a new membership somewhere, like Netflix, Amazon, Fruits to your door, a new line of hair care products all because there’s a free trial, and all you have to do is unsubscribe. But you never do… Why? Not because you forgot, and not because you feel guilty, but because the monthly charge just isn’t big enough to notice. So you don’t feel so bad, and you might even use the service once in a blue moon – just to say you’re not wasting money. But at the end of the day, you don’t really get much of a benefit from it. However, you never cancel because you just don’t want to take the time to find all the account information and unsubscribe. So you figure you’ll do it next week, or the week after that – all the while these charges just keep compiling and hitting your bank account, and after months and months, they really add up!

All these charges are adding up to billions of dollars every year in wasted money! Americans are basically throwing away $14 billion a year on stuff they don’t actually want, and probably completely forgot they’re paying for. Just think, consumers just like you and I can forgive a few dollars here, maybe $10 there, or maybe even $15 once in a while and many people don’t take the time to review account statements carefully or dispute unwanted charges, because it doesn’t seem like a large enough amount of money to stop and deal with! It’s your decision to let someone take your money without getting anything that’s useful to YOU in return. Instead of that money going toward something you want, or toward your retirement savings, it just goes in the trash.

There’s a reason I tell my clients to keep track of all their bills in the Money Diary, or at least in a notebook or excel sheet. I mean every single charge that hits your account, because that way you’re actually going through every single charge and making sure you’re not spending on things you’ve completely forgotten about! We cannot change our habits unless we know what it is that we are doing wrong! Human nature is such that unless there’s pain, we won’t make changes for the better. And seeing a poor $10 bill being ripped from your account statement regularly can be painful. But it only works if you sit down and review your statements carefully!