Retirement Planning: How We Live, as well as How Much We Need

Sufficient savings, diligent budgeting, and smart financial planning are of course crucial for a comfortable retirement. Adequate income and assets are essential for the basics— food, shelter, and healthcare—and to maintain one’s lifestyle. However, money is by no means the only important consideration in retirement.

During a recent conversation with a retired couple we serve, they shared how their community organizes an abundance of volunteer activities that offer opportunities to facilitate community engagement and encourage cooperative solutions to shared social barriers. Their enthusiasm illuminates the qualitative concerns that are central to resilient investing and highly desirable for what we might call “resilient retirement”: engaged communities, adaptability, and prioritization of the common good.

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Catastrophe Planning in Real Estate

As Robert Muir-Wood says in The Cure for Catastrophe: “Natural disasters are in fact human ones: we build in the wrong places and in the wrong way, putting brick buildings in earthquake country, timber ones in fire zones, and coastal cities in the paths of hurricanes.” Global climate change is already amplifying freak weather events, adding tricky considerations to today’s real estate decisions: unprecedented droughts, raging wildfires, and superstorms with their disastrous floods.

How is the smart, responsible homebuyer/homeowner to reduce exposure to such risks? No one would disagree that protecting one’s life, family, and assets is a worthy goal, but planning and preparation don’t come easily to everyone.

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Resilience and Disaster Mitigation

Recent catastrophes provide an opportunity to practice a future-planning mindset.

It’s obvious that significant Earth changes are occurring these days—in the past month alone, we’ve seen several major earthquakes, ravaging fires, devastating hurricanes, and torrential flooding. When we wrote The Resilient Investor a few years ago, we anticipated future volatility and uncertainty due to climate change and other factors, but we didn’t know how immediately prescient our insights would be. The September trifecta of superstorms in the Atlantic provided a stark reminder that as resilient investors, we must incorporate disaster mitigation, in addition to disaster preparation, into our financial analysis and planning—for there are few places in the world that will be truly “safe” from the impacts of climate change.

To this end, our top priority must be a bold adjustment in how we produce and consume energy. The good news is that businesses and local governments had already begun to take steps in this direction before our current, climate-change-denying Administration took power. In fact, despite a near-total absence of leadership by the federal government, Americans are on target to meet he 2025 CO2 reduction targets set by the Paris agreement (1800 million tons of CO2); by the end of 2016, we were halfway there. Carbon-based utility generation is down 25% already, ten coal plants are closing, and many states are setting aggressive renewable energy goals.

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Bike Commuting Pays Financial, Social and Personal Returns

I bought a used bicycle in 2010, for $200. It certainly is not the fanciest, no carbon fiber or titanium, but it’s sturdy and has stood up well for the past seven years. I’ve spent some money on tune-ups, replacing tires, a new helmet, a rack, and gear bags as well. Altogether, I have spent just under $1,000 on it.

Many days I choose to commute to my office on this bike, an eight-mile round trip, which takes me about forty-five minutes total. Having done this for a number of years, that’s about 11,000 miles of travel on this bike on trips where I would otherwise have been driving.

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Financial Planning for Dementia

None of us wants to think about the possibility of losing our ability to make sound financial decisions, but many of us eventually will, owing to an accident or illness, especially some form of dementia. What would happen, for example, if in a period of impaired judgment you started taking large amounts of money from your accounts or were enticed to fund a get-rich-quick scheme? Is there anything that can be done to help protect you and your assets?

An easy first-line defense is the NI Sharing of Information Consent Form, which you can file with your advisor. The form gives your advisor and Natural Investments permission to contact designated people if your advisor perceives that a request or behavior is uncharacteristic of you and your goals. An unusual request does not necessarily signal a loss of capacity to make decisions, and in all likelihood the form would never be needed. But should the situation occur, a quick double-check by your adviser with someone whom you trust could prevent a potentially significant mistake. Your advisor can help you choose the best person for this role.

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Coming to Grips with Sudden Wealth

Did you ever know someone who was an environmental advocate, or your locavore activist friend, or a deeply religious soul—fill in the blank—who lived their lives with their values-flag writ large? Unless you know them very well, you might not be aware if they’ve had decisions to make about their money life that have challenged those core values. Spoiler alert: not all these stories have happy endings for these caring souls!

Kristine unexpectedly inherited a significant sum after someone she knew died and left her money (all names are pseudonyms). She is an aggressive activist leader, nationally known and engaged in growing the local community. She has steadfastly moved her money out of mainstream investments and into everything from CDFIs to municipal bonds to progressive alternative offerings. She wants decent returns, but prioritizes her core values as she works with her windfall. One of the new-economy heroes! In the beginning, though, it took some time and dedication to find a financial advisor that would “get” her values and support her non-traditional choices. After interviewing a few advisors and not finding the connect she wanted, a friend recommended her fee-only SRI advisor and Kristine finally found the ally she was looking for.

Shawn was a young environmental activist involved in stopping nuclear power plants in New England. As he grew his family, they used electricity as little as possible and added solar when that became financially feasible.

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Appreciating Appreciation

Recently I talked with a client who is considering buying a house in Sonoma County. As you might know, the housing market here in the Bay Area is variously described as “crazy,” “red hot,” “ridiculous,” and “divorced from reality.” A similar situation prevails in many cities and towns across the country. Should a smart home buyer take the leap now or wait and hope for prices to drop? How do you evaluate whether renting or buying is the best strategy?

The comment sections of innumerable personal finance blogs are strewn with the wreckage of the battle—no, the war—around this question. It’s nearly as hot as the debate over whether to pre-pay a mortgage or not (don’t get me started). As a math major, I like to look at the numbers myself, play with calculators, build my own spreadsheets. After hours of work on this my definitive answer is “it depends.” Seriously. It depends on a bunch of factors, but actually pivots on one big factor.

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Post-Election Resilience

After the election, I left the country. Many people had a similar instinct, but no, my doing so wasn’t out of disgust over the election results. It was planned long before, in response to an invitation to speak in Deauville, France at the annual global Womens Forum for the Economy and Society (also known as “Davos for women”). This was quite an affair: 1200 powerful political, business, media, and NGO women from around the world all focused on economic development and improving the status of women. The theme this year was “The Sharing Economy,” which as you know is an Evolutionary investment strategy in The Resilient Investor, so I fit right in despite being one of the only men in attendance.

The timing was good for my presence at the event—resilience is resonating well with people, not just because of global instability, but also because the current political situation, in particular Brexit and the American presidential election. There was even a “What America’s Choice Means for Women” panel at the event that featured Star Jones of The View and Leah Daughtry, the chair of the Democratic National Convention Committee, discussing the battles on the horizon.

So what does resilience mean in this political environment?

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Four ingredients for powerful change in your money life

The new year offers us a burst of energy for starting fresh and recommitting to the changes we’d like to see in our lives. In the Mindful Money Transformation work I do to help clients achieve their money goals, I’ve found that there are four important ingredients that work together to help create powerful change.

#1 – Our WHYs

We start by identifying the goal (the WHAT) but then quickly dive into the WHY. There’s little energy in the “what” until it’s accomplished—the energy to fire our actions is in the “why.” If the goal is to pay off credit card debt, the why might be “to feel free from the stress of the debt hanging over me.” If the goal is to contribute the maximum amount into their IRA for the year, the why might be “to know that I am sending love to and caring for my elder self by what I do this year.”

# 2 – The energy of 90 days

Many of our goals are long term and that’s OK, but it can be overwhelming and hard maintain momentum toward goals that are still out of reach. So looking at the year by seasons can be a powerful lens that really focuses your energy: using the energy of your WHY, look at the next three months (set a specific target date) and set yourself an achievable goal. Shifting to this seasonal focus can really help you keep the momentum.

Let’s look at an example.

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Location. Now more than ever.

Climate change is not a Chinese-created hoax to kill American manufacturing. It’s real, it’s happening now, and all of us need to adapt. Regardless of which climate scenario you think is likely, be it 1° or 2°C in the next 50 years, sea levels will rise, it will be hotter, there will be more droughts, more flooding, more wildfires, more stress, and after a list like that, likely much more drinking. I’m not suggesting you invest in Seagram’s to compensate, though buying a houseboat might make some sense. If you’re going to buy a house, and you know location is the most important purchase factor, what do you do when one of the key elements of location, climate, is changing rapidly? Can you anticipate and plan around climate change?

The real estate cliché about “location, location, location” usually refers to issues like being close to good schools, close enough to work, near family. Clearly these are still important but looming climate change is a disaster on a scale that will make them seem quaint. For many of us, real estate is the biggest piece of our net worth so getting it right is crucial.

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