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Life is a journey.  We either control that journey or it happens to us with no control.  For life to go the way we want, first we need to know where we’re going & what we need and want to accomplish while we’re here & before it’s over.  After all we came in with nothing and will go out the same way.  Everything between is a game to play exactly as we wish.

I just completed an assignment with a corporate executive who owns a successful company on the East coast.  At 64 years of age, he knew it was time for the next chapter in his life but didn’t know what that was.  He has savings, a retirement plan, a nice home where he owes less than 50% of its value.  He knew it was time for the next chapter of his life but didn’t know what that was but did know he couldn’t come up with it thinking on his own.  This is a wise man. . .

We talked about what he wanted, his family, what kind of skills he has and would be willing to develop.  We looked at work, career, spirituality, and play.  A primary benefit of his corporate life began to emerge which he saw no value in at all, the amount and depth of influential relationships he had developed in his career.

Like most of us he did everything right and still lost over 42% of his retirement saving in the latest economic downturn.  He correctly concluded he would not be able to retire without supplementing his retirement income and for sure not until his company was sold or he was bought out, neither of which is on the horizon.

What did our senior marauder do - He took a class on social networking on LinkedIn. Knowing very little about computers or internet technology he was intrigued and anxiously willing to learn.  He studied, took more classes, met with his peers to determine their need for this new opportunity and guess what?   He now has a website under development has trained more that 30 company executives who pay him as much as $250/hour to learn

He is convinced he can supplement his income quite nicely and he is thrilled to be learning on the cutting edge in his area.

So, I have a suggestion - How about a responsible plan that gets reviewed often and followed rigorously until following it becomes a habit.  Be ready to take full advantage of the upcoming recovery by learning about money.  What have we learned

You and I have a 40 year work life.  That means of the 365 days in a year, roughly 250 are spent working and each year that passes is about 2.5% of your total work life.  That means if you are 45 years of age, you are about half way there!

Time is finite and we live and act in the fantasy that it is infinite. We have 40 years to accumulate the wealth for those 40 years and 20 beyond.  In California that’s $2 to $4 million in capital at work at retirement at age 65 (for 20 years, and somewhat less if you live 10 years longer).

So, let me ask you, how are you doing on your savings?  Not how much do you have although a good question, but as a percentage of your gross monthly income, how much have you been saving?

Consider this, in 2004 The Putnam Group did a study of 2,000+ randomly selected retirees and made these conclusions:

• This is a money-worried, cash strapped group
• They are primarily dependant on social security
• Their satisfaction increases as their income does
• 50% experienced a drop in quality of life from before they retired
• 41% had a strong fear of outliving their income
• 78% regretted not saving more when they could
• 16% had a formal written plan for reaching retirement
• 40% of Americans save less than 5% of their net monthly income
• Budgets are rare and seldom used

Due to current events and what’s projected economically for the next five years again we confront having to work longer to take some well earned time off. We may have to create an entirely new conversation for retirement since we may need to work until our life ends. Also, we will likely have little to nothing to pass to our children who will be paying off the debt now being amassed to encourage us to spend, buy, and get this economy going.

The solution, might be to train our children to do it differently. So consider this example of saving consistently for 40 years and 3% income increases every year:

The cry of the ages, save more & spend less.  We now know the purpose of savings and lots of it, maybe the US savings rate will stay up & we will discover we not only like it but will live more peacefully doing it.  So, what we’ve learned about money so far is about our choices and savings.

I ask myself all the time, am I making the right choice?  We could debate right or wrong all day on different levels but the point is I make choices and so do you.  Losing 25-50% of your long term savings is a problem.  Just this week we’ve heard about folks putting off retirement for 5 - 7 years or who need to subsidize retirement income, or who may not retire at all and then around age 90, it’s over!  It’s just not fair - - Says who?

Who made every single choice in your life, in my life?  You did, I did, and then life goes the way it does and we see the results of those choices.  Why is it then we begin a process of disempowering ourselves and forsaking any learning that we might benefit from by looking around for somebody or something to blame for how it turned out?  Oh but when it goes well & we win, guess who gets the credit. . .

Like children learning to walk who do not give up when they fall, we keep living and making choices, thousands of them each day.  The question is who or what is driving them?

The simple answer is:  every thought, feeling, belief, or memory we’ve had, combined to form your past, your history.  So is our history choosing for us?  Do we simply look for what we already tried that worked or avoid what didn’t for our next choice?  Are there any other options, what about the present or better yet the future, how do we get there?

Moving forward will require great courage and very different thinking to form new habits if we’re to get valuable lessons from history with which to move forward. We are about to experience a massive economic recovery.  It may already be underway.  To be positioned to gain from it, here are some ideas to work with if we can give up blaming for just a bit:

• Update your plans, dreams, and goals for what you most want in your life.
• Translate them into the monetary equivalent. What income will you need, what will that new car cost & when & how many years before college planning begins and what will the cost be?
• Do research to determine what choices you need to make now and in the near term. Base them on what’s current, strengths and weaknesses, and what’s anticipated. Create your own criteria for choosing. Bring in experts when you need them & listen to them if they are more skilled than you, which might be why you brought them in.
• Avoid making choices or decisions in extreme emotional states which would obviously be emotional choices. Make your choices based on carefully considered criteria which have the best odds of producing a win.
• Finally, we’re back to where we began. Life goes the way it does, you get what you get. Be responsible for the choices you made, take the results and move on and make more!

See where this began Click here

Our culture’s psychology today is not doing well.  People are absolutely panic stricken. Everything they thought was true about money is being turned on its head. Seemingly rock-solid institutions have collapsed.   Average affluent individuals have lost 25-50% of their net worth in the last year, and many have of course lost far more.  These are people who seemingly did everything right and were following the rules–diversified portfolios, thoughtful weighting of risk vs. return, etc.  So what do we do now?

How do we instruct our children moving forward - what common sense are we to use to build the future we want to live?

• First - Careful, thoughtful and responsible choices. If we learned anything, could be we consider not only what we want but what might be lost and do research and investigate our options more thoughtfully.
• Second - The cry of the ages, save more & spend less. We now know the purpose of savings and lots of it, maybe the US savings rate will stay up & we will discover we not only like it but will live more peacefully doing it.
• Third - How about a responsible plan that gets reviewed often and followed rigorously until following it becomes a habit.  This could curtail some of the out-of-control emotional spending.
• Fourth - Let’s create additional sources of income, passive income so we don’t have to rely 100% on an ever evolving career or job.
• Fifth - Design our children’s education system to include basic financial literacy then support it with practical applications and examples from the parents who follow those very principles.
• Sixth - We could also look for others in our communities who needs support and work with them in ways that transfer the skills that come from the unique experiences we each have from our lives.

In the coming posts, I’ll discuss & develop each of these a bit more.

What do you think?

Danno. . .

She is a school teacher, he is in the technology game, and they just married last year.  They’ve been working on combining two financial household, so the combining of two budgets into one is a struggle, but 90% through it, they see enough to know what monthly payment they can actually afford, and they could prove it to you.  In our coaching sessions we all agreed that saving 10% for their future was the right number.

She brings two properties to the marriage, him none but he does have some debt & minor credit issues that will be solved in the next 30 days.

They have a chance to buy a single family home in Silicon Valley that would have cost $650-750,000 1.5 years ago for about $450 to $475,000 now.

They also have access to low rate teacher financing with 3% down payment, or they could use his no down payment veterans’ loan eligibility.

A wise move they made was to select and agent and begin looking at property on weekends by themselves before they were actually ready.  That way, building the sensibility of what’s available at what price, they will instantly be able to spot the good deals from the average and be ready to make a saleable offer to the sellers.

Again, please tell me, who is buying real estate right now?  It’s your turn, click the comment button and send me a profile of yourself or someone you are working with - 

What do you think?