April 2005 Newsletter

Issues for Discussion

Over the past few years, some issues have become more common among new and existing clients, and they deserve our attention. There are questions that have no easy answers, but they still need to be discussed. Here are two:

Moving From Portfolio Accumulation to Withdrawals
Our clients are reporting that it is very challenging psychologically to stop saving money when they retire, and feel comfortable taking money out of the portfolio for the first time. They understand on a rational level that these funds were saved by them for exactly this purpose, and they know they don't want to keep working, but there is still a struggle.

For some, spending down savings brings back memories of financially difficult childhoods and parental lectures including lessons such as "don't touch the principal!" For others, the bigger fear is the future and its potential catastrophic risks such as serious illness and the cost of longer life expectancies.

Sometimes the issue is compounded by a change of identity, when a retiree is no longer employed at a company and receiving daily affirmation of their work and worth. It may also be emotionally difficult for some to adjust to a lower standard of living and simpler lifestyle.

Moving from Independence to Assisted Living (excerpted with permission from article by Ben Coombs, CFP®)

As we all grow older, we find ourselves dealing more and more with the question of whether or not there is a need for assistance in daily living and what level of assistance may be required. After spending a lifetime of being responsible for oneself and in control of one's own life with all its daily activities, this question may be very emotionally trying to address.

This daily assistance issue ... develops slowly and is often unnoticed as it becomes more difficult to engage in many mundane activities of life like making a telephone call or being able to hear the person on the other end of the line. Failure to address this problem and plan for it can put a great burden on our loved ones and compound the financial ramifications of seeking living assistance. Putting it off often compounds the need and the costs of addressing the need.

The first level of need occurs when one or more of the following activities become difficult or impaired:

  1. Using the telephone
  2. Managing medications
  3. Moving about outside
  4. Shopping for essentials
  5. Preparing meals
  6. Doing laundry
  7. Doing light housekeeping

The diminished ability to perform one or more of these activities would be the first indication of the need for taking the initial step toward some change in your housing services or your living arrangements.

Living alone can create a diminished desire [to do things] long before the capacity to perform these activities is diminished. Moving into a group environment or a close community can help restore that desire and motivation. At some point, living alone in your family home or the home you moved into when you first retired can become lonely and increasingly devoid of the normal motivations of life.

Talk about this now long before it is likely to occur. Decide how you are going to make the determination that the motivation or capacity to live your daily life has diminished and that you need to seek alternate living circumstances. Let others know of your thinking, and encourage them to give you feedback when they think you are approaching this stage in your life.

Children: talk with your parents!

Investment Boot Camp

Our next workshop on investment fundamentals and emotions will be:

Saturday, September 17, 2005
9:30 am to 11:30 am

Please call Jessi to register.

Spring Cleaning

Clients and friends often ask, "how long do I need to hang onto this piece of paper?" There are various reasons to keep records, but here is a quick checklist to get you started.

  1. Read and discard:
    • annual reports
    • mutual fund prospectuses
    • newsletters (like this!)
  2. Keep for 3 years:
    • household bills
    • credit card statements
    • receipts for minor purchases
    • monthly brokerage statements
  3. Keep for 7 years:
    • canceled checks & check registers
    • bank statements
    • year-end pay stubs
    • tax returns with supporting documentation & trade confirms
  4. Keep forever (or until asset sold):
    • receipts for home purchase and improvements
    • receipts for major purchases
    • annual investment statements
    • inheritance papers & gift tax returns insurance policies
    • copy of your will, trust, powers of attorney and Advance Directive for Health Care
    • marriage certificates
    • dissolution paperwork
    • Social Security cards
    • house titles/deeds & car titles
    • tax returns w/o documentation

Computer users: making backups of your electronic financial information and keeping this data in a safe place is as important as retaining paper records.

When throwing papers away: DO NOT throw anything into the trash that has an account number or Social Security number on it — SHRED IT! If you don't have a shredder at home, please bring your papers to Silver Oak and we will have them processed by our shredding service.

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