A host of experts are predicting what the future will bring. Ken Dychtwald, a leading “age wave” expert, characterized the 10 physical, social, spiritual, economic, and political crises we will face as we age in the 21st century in the following list. (You can learn more at www.agewave.com.)

1. A Pandemic of Chronic Disease
2. Mass Dementia
3. The Caregiving Crunch
4. Coping With Death and Dying
5. “Gerassic Park”
6. An Inhospitable Marketplace
7. Changing Markers of Old Age
8. Financial Insecurity
9. Age Wars
10. Elder Wasteland

Let’s hear what Dr. Dychtwald has to say about one of these issues, #5. What about “Gerassic Park”? As Dychtwald writes,

All future-oriented public policy in America, including policy regarding Social Security and Medicare, is based on the assumption that there will be no meaningful breakthroughs that will affect longevity or biological aging. So what happens if we wake up tomorrow morning and there is a breakthrough?

Might it be a “Gerassic Park” in which, instead of cloning entire humans, we find a way to clone organs? What if we learn to manipulate the body’s immune system to increase longevity? Can we imagine a future without cancer, a world without Alzheimer’s or heart disease? It is possible…. The biotechnology century is coming; we should expect the unexpected.

–Dr. Ken Dychtwald, “THE 10 PHYSICAL, SOCIAL, SPIRITUAL, ECONOMIC, AND POLITICAL CRISES THE BOOMERS WILL FACE AS THEY AGE IN THE 21ST CENTURY,” American Society on Aging (www.asaging.org)

I see medical breakthroughs each day. That is why, as a Certified Financial Planner, I am bound to do planning for my clients assuming a life expectancy of 120 years.

You may think that living 120 years is far-fetched. When I was in my early teen years, as my grandfather retired at age 65, it was expected he would be dead by age 70. Over the past 50 years, with medical advances, the Insurance Institute states that a married couple reaching age 65 can expect one of the spouses will easily live to the age of 95.

Better plan for at least 30-40 years of retirement funding.

Discipline or regret!

“In the cold northern wastes there is a mountain a thousand miles long, a thousand miles high. Once each thousand years a small bird flies north. This small bird flies north to sharpen his beak on the cold hard stone of the mountain. When the mountain is thusly worn down, one second of eternity shall have passed.” –Tibetan Poem

In the past 25 years, medical breakthroughs, such as stents, have extended people’s lives without debilitating surgery. Weekly, you see in the media celebrities or the “average person” living well into their 100’s. In fact, the fastest growing segment of Americans are those living past age 100.

So how do you plan financially for this event? You work from age 25 to age 65…a mere 40 years to accumulate enough money to live 35 or 40 years after retirement. Funny, if you save 10% of your gross income in your working years, and, assuming no rate of return (common today in bank accounts) for the 40 years of work…you will have, at 65, four years’ worth of monies after retirement. If you save 25% of your gross, with the same factors, you will have 10 years of living expenses available at retirement. Both scenarios assume no inflation.

The authors of a new study, The Problem With Living Too Long, from the Institutional Retirement Income Council, report half of all females who are aged 65 today will live to almost 88. Thus, if you, as a 65-year-old female, guess you will live to be 88, then, that gives you only a 50/50 chance of not outliving your income. Statistically, a quarter of those women will live five years past age 88 and 10% will live to age 98. So, if you want a 90% certainty of how long you will live…better use age 98.

You are playing with loaded dice if you say, well, I’ll be dead at 85 and so I only need to plan financially until then. How will you pay your bills when you live longer? Are you going to call on your kids to fund your lifestyle? (They probably will be retired themselves.)

The better choice is for people to work longer, save more, or live on less now. This funding requirement should not be a surprise to anyone. You have had your entire lifetime to plan for your retirement.

Sit down with a professional advisor…this week, and have them map out at least a “rough and dirty” template as to the path you are on. I have done scenarios over the years where people have only a projected 5-30% of what they will need in retirement. They are in shock since they never thought about it. (Must be because they are too concerned over who will win on Dancing With the Stars.)

Start now…a small change can produce tremendous results.

The chart below will give you an idea of what you can expect:

THE LIFE EXPECTANCY GAMBLE
10% of all 65-year-olds will live into their 90s

65-year-old males:

50% will live to 85.99 — 25% will live to 90.78 — 10% will live to 94.74

65-year-old females:

50% will live to 87.97 — 25% will live to 93.17 — 10% will live to 97.64

65-year-old joint life expectancy*:

50% will live to 91.07 — 25% will live to 95.07 — 10% will live to 98.80

Source: Actuarial Consultants Inc. Data is based on 2013 mortality rates for people who do not hold annuities using IRS projections based on July 2000 tables from the Society of Actuaries.
*At least one spouse will live to the age indicated.

You can deal with this issue like the “ant or the grasshopper.”

Ah yes…discipline or regret.

(For years, in this blog we have advocated the extraction of the maximum equity from your home and withdrawal from your qualified plan. Take these funds and place them in a tax free investment vehicle that is not a countable asset for college funding, Medicare or Social Security. Contact us for more information.)

Colleges that use the FAFSA will determine financial needs based on your expected family contribution. The formula looks like this: Cost of Attendance minus Expected Family Contribution equals Financial Need.

Do not be tricked into putting a lot of assets into a child’s name. If you do, colleges will demand:
• The child use 35% of their assets for college before any aid is given to the family. If the asset is held in the parent’s name, then only 5.6% of that asset must be used before aid is given.
• If the child does not go to college, they can spend that asset as they please. Remember: You gifted the asset to them. Let’s see…would the child choose a new red sports car, or, would the child use the money for college? DUH!

Many private schools use the institutional method which counts home equity as an asset. If you have, say, $300,000 of home equity, it will be assessed at 5.6%, which means a difference of $17,000 in expected family contribution you will pay before getting any aid.

Keep in mind, many private schools cost in excess of $53,000 per year (without taking into consideration personal expenses of the child; e.g., football game tickets, new clothes, special events, etc.). Add in your retirement plan assets as being assessed in the formula, and parents will have a huge amount of Expected Family Contribution.

Public schools are making it so students have to go five or six years to complete their degree which pushes up these costs, also.

The best time to start saving for college is before the newborn leaves the hospital to go home with you.

It’s the same for you and me and our goals: once you complete them, make another list. My father lived to be 83 years old. You can’t imagine the goals he had at 83: get his driver’s license renewed. He got it renewed for four years.

• How far into the future should you plan? As far as you can.
• How many books should you read? As many as you can.
• How many friends should you make? As many as you can.
• How much should you earn? As much as you can.
• What should you try to be? All you possibly can.

The purpose of this exercise is to stretch you, get you to think, get you to wonder, ponder…. I wonder what would be possible if I could get everything I wanted. What would it be like?

Goals for Personal Accomplishment
Once I reached eight years old, the fires were lit for me and they have never gone out. Since I was eight years old, no one ever said to me, “When are you going to get going? When are you going to get off the couch? When are you going to get off the dime?” I only hear, “When are you going to slow down? You can’t do that many things. You’ll have a heart attack and die.”

It’s easy to get lazy in designing the day, the month, the year, or your life. It’s easy to cross your fingers and hope it all works out. The way to keep this up and not get lazy is to teach it to others; e.g., your family.

The Why Is Important
Pick out the top four goals you want to complete by the end of this year. Then, write a short paragraph:

“Why These Four Goals Are Important to Me.”

When the Why gets big, powerful, and strong…

The How Seems to be So Much Easier
Without a strong enough Why, the How seems too difficult to accomplish. How do you manage your time? If you had strong and powerful goals you would figure out how to manage your time if it was worth it. If it wasn’t worth it, why bother struggling with the art of managing your time if it really doesn’t matter?

We are now approaching the final quarter of this year. How are you doing on the goals you set nine months ago? Take this short quiz to determine your priorities and finish the year strong – even if it means completing only one of your goals.

1. You win $100 million in the lottery. What would you do with the money? What would you change in your life? What would you do differently?
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2. If you knew you had only five years left to live, what would you change in your life?
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3. If you found you had only 24 hours left to live, what would you regret not having done; regret not having had; or regret not having been in your life?
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Let’s take a look at 3 friends…Larry, Moe and Curly. They all live in the same neighborhood, all earn around $50,000 per year, have average health and body weight.

Larry:

o Goes along with his everyday routine.

o He is happy.

o Complains that nothing ever changes.

Moe:

o Makes some small, seemingly insignificant changes that are positive.

o He reads in the evening and listens to 30 minutes of something instructional or motivational.

o He read an article from Doctor Oz and decided to cut 125 calories from his diet each day. Also, he started walking a couple of thousand extra steps a day.

Curly:

o Has made a few bad choices.

o Bought a new big screen TV so he can watch more of his favorite shows.

o Is trying out new fattening recipes from the Food Channel.

o Installed a bar in the family room and added 1 drink/week to his diet.

After 5 months:

No difference seen in the 3.

After 15 months:

Still no noticeable changes.

After 25 months:

Changes showing.

After 27 months:

Expansive differences show up.

After 31 months:

o Changes are startling.

o Curly is fat; Moe is trim. By cutting 125 calories per day, he lost 33 pounds.

o Curly only ate 125 calories more than Moe and gained 33 pounds. Thus, Curly weighs 66 pounds more than Moe now.

o Also, since Moe has been reading, he has a new job, and a happy marriage. Curly is unhappy at work and in his marriage.

o Larry is about the same as before.

You can and must make changes in your financial life immediately. It can be small but the payoff is great.

Ah yes, discipline or regret.

“Some people succeed because they are destined to, but most people succeed because they are determined to.”

He had a unique philosophy and attention to detail. (Like teaching his college players how to properly put on their socks. If done incorrectly, it would lead to blisters and make them unable to play).

He followed a creed for happiness. One of his principles was in a poem:

Making the Most of Oneself

Be true to yourself.
Make each day your masterpiece.
Help others.
Drink deeply from good books.
Make friendship a fine art.
Build shelter against a rainy day.
Pray for guidance and give thanks for your blessings every day.

He had high ideals for excellence and a code of conduct to find happiness. He said happiness comes from making and keeping nine promises:

1. Promise yourself that you will talk health, happiness and prosperity as often as possible.

2. Promise yourself to make all your friends know there is something in them that is special that you value.

3. Promise to think only of the best, to work only for the best and to expect only the best in yourself and others.

4. Promise to be just as enthusiastic about the success of others as you are about your own.

5. Promise yourself to be so strong that nothing can disturb your peace of mind.

6. Promise to forget the mistakes of the past and press on to greater achievements in the future.

7. Promise to wear a cheerful appearance at all times and give every person you meet a smile.

8. Promise to give so much time improving yourself that you have no time to criticize others.

9. Promise to be too large for worry, too noble for anger, too strong for fear and too happy to permit trouble to press on you.

John suggested everyone should recite these every day and he believed that you will have lifetime happiness. John is now deceased but I can still say…Thanks, Coach.

“You cannot win if you do not begin.”

I have had the honor to help thousands of individuals and couples in their comprehensive financial planning. I have found that money problems always come about due to a person’s view on money. Some people run, hide or abhor money. Others allow it to be their “master”, while others use it as a “score card” or, some other tool.

When working with an individual or couple, I find, after exhaustive probing, that a person’s problems, issues or insights about money all relate back to some childhood experience, or, recalling childhood money experiences with their parents, or, avoidance about the thoughts of money altogether.

To help start the New Year off correctly, may I invite you to set aside a little time to find out your view on money. The National Endowment for Financial Education has provided access to a quiz about the subject.

Here are your steps:

1. Visit www.smartaboutmoney.org/lifevaluesquiz.
2. Take the quiz now to establish a baseline. Then, take it every time you have a major change in your life: marriage,divorce, birth of a child, purchase of a house.
3. Ask the financially important people in your life also to take it: spouse, partner, parents.
4. Be open to the fact that you and your significant other(s) are going to have different life values.
5. Read the analysis and use it to understand your financial decision preferences (or if you are a financial educator, the preferences of your learners).

What to Expect:

Questions on the Life Values Profile Quiz may surprise you – they’re not all about money. Here is a sampling of the multiple choice questions you’ll encounter when you take the quiz:

• The definition of “health” most appropriate for me would be…
• When I hear the word “security” I automatically think of…
• When people visit my home and see my lifestyle they…

I think you will find it very helpful. You have nothing to lose and everything to gain. Or, are you going to wait another year to promise yourself that this will be the year you fix your finances?

Ah, discipline or regret.

Just six months ago you made out a list of your goals for this year. You were filled with enthusiasm and an unquenchable thirst to complete every one of them. It has been shown that just “making a list” does ensure some of your goals will be completed. Unfortunately, for most people, life just gets in the way. Too many people have so many goals with no set timetable that your brain just shuts down and nothing gets done.

Rather than following the “typical” year, and lifetime, for most people….how about trying something else….a different approach. Heck, you have nothing to lose.

1) Pull out your January 1st list of goals.

• Cross off those that you have completed – congrats!
• Next, cross off those that do not seem to strike your fancy anymore

2) With the remaining list, choose one, just one, of your short term goals that you wanted to complete this year. Let’s say it is….lose 12 pounds by year end.

3) Now write that goal on 4-5 index cards. Place the cards on your desk, mirror, office, etc. so you constantly see it.

4) Now break the goal down into small parts (How do you eat an elephant? Hmm one bite at a time). Let’s see, 12 pounds over the next six months is two pounds per month, or ½ pound per week.

5) Now weight loss is easy math….simply…..less “guz-in-tahs” into the body (food) and more “guz-out-tahs”, namely, exercise (burning calories).

6) Now, lay out your plan of the little changes you will do each day to reach this goal. Let us say, eliminate 200 calories per day and burn, say, and extra 200 calories per day. Look at your food consumption daily, google to find out the calorie amount and decide upon the tiny change that is needed to eliminate 200 calories. None of these starvation diets are needed!!!! Lastly, find out how much brisk walking (or other exercise) is needed daily to burn 200 calories.

You will be shocked how your goal can be met.

Now before you start this program, you must write out….”Why” you are trying to reach this goal. Maybe it is to get into a new outfit, or because you want to get in shape and live longer. Whatever the main “why” is….write it down. You see, when the “why” is strong enough, then the “how” is easy.

The “why” will be the inner path that will get you up early to “walk” on the days you want to hit the snooze button and not “exercise.”

Ah yes, discipline or regret.

• Lack of Confidence

“I can’t” (manage my money).

“I definitely can’t” (make informed investment decisions).

“I don’t know how to” (find out what I want to know – and even if I did…)

“I couldn’t trust myself” (to interpret the information correctly).

“I’ve never had to” (pay the bills on my own).

“I’m not sure if I can” (follow through).

A lack of confidence is not confined to one sex, but it has been more prevalent in women. Regardless of the changing roles, some women still feel that showing competency in financial situations is unfeminine. Many men still maintain complete control of the family finances, however poorly they may manage them. While these relationships are shifting, lack of confidence discourages learning new information and skills.

• Overconfidence

“I already know what I need to do” (there is little new I can learn).

“I’ve been managing my money very successfully for years” (I really do not need any help).

The opposite of underplaying financial competence is knowing all the answers. This is more common with men. They have been told they are expected to know it all – the masculine mystique. In many cases, the financial situation has been handled well, but can be improved upon.

• Sequential Thinking

“First I must take care of this and when that is done, I will take care of that….”

This type of thinking is typical of the couple who cannot plan for retirement until the children finish college, or the affluent young adult who cannot set aside money for emergencies and take care of paying current obligations.

• Procrastination

Desire for perfection. “Unless I can make X percent on this investment, I won’t go into it.” “Unless you can guarantee that I will earn X amount by this date, I just won’t act.”

Sequential thinking. “I will act as soon as I have all the facts.” “The economy straightens itself out.” “When I get a raise.” “When my spouse gets a job.”

Avoidance of painful subjects. “I can’t think about dying or buying insurance.” “I don’t want to think about becoming disabled.”

The perfectionist fears discovering a financial decision was not the best possible move. Sequential thinkers and procrastinators have an inexhaustible supply of reasons; there will always be another contingency.

The person avoiding painful subjects will delay acquiring adequate insurance because he or she is unable to think about death or the possibility of disability.

• Lack of Definite Goals

“I put long hours in every day; I just don’t have time for anything else.”

People without goals are not shiftless or lazy, just extremely shortsighted. Some continue to work 10 to 14 hour days both bragging and complaining about the long hours, but with no plans to change or upgrade their circumstances.

• Goal Confusion

“I don’t have enough money to travel.” “I can’t seem to plan for my vacation.” “I never have the money to do what I really want to do.”

Some people know exactly what they want – a vacation in Europe or Mexico, maybe the purchase of a second home – but they have never had the money to reach their goals. They allow secondary goals, eating at gourmet restaurants or buying expensive gifts to pre-empt their primary goals.

To help solve these six money hang-ups, talk with a professional. Recognition of the problem is the first step toward a solution. A financial advisor can suggest a number of ideas to help overcome money mismanagement.