Aging in America: Financial Planning’s New Frontier

Contributed by: Amanda Toia Amanda Toia

I had the opportunity to attend the Raymond James National Conference in April. It is a time when colleagues from all across the country gather to share ideas, host seminars, and learn new and exciting information to take back to their practices. One of the experts on a panel on aging happened to be our resident gerontology expert, Sandra Adams (she did a fantastic job).  When it comes to degenerative disease that accompany aging like dementia, the statistics are staggering.  

The Impact of Alzheimer’s

There are over five million people affected with some form of dementia in America today.  While there are various diseases that fall under the umbrella of dementia, Alzheimer’s disease is the most common.  In fact, 80% of dementia is related to Alzheimer’s disease. While we are seeing a decline in other diseases across the board (breast and prostate cancers, heart disease/strokes and HIV), Alzheimer’s is rapidly increasing. 

As we begin to age, our mental effective power begins to slow down.  This slow down starts in our early thirties and continues to decline through our aging process.

Every 67 seconds, one person in America is diagnosed
with Alzheimer’s disease.

An alarming 1 in 9 Americans (aged 65+) has this progressive disease (and there are 10,000 people turning the age of 65 each day).  Americans over the age of 85 will have a 1 in 3 chance of living with this form of dementia.

Dementia and Financial Planning

As our aging population is rising, so are some of the issues in financial planning. Statistics show that by 2050, we could have 16 million people living in America with Alzheimer’s disease (Alzheimer’s Association). The expected costs related to the diagnosis, treatment, and societal factors of dementia could be as high as 1.2 trillion in today’s dollars. (Yes, I wrote “trillion.”) Today, average nursing care is running around $75,000 and this is for basic, skilled care – not a lavish facility. With healthcare and long term care costs on the rise, it is necessary for clients and planners to begin the long term care plan early in life taking into account the rising risk factors of dementia as they can strike earlier in life.

Sandra Adams and the other panelists discussed engaging and educating ourselves and our clients on the issues of aging and the effects on the financial planning landscape.  While aging has been a part of the financial planning process for some time, it has become somewhat of a new frontier as the aging population, health care, and long-term care costs increase by leaps and bounds.  Creating a financial plan no longer includes just assets and insurances for your long term goals.  Your intentions for your health care and mode of living beyond retirement are now viewed as appropriate topics to broach with you planner and other professionals alike.  Building a care management team will ease the burden should the time come when your health begins to decline.  Making sure members of your inner circle are aware of your wishes as they relate to treatment options, modes of living, and end of life care are also very helpful. 

Aging and the concerns surrounding it can be a tough subject to tackle as no one really knows what the future will hold.  We are fortunate to have a specialist in our office who keeps us up to date on all matters of aging and we are here to help do the same for you providing financial guidance as you move through your life.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Amanda Toia and not necessarily those of Raymond James.

Aging Investors: Top 3 Reasons Why Do-It-Yourself May Not Be The Answer

Contributed by: Sandra Adams, CFP® Sandy Adams

The demographic shift is underway.  A whopping 10,000 Americans are turning 65 each day – a trend that will continue for the next 15 years.  And Americans are living longer than ever. At the same time, the chance of being affected by dementia doubles every 5 years after age 60. Even those without dementia have a 30% of being affected by cognitive impairment without dementia by the time they are in their 80s.  And on top of all that, fluid intelligence – our ability to analyze new information and concepts (especially numbers and financial concepts) – begins to decline after our peak years between ages 30 and 40. (American Association of Individual Investors Journal September 2011).  

Particularly in the area of investment management, there are a number of risks to aging investors.  Here are some of the top risks and why it makes sense to consider working with a financial planning partner in the investment area to avoid these risks.

Reasons to Consider Working with a Financial Planner

  1. Fraud/Undue Influence – one of the biggest risk factors as you age is that becoming a primary target of financial frauds and scams.  Someone may want to steal your identity, sell you inappropriate financial products, or family members or others my attempt to steal from you.
  2. Diminished Ability to Make Decisions or Understand Concepts - this occurs when you -- whether due to dementia, cognitive impairment, or normal aging -- begin to struggle with understanding numbers or financial concepts.  Now, more than ever, you need a professional fiduciary to watch out for your financial best interests rather than trying to handle investments on your own.
  3. Primary Decision Maker becomes incapacitated and spouse has no game plan or is caregiver and cannot handle another task – generally, there is one partner in a marriage that primarily handles the investments.  If that person becomes incapacitated and the spouse is not up to speed, and doesn’t know “the plan,” it is important that there is a professional financial planner involved. With a financial planner working as your partner, they can help you keep things running smoothly and make sure that the investments are handled appropriately to meet your long term care and retirement needs. This is especially important if you are also the primary caregiver for your spouse and already dealing with added responsibility.

For many reasons, it is important to work with a financial planner.  Particularly as an aging investor, it is crucial to have a financial planning partner to help protect you and your family against financial predators, to make sure appropriate decisions are made, and to help relieve the burden of yet another responsibility that you might have in the aging process.  Make sure a CERTIFIED FINANCIAL PLANNER® professional is part of your professional planning team. 

Sandra Adams, CFP® is a Partner and Financial Planner at Center for Financial Planning, Inc. Sandy specializes in Elder Care Financial Planning and is a frequent speaker on related topics. In 2012-2014 Sandy has been named to the Five Star Wealth Managers list in Detroit Hour magazine. In addition to her frequent contributions to Money Centered, she is regularly quoted in national media publications such as The Wall Street Journal, Research Magazine and Journal of Financial Planning.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Sandy Adams, CFP® and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. You should discuss any legal matters with the appropriate professional. Investing involves risk and investors may incur a profit or a loss.

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The Secret to Our 30-year Success

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Contributed by: Timothy Wyman, CFP®, JD Tim Wyman

So where were you in 1985? You may have been in high school or college. You may not have even been born yet. Like our Center founders, you may have been starting your own business or career and sought out a financial planner to help in financing higher education for your kids and planning for a successful retirement. It was in the mid-80s that Center for Financial Planning got started.

Our 3 Secrets to Success

A professional services firm can’t survive, let alone thrive, over 30 years without at least three key ingredients:

  1. The loyalty and support of clients. Many of The Center’s clients have been with us from the start. Our success is based of their continued relationships and the introductions they’ve made to others we can help.
  2. The loyalty and hard work of our staff. It has been said that great performance can never come without great people and culture.  Our current staff is filled with a deep bench of top-notch technicians.
  3. The hard work, vision and generosity of founding partners Estelle Wade (retired 2003), Marilyn Gunther (retired 2014), and Dan Boyce (retiring at the end of 2015).

Building a sustainable business requires lots of hours. Not 9-5 and no weekends kind of hours. There were sacrifices, and rewards, and I am sure our founders would agree that their success was in large part due to the support of at least 3 special people - their spouses: Gene Wade, Ron Gunther, and Sue Boyce.

Building a Foundation

Estelle, Marilyn and Dan didn’t set out to create a company. Financial planning was more like a calling. You see, in 1985, much like today, financial advice was often the pretense to selling a high commissioned investment or insurance product.  Our founders saw a new & better way to help people achieve their financial goals. The new (back then) process was called financial planning – and they quickly experienced that the financial planning process had the power to improve lives and make a difference for people. So, The Center really started with a purpose – a calling – to make a difference in people’s lives.

Estelle, Marilyn and Dan also lead by example. They always put clients’ interests first. They were always first to lend a hand around the office, no matter the task. And they were always committed to lifetime learning and personal growth. Our founders also invested in people and relationships – both clients and team members. The three are some of the most generous folks I have ever met with their time, talent, and financially. Over the years they have mentored folks both inside The Center as well as outside.  They had the foresight to begin transitioning leadership to others such as current partners Matt Chope, Sandy Adams, Laurie Renchik, Melissa Joy and me as long as 10 years ago. The foundation they provided has given our current team a platform to take The Center to new heights and further strengthen the firm for the next 30 years.

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc. and is a contributor to national media and publications such as Forbes and The Wall Street Journal and has appeared on Good Morning America Weekend Edition and WDIV Channel 4. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), mentored many CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

Any opinions are those of Timothy Wyman, CFP® and not necessarily those of Raymond James. Investing involves risk and investors may incur a profit or a loss. Past performance is not a guarantee of future results.

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The “One Per Year” Saving Strategy

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Contributed by: Nick Defenthaler, CFP® Nick Defenthaler

This is obviously a very common question people will ask and the typical response you will get from most financial professionals is 10%.  While this is certainly a good number to shoot for, many clients, especially younger ones, simply do not have the capacity to currently hit this figure.  This can become frustrating for some because they may feel like the target of 10% is so far off that it can be deflating and can actually deter retirement savings all together because they feel as if saving a number much lower simply won’t make a difference.  More and more recently, I have been recommending a slightly different approach that many clients have been very receptive to and find it far more realistic to implement – the “one per year” strategy. 

When a 25 year old is just starting their career, saving 10% of their income most likely isn’t feasible.  Between student loans, housing, transportation, utilities, groceries and other discretionary spending, someone in this age group might be lucky to contribute 3% - 5%.  My suggestion for these younger professionals is to start saving 5% into a retirement plan (typically around the most you need to contribute to get the full company match if your employer offers one) and increase the percentage by 1% each and every year until you hit 25%.  By age 30, retirement savings would be at 10%, 15% by age 35, 20% by age 40 and eventually hitting 25% by age 45.  Does this mean you shouldn’t save more than 25% once you get there?  Of course not!  If you have the available cash flow, we will almost never discourage our clients from saving more but most clients find it tough to save beyond this percentage.  If you’re getting a later start on retirement savings, this doesn’t mean you can’t use “one per year” strategy.  The key is to make progress and if you can eventually be saving between 20% - 25% of your income in your fifties (when most are typically in their peak earning years) you are putting yourself in a fantastic position in those crucial years leading up to retirement.

By increasing savings gradually, it makes retirement savings far more manageable and realistic for many.  Think about it, if you’re trying to lose 100 pounds and you become fixated on that large number, chances are you’ll become overwhelmed and give up on your weight loss goal.  The people who have the most success are the ones who focus on small victories.  Losing a few pounds per week until that goal is met– the same goes for retirement savings.  

I personally use the “one per year” approach and have found it extremely helpful and motivating.  More and more 401k plans are now offering the option to enroll in an “auto increase” where this 1% bump occurs automatically so you don’t even have to worry about remembering to make the change online each year.  This is the ideal so ask your HR department if your plan offers this option.  When you increase your savings by 1% each year, you honestly don’t even notice the difference, especially if you’ve received a modest pay raise.  Often times that miniscule annual increase is the equivalent of one less Latté or lunch out per week – something I think we can all manage!  Keeping it simple and being consistent is my advice, which is what the “one per year” strategy is all about!

Nick Defenthaler, CFP® is a CERTIFIED FINANCIAL PLANNER™ at Center for Financial Planning, Inc. Nick is a member of The Center’s financial planning department and also works closely with Center clients. In addition, Nick is a frequent contributor to the firm’s blogs.

This􀀀 material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Nick Defenthaler, CFP® and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. Investing involves risk and investors may incur a profit or a loss regardless of strategy selected. Prior to making an investment decision, please consult with your financial advisor about your individual situation.

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Gas Prices Went Down But Where Did the Money Go?

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Contributed by: Angela Palacios, CFP® Angela Palacios

After oil and thus gas prices sharply declined late in 2014, many were expecting consumers to run right out and spend what they’d saved.  What has surpised everyone is that isn’t happening.  The chart below shows the direct correlation between the decrease in what consumers are spending at the pump (the light blue line) and the increase in their savings account dollars (the dark blue line).  As consumers are spending less, they are saving more.

There are a number of reasons contributing to these increased savings rather than spending:

  • Most did not expect the temporary reprieve in gas prices to last

  • Prices of many other goods are perceived to be increasing

  • People are starting to recognize the importance of having a few months of living expenses set aside in the bank as a safety cushion

While all of these are probably contributing factors causing this “savings” to not be spent, I would hope the main reason for the pattern is the last bullet point -- people recognizing the importance of having some money set aside for a rainy day!

Angela Palacios, CFP® is the Portfolio Manager at Center for Financial Planning, Inc. Angela specializes in Investment and Macro economic research. She is a frequent contributor to Money Centered as well asinvestment updates at The Center.

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Angela Palacios, CFP® and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete.

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The Art and Science of Happiness

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Contributed by: Angela Palacios, CFP® Angela Palacios

In 1988 Bobby McFerrin inspired us to “Don’t Worry Be Happy.” As I’m sure many agree, this is far easier said than done.  During the Raymond James National Conference I had the privilege to attend a session on happiness taught by Dr. Fred Luskin from Stanford University.  This session was a very abbreviated, but no less inspiring, version of his popular course offered at Stanford University.  We can all use a little more happiness in life even if we aren’t unhappy and Dr. Luskin offers some tools to help us do so.

Manage your drive to achieve

“Happiness is wanting what you have” said Dr. Luskin.

Don’t waste all of your time pining for more or something different than you already have. You can strive for more, but take time to appreciate what you do have.

Savor moments of success and love

Too often we ruin these moments by immediately picking up our phone to check email or text messages. Stop and just enjoy the moment briefly before moving on to the next item on the list.

Take time to show gratitude

Think about what you are grateful for and share that with someone.   We don’t have to wait until it is November to post these things on Facebook or share with someone; try to do this every day.

Give your brain the opportunity to see the happiness

Mediate, take breaks and relax.  It is ok to have a lot to do. “In every life we have some trouble, When you worry you make it double.”  Train yourself to just be ok with having a lot to do and temper your drive to get it all done at once.

Dr. Luskin teaches us not to focus on what has gone wrong, but instead what makes people happy and why.  So while we all can’t attend a class at Stanford, an easy first step is try generating your own list of activities and experiences that rejuvenate you and keep it handy to help you manage your daily stress.  This small step can go a long way in increasing our mood, health, productivity and overall happiness.

Angela Palacios, CFP® is the Portfolio Manager at Center for Financial Planning, Inc. Angela specializes in Investment and Macro economic research. She is a frequent contributor to Money Centered as well asinvestment updates at The Center.

Raymond James is not affiliated with Dr. Fred Luskin

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Where’s Waldo? Or Where’s Wyman?

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Contributed by: Center for Financial Planning, Inc. The Center

If you have emailed Tim Wyman in the last couple of days you may have received his “out of office” reply. Tim is out for a bit on a scheduled medical leave of absence.  Fortunately we have a dedicated team that is ready to help if needed. For service items please feel free to contact Client Service Associate, Jennie Bauder, via our main telephone line (248) 948-7900 or at Jennifer.Bauder@CenterFinPlan.com. For financial planning questions please feel free to contact Certified Financial Planner™  Matthew.Trujillo@CenterFinPlan.com and for general operations/business items please contact Melissa.Joy@CenteFinPlan.com.

If you’d like to know the story behind Tim’s medical leave, click here to watch the Fox 2 News interview with the Wymans.

We are always here to help so please feel free to call or email as needed.

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Part 5 – A Year of Lessons on Money Matters for your Children and Grandchildren Contributed by Matthew Chope

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Contributed by: Matthew E. Chope, CFP® Matt Chope

If you know where you’re headed, then you have a better chance of getting there.  This applies in money matters and in life. To help you chart your course, try making a list of the top 100 things you want to accomplish in your life.  The idea here is that if you know what you want to accomplish and what’s important to you, it might help you start on the path that will get you there.

Finance Your Goals

Along that path, I don’t think you should be concerned about spending money, especially if it’s towards these 100 things.  This is what money was meant for.  Money is not an end, but a means to an end.  Part of your money is a temporary store of value to be used towards the goals in your life.

Do you think you could become president if you don’t intentionally set that goal? In my own life, I’ve seen how writing down my goals has helped me find the path to achieving them since I already know the end. Writing down goals will also help you invest in things that will lead them toward that end. You’ll be able to make choices differently than someone who has not considered what’s important to accomplish in life.  Feel comfortable spending money alone this path.  This is what is important to you.

Focus on What Matters

I think Oliver Wendell Holmes said it best:

“Most of us go to our grave with our music still inside us.” 

I have seen many clients get to the end of their lives with much of the music still buried within them.  Their time was spent focused on saving money to build wealth for financial independence.  Or they felt that money should not be used unless necessary.  Financial independence is very important, but so is finding a balance to pursue your interests along the way. 

If you don’t have a list of your own, maybe you’ll get inspired by mine. I started this list in my early 20s and have tweaked it over the years. Here are some of my goals:

Fun – Travel

  • Paint a beautiful picture

  • Swim with a dolphin

Generosity – Giving

  • Be someone’s mentor

  • Make it possible for my niece to go to college

 Education

  • Achieve Master’s degree

  • Give many motivational and inspiring speeches

Personal Achievement

  • Own a home in a warm sunny climate to escape the winter gray

  • Practice meditation and yoga daily

Professional Life – Career

  • Contribute to a healthy financial planning practice for 40 years

  • Help 1,000’s of people reach their financial objectives in life

Family

  • Earn the right to marry someone special.

  • Visit my grandparents and find out about their life as much as possible

Health / Fitness

  • To practice meditation and yoga daily

  • Exercise with a trainer every month to stay doing things correctly

Financial – Monetarily

  • To never be a burden to anyone else

  • To be financial independent by age 60

Maybe some of these categories or ideas will spark you to start your own list. I believe when you choose something (make a decision) you should put your full potential behind it. But remember nothing is set in stone. My list has evolved since I started it. After a good try, be open to changing your mind. 

Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc. Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

Any opinions are those of Matthew Chope, CFP® and not necessarily those of Raymond James.

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The Center Celebrates a 30-Year History

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Contributed by: Center for Financial Planning, Inc. The Center

From our start in 1985 through today, Center for Financial Planning has grown and changed. We dig back into our history with founders Estelle Wade, Marilyn Gunther and Dan Boyce. Their vision of serving clients has grown over the past 3 decades and we couldn’t be prouder of all we’ve achieved. Join our founders and current partners traveling through The Center’s history … back when our offices looked much different and Tim Wyman had more hair. A lot has changed, but some things we like just the way they are.

From our start in 1985 through today, Center for Financial Planning has grown and changed. We dig back into our history with founders Estelle Wade, Marilyn Gunther and Dan Boyce. Their vision of serving clients has grown over the past 3 decades and we couldn't be prouder of all we've achieved.

Live YOUR Plan™