Pin Money Club

[Before they find themselves in their own “War of the Roses” ]

Men receiving alimony from their wives; could this be a trend? As some women begin to out-earn their spouses, some men are asking for - and getting - alimony after a divorce.

Take the case of John David Castellanos - he played hunky attorney John Silva on The Young and the Restless on and off  for 15 years. In a case of poetic irony, his character represented many other characters in their TV divorces. While working on the show he met and married Rhonda Friedman who now earns over $500,000 a year producing “The Bold and the Beautiful.” Mr. Castellanos’ career, meanwhile, has stalled. During their recent divorce, he was awarded $9,000 a month in alimony from Ms. Friedman.

I’m not saying that men aren’t entitled to alimony if they meet the same tests women do for receiving it…but both parties to a marriage should have a financial reality check before they march down the aisle. Maybe wedding planners should add it to their list of services, right alongside the flowers, music and white-dove releases and let’s have Jennifer Lopez reprise her role in The Wedding Planner with this new plot twist.

A recent study from the UK shows that more than three-quarters (76%) of bosses would not hire a female if they knew she would become pregnant within six months of starting the job (I think we can safely assume that these attitudes pervade in the good ole’ US of A too)!

The study found that during the selection process, 52% of respondents will weigh the chances of a candidate getting pregnant, taking into account age and whether they have just got married. Of the 1,100 bosses and personnel managers of both sexes that were polled, 68% said they would like more rights to quiz candidates about their plans for a family.

In addition, the survey found only 5% of the bosses have employed someone knowing the candidate is pregnant, and 86% said they would feel cheated if someone started a job and announced within weeks they were pregnant.

It just goes to prove my point that women still get the short end of the stick financially in this world and why it’s so important that they know what they’re up against and fight back by making the best financial decisions possible.   

I’ve got some good news and I’ve got some bad news…

We’re all living longer (whoopee) but it’s going to get more expensive. At the rate we’re saving in this country, many of us are at risk of outliving our nest eggs (boo!). But there are some intriguing new financial products coming on to the market that promise to pay a steady stream of income in retirement. Just how good are they?

All these products are not created equal - not by a long shot. While they all have the same goal - providing you a steady stream of income in retirement - the amount and length of their payout, how much that payout costs you in fees and whether or not you can outlive the payout - differ widely. So read the fine print and know what you’re getting into. Here’s just a few questions to ask:

How long is the payout guaranteed and can I outlive the income? Some plans stop payouts at age 85, the actuarial life expectancy for today’s American woman. If you’re convinced that all those supplements you’re swallowing will take you to age 100 and beyond, then you’ll have to spend more to guarantee you won’t outlive the income.

What are the fees? Fees are usually charged on an annualized basis and taken directly from your account. These products can be expensive, so comparison shop.

How much can I expect the payout to be? This is partly a function of how much the fund charges as well as what the fund’s target rate of return is.

Will I ever dig into my principal? The answer is yes with some products. You may want to consider this strongly if you want to leave anything to your heirs.

Who guarantees the income stream? Is it an insurance company? What is that company’s financial rating? Remember, the guarantee is only as good as the company selling the product. These products aren’t going to be FDIC-insured nor are they likely to be SIPC-insured, the securities industry equivalent of the FDIC.

I don’t know about you, but my momma told me:”you’d better shop around”. I’ve looked all over and decided I like this version of that song best from American Idol’s David Archuleta…

 No - it’s not Lost, Survivor or CSI, it’s our special PMC event…

April 3,  2008 - A special opportunity to discuss some of life’s biggest financial decisions

Ladies, don’t forget our special meeting of the Pin Money Club this Thursday, April 3 from 7 to 9 p.m. We’ll be discussing the  “Sandwich Generation” - those of us who are financially caught between competing and often overwhelming financial needs such as saving for retirement, funding our children’s college education and planning for long-term care for ourselves and our parents.

Remember, the meeting is by invitation only and space is limited to 12 people. If you received an invitation, please click on the “Events” button at the upper right to sign up and you’ll also find a link for directions under the “Events” banner. Don’t forget, we will be raffling off a beautiful pair of embellished flip flops, just in time for the warm weather.

Click here for directions. 

“Pin Money” is an expression that refers to an allowance a husband would give his wife for her incidental expenditures. I like to say: “WE can do better than that, can’t we girls?”

This Sunday at 9 p.m., Paula Zahn will be hosting a program called “Retirement Revolution” on PBS. It’s a sign of the times and how much retirement is on everyone’s minds that PBS is hosting such an event, and that the promotion of the the program included a full -page color ad in the Wall Street Journal (BTW, such an ad runs in excess of $150,000).

The show, sponsored in part by Mass Mutual Financial Group, will highlight the changing face of retirement in the U.S. - delayed retirements, longer retirements and some folks who by design or disaster will never truly retire - and aims to provide strategies that will help you be as prepared as possible for the future.

Ladies, don’t miss this program and write in and let me know what you thought of it.

[oh no, you didn’t] 

When I was a kid I used to play handball; when I would leave the house to go play, my mother would say: “Let the boys win Cherith.” Well, as you might have guessed, that only made me more determined to win (and, P.S., I did most of the time).

So when I read the results of a new research study out today that show women are behind men in retirement planning I was freshly miffed! The study found that 56% of all baby boomers (age 44-62) say they are less confident than they were three months ago that their retirement savings will last them through retirement but women are less confident and further behind…

-Among adults of all ages, men are more likely than women to have retirement savings (78% vs. 70%).

-Compared to male baby boomers, female baby boomers are much more likely to say they have less confidence in their retirement savings (61% vs. 49%).

-Among those who have changed or plan to change their retirement savings, more baby boomer women than men say they have or will buy long-term care insurance to protect their assets (18% vs. 7%). Clearly we ladies understand that we will live longer than the men (OK, score one for us here) and that we have to figure out how to not outlive our savings!

So girls, don’t let em win…keep saving as much as you can. For some good general retirement planning help, including “Five Tips for Retirement Planning,” visit www.longevityalliance.com.
 

Take away his credit cards! (but seriously folks!)

Recently Jonathan Clements wrote in the Wall Street Journal about the looming credit score crisis many Americans face in the current economy, likening people’s plummeting credit scores to junk bond ratings.

It’s worth a reminder here of the three big things you can do to keep your credit score as high as possible if you should lose your job or your financial circumstances take a turn for the worse: pay your bills on time, avoid applying for credit too often (I know it’s tempting, but ladies, resist the urgings of every cashier in town asking you to apply for that credit card and get 10% off!), use as little of your available credit lines as possible.

It also pays to know and keep up with your credit score; the most useful to know is your FICO score. The score ranges from 300 to 850 and it’s basically a number that summarizes all the activity on your credit report. Generally speaking a score in the mid 700s or higher is considered good. You can get it directly from myfico.com for about $16 (with some add ons if you choose). You can also succumb to freecreditreport.com; their constant advertising makes them hard to forget, but know that it has a catch; you are automatically enrolled in their Triple Advantage Credit Monitoring program. If you don’t cancel your membership within their 7-day trial period, you will be billed $14.95 a month (doesn’t seem like the best deal to me). However, their latest commercials are darn funny and this subject demands some comic relief (other than my bad jokes)…

Sorry, serious post today… 

The Today Show recently reported that according to the Alzheimer’s Association, an estimated 5.2 million Americans have Alzheimer’s disease, and it could steal the minds of one out of eight baby boomers. The report found there were 411,000 new cases of Alzheimer’s in 2000, a number expected to grow to 454,000 new cases a year by 2010.

As my readers know, this is a cause near and dear to me as I recently lost my mother to this slow killer; but it also puts me in mind of a question I often get: “How will I pay for long-term care; for myself and my spouse, my parents, my in-laws?” Great question when you consider that the cost of long-term skilled nursing care runs anywhere from $6,000 to $10,000 a month.

Aside from having scads of money or getting an inheritance (in which case, stop reading this post and call me immediately, I’m up for adoption); careful planning now is the answer. You can consider buying long-term care insurance, setting aside savings just for this purpose or rely on Medicaid. For more on long-term care, see my post: “Where’s the Beef?” of February 13.

A lot of people believe they can just rely on Medicaid, but consider this: To get Medicaid for skilled long-term nursing care, you have to “spend down” all of one’s assets to less than $2,000 - that means you have to get rid of everything, even things like the cash value of any life insurance. And, when you apply for Medicaid, the government “looks back” three to five years to see if there have been any asset transfers that may be inappropriate; if so, they can delay the start of Medicaid payments.  Systematically gifting assets now say from your parents to you or your children is something to strongly consider.  

For more on this story, click here 

The question I’m getting the most these days is: “Should I sell all of my stock funds and go to cash?” Now while there’s no one right answer to a question like that, I can give you the benefit of my more than twenty years on Wall Street where I’ve been through some other pretty tough scenarios - junk bonds in the mid 1980’s (which did give us Michael Milken to make fun of), and the tech bubble burst of the early 00’s, for example.

Yes, we’re in a bit of a crisis and there will be more fallout from the sub-prime mess, but how that fallout relates to your individual portfolio is the important question.

If let’s say you’re in diversified mutual funds in your 401(k) or 403(b) plan at work, you are likely to be just fine.

First, ask yourself, are my funds in down positions? For how long? If they are in down positions, chances are it’s a temporary thing; if your fund is not in a down position - go watch some TV or take a walk….

But let’s say that right now - defined as year-to-date 2008, one of your funds is in the red - that’s not your return in the fund; your personal return on the fund is what you’ve earned since you’ve owned them. Chances are if you’ve owned your funds for a while, you’re in the black.

Many plan web sites will show you your personal rate of return when you open your account profile, but if not, take a look at your funds’ overall rate of return - usually it will be spelled out as a 1-, 3-, 5- and 10-year average annual return. This will help keep you focused on the fact that the returns in stock funds build up over the long term.

And keep in mind that what affects the broad market doesn’t necessarily trickle down to the individual holdings in your mutual funds. A lot of the esoteric investments that are imploding - derivatives,collaterlized debt obligations, hedged investments, aren’t strategies employed by the mutual funds you normally find in your workplace retirement plan.

So, let go of that mouse or drop that phone for the moment, take a deep breath and look closely at all the facts before you make any rash decisions.

Arnold and Maria also say hi!

Last week I attended a conference in Newport Beach for the retirement investment industry – and the big discussion in the industry is just what a few of you have already mentioned to me and something we’ve all have been avoiding:

n      what to do about long term care, for our parents (and let’s face it ladies, for many of us that means our in-laws as well) and for ourselves.

n      we’re all living longer (whoopee) but it’s going to get more expensive. At the rate we’re going, we’re going to outlive our nest eggs. There’s a lot of new ideas in this area.

n      And as if everything else wasn’t enough, many of us have to pay for our kids (or even our grandkid’s) education.

The financial industry is abuzz about the products they can sell, but I’m concerned about all the realities we have to face. It requires financial smarts, but more importantly, an environment where we women can talk openly, without intimidation, to discuss strategies in our own terms, in our own words. That’s what I hope to accomplish with the Pin Money Club so keep those comments and questions coming in.