Pin Money Club

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 

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.

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

On April 3, 2008,  I will be holding a special meeting of the Pin Money Club at my home. In this inaugural meeting of a local Atlanta chapter, hosted by Connie Morelle of Keller Williams, I’ll be talking about 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.

My goal for the meeting is to provide an intimate and non-threatening environment in which you can learn some basic financial strategies from my experience, but also to foster an open dialogue where our guests can begin to share their hopes and fears about money and, ultimately, help each other.

Pin Money Club does not sell any products or endorse any brokers or planners. I started the Pin Money Club when I found myself caught in my own “sandwich” - a contentious, financially devastating divorce and a dying parent. I decided to take my extensive experience on Wall Street and overlay it on to a more meaningful labor of love and started the Pin Money Club.

There is absolutely no charge for the meeting and there will be food and drink in an informal and intimate atmosphere, and Connie and I think you’ll get a lot out of it.

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. Don’t forget, We will be raffling off a beautiful pair of embellished flip flops, just in time for the warm weather.

“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?”

“Oops, I did it again”

 I was recently talking with a married friend whose husband works for a well-known technology company. As I told her about Pin Money Club, she was quick to assure me that she and her husband were financially set because they had most of their savings tied up in his employer’s stock -both in their 401(k) plan and in a separate stock purchase plan.

Like Britney running around all over LA, these folks are overexposed! Listen, here’s a dose of dime-store psychiatry from me: don’t just assume that because you work for a “good” company that things can’t go wrong. Any company’s fortunes can go south - and sometimes they down right implode…Enron and Worldcom are two extreme, but telling examples. When the company’s fortunes and then stock price fall, you risk losing your savings and your job! Even if there isn’t an all out failure, a downturn in your company’s stock price could happen right when you need to cash out, say for retirement.

I’m not saying don’t invest anything in your employer’s stock, but use caution and be hyper vigilant in watching the company’s fortunes so yours stays intact. I don’t wanna have to hear you say: “Oops, I did it again…”

Google, redux…

..A lot of my friends and family have asked me if there is now a buying opportunity in Google’s stock. That’s because Google is now trading ($526 as of this posting) well below the high it reached of over $700 late last year. Again, I don’t make specific investment recommendations, but I do have my opinions, an opinion I shared in a post on 10-19-07. Google was then, and is now, overvalued. That means that it is trading at a price that can’t be supported over the long term by how much the company can realistically earn.

Google only got to its high trading levels through good, old-fashioned hype. It’s similar to the boiler room phenomenon (see post of 2-10-08) only Google has been hyped by a reliable-sounding media (including our friend Jim Kramer), it’s own senior management team and its devoted investors. So, as investor sentiment (aka hype) continues to turn against the company, the stock price will continue to fall.

Save the high altitude stunts for the professionals. Google isn’t a stock for the faint of heart individual investor. As I said in that earlier post, you may already own Google through a mutual fund in your workplace retirement plan - so hopefully the professional manager of that fund has made some good buy and sell decisions; better them than you, I always say.

Jane, stop this crazy thing…

Are you the meat in your own financial club sandwich?

I am a card-carrying member of the sandwich generation. The “sandwich” generation is a term that was coined to refer to those Americans who are caught between competing and often overwhelming financial needs such as saving for retirement, funding college educations, and planning for long-term care for themselves and their parents. When you’re facing all of these at once, you’re in what’s known as the “club sandwich” generation (help, I don’t wanna be the meat in this sandwich)!

But I am and so are many of my readers, so what can a smart chick do? Well, did you know that you can take a tax-free loan from your 401(k) plan or tap a portion of your Roth IRA to pay education expenses? Saving for college through these plans may be as or more efficient than using a 529 college savings plan to do the job. It depends on your savings rate and the time you have till the money is needed. That being said, you shouldn’t rely solely on the retirement account for college funding if you can avoid it, but it’s good to know it’s an option. Follow this link for a good summary of the pros and cons of each from a great web site: savingforcollege.com.

Whether or not you should purchase long-term care insurance is also dependent on age. It doesn’t always make sense to buy a long-term care policy, and if you do, you need to be very clear on how much total premium you will pay over the policy’s lifetime and compare that to what the product pays out. Here’s a good summary of long-term care insurance from the AARP that explains how these policies work and who they may be right for.

Well, I’m off to eat that king of all sandwiches, the cheeseburger in paradise! Why don’t you join me?

In Jonathan Clement’s Wall Street Journal column yesterday he describes research studies (supported by this author’s own anecdotal evidence) that show women invest more conservatively and turn over their investments less frequently. In one sweeping study, researchers show that men’s overconfidence (surprise, surprise) hurts their stock performance by 2.65% each year, while women only hurt their result by 1.72 %.

But before you declare the battle of the sexes over and triumphantly plant your flag on the enemy’s soil, be cautioned that this doesn’t mean women come out on top in the long run. That’s because there’s a triple threat hanging over our heads; women tend to earn lower salaries overall, spend less time in the work force and we can expect to live longer than men. All this adds up to a strong risk that we could outlive our savings.

So what’s a practical girl to do? Start by looking at your retirement plan at work and see what percentage of your assets are in conservative investments such as a money market fund or a guaranteed fund (sometimes called a stable value, guaranteed investment fund or GIC fund) or bond funds. If you’re five years or more away from retirement, and you have more than 30% of your portfolio in these conservative investments you could be doing yourself a disservice.

Here’s a good resource from the SEC (Securities and Exchange Commission) to help you determine if your portfolio is “overweight.” And to “lighten” things up a bit, check out the famous non-fat yogurt scene from Seinfeld.

I become a grownup…

In many ways, I am the poster child for Pin Money Club; I just made my first will after a mere 48 years on this earth. But I’m in good company, over half of all adult Americans also do not have a will. I suspect that the idea of our own mortality staring back at us from a piece of paper is what keeps us from doing what we know we should.

But my recent hospital stay reminded me that if I didn’t make out my will, I’d die intestate (and who the hell wants that on your death certificate?) which means the state of Georgia would get to divide up my assets as they saw fit and I was running the risk that my ex-husband could somehow worm his way into the picture and that I couldn’t abide.

So, I did it, I made my will and I feel like a real grownup now. I used an online service and it was quick, painless, legally binding and cheap at just $69 (a lawyer will charge you hundreds of dollars for the same thing and take a lot more of your time). Check out these easy-to-use sites for wills and other grown up legal stuff! legalzoom.com, wills.com or nolo.com.

Oh, and I can die happy now because Ann Coulter has declared that she’ll campaign for Hillary if McCain gets the Republican nomination. Could it be that she’s grown a heart?

It’s 10 p.m. Do you know where your ex’s are?

A reader recently asked if I could recommend an accountant to handle her “first post-divorce” tax filing. First, let me say that I don’t recommend specific professionals because I want to remain completely objective - my mission is to educate and motivate.

So in that spirit, the far more important question is: What kind of professionals do you need around you while you’re in the midst of a divorce? THIS IS WHEN THE STAKES ARE HIGHEST! The decisions made here have far-reaching, life changing implications, especially for women.

A friend’s situation highlights this issue perfectly. After 37 years of marriage her husband suddenly checked out (with a mistress, a condo and hidden assets in tow). Like many women of her generation, she knew very little about their financial situation. They were modestly wealthy; the husband is a physician and had done pretty well with his investments over the years, but she had no idea how much they were worth or where any of their assets were and he wasn’t telling (lest my front lawn be bombarded tonight by a pitchfork-bearing, torch-waving mob, recognize that I am aware that men can be victims as well – the advice is the same).

Like most people, she initially looked to her divorce attorney to navigate these murky financial waters and get her the best possible settlement. Sadly though, while accomplished at the law, most attorneys do not have a great deal of financial savvy, and what’s worse, they generally won’t admit it. That’s why I encouraged her to retain a “forensic accountant”. Forensic accountants are like hound dogs - they’re trained to sniff out the money trail no matter where it leads.

She took my advice and I’ll tell you more about her story when the dust settles. Meanwhile, let’s look at the lighter side of divorce.

Do you have a divorce money story (or a fun song about divorce) to suggest? Fill out the comment form below.

Who’s on first? Let me have it with both barrels on this one…

Election fever has started in earnest - Wolf Blitzer is reporting the minutia of the campaign ad nauseum from CNN’s Situation Room (a little dramatic, eh)? as though his hair was on fire (which would make for pretty good TV cause he has a lotta hair).

So which candidate is in the best position to lead us through what appears to be an inevitable recession? I’m not sure I know yet, but I’m more than willing to opine. As a “velvet feminist”, my heart first goes out to Hillary (and she is working that St. John wardrobe and her new highlights in a way that makes my fashionista heart go pitter patter). In addition to her new-found fashion sense, she’s got some pretty good fiscal sense demonstrated while she’s been the esteemed Senator from New York, and she’ll have Bill there to back her up if she gets elected. I don’t know why that makes some people nervous, it’s just a bit of a strange new twist on that good ole’ American love affair with the political dynasty (Roosevelt, Kennedy, Bush) and I feel I’m kinda getting a two-fer.

More on the other candidates later, meanwhile, check out what the Prez has to say about it all.

Oh, need I say that I’m a Democrat?