5 Giant Myths Of Retirement Planning

5 Giant Myths Of Retirement Planning


Excerpt:

1. Don’t touch the principal — live off the interest.
2. The more a financial plan weighs, the more valuable it is
3. My life is simple and I have a will — that’s all I need.
4. A surviving spouse will honor the way the deceased spouse managed money.
5. When I retire, I need to dramatically shift my investment portfolio away from stocks and into bonds

Comments:

1. We actually plan to live off the dividend income only + social security. If all goes well, our heirs will have a nice inheritance and/or Christian organizations will benefit
2. Financial planning? I'm the guy ... seat of the pants financial planning but so far it's been going fine for us
3. We need some buttressing here. Today I contacted an attorney to have our wills revisited and to have power of attorney and life directives drafted. Goal is to have done by Christmas
4. Not sure who will go first (or maybe we will go together) but surviving spouse can make whatever adjustments are needed
5. Income securities to me are the key.

The Ultra-Wealthy - How Many and Where?

The Billionaire and Millionaire Boom
Excerpt:

The billionaire ranks are growing rapidly in many countries. Who's minting the most new members of the ultra-rich class?

Comment: WSJ video. Interesting.

Green vehicles: "the math doesn't really work out."

The ugly economics of green vehicles

Excerpt:

Some consumers may be willing to pay more for greener, more efficient vehicles. Most cannot; a $12,000 Nissan Versa is much more accessible than a $30,000 Nissan Leaf. To push people towards these new technologies, the state and federal government has been stepping in to sweeten the pot.

.. lower gas prices, higher fuel efficiency for conventional cars, and the high prices for alternative fuel vehicles are putting a triple whammy on green car sales. Right now, she says, for consumers, "the math doesn't really work out."

Comment: Images from the Wiki articles linked above. I would consider a Prius but with only 75,000 m on my Buick, I am 5-6 years away from making a purchase.

Will win the EMC prize?

EMC Stock Soars After Investors Learn About Mega-Merger Talks With HP, Others

Excerpt:

For nearly a year, EMC and HP have been kicking the tires on a merger that would have created one the biggest enterprise tech companies on the planet — with over $130 billion in annual sales, according to the Wall Street Journal. For comparison, IBM is expected to do $98 billion in annual sales this year. Apparently, the talks have stalled because they couldn't agree to terms. Both companies were concerned they couldn't sell the deal as it was to shareholders, reports the WSJ. ... The WSJ said EMC was talking to Dell about a merger, which may have involved just selling parts of itself off. Dell is working hard to get a piece of EMC's enterprise storage business. This means that EMC is open to talks with others, too, with names like Oracle and Cisco being dropped to the WSJ and Barron's. Cisco would be interesting match with EMC. The two companies are close partners, but in recent years, EMC subsidiary VMware has been threatening Cisco with a new technology called "software-defined networking." SDN threatens Cisco's Cisco's $21 billion router/switch business with a new software-centric way to build networks. Everyone from Goldman Sachs to Facebook has jumped aboard the SDN bandwagon. Then again, HP, Cisco's main rival in the network industry, has been all-in on SDN. Owning EMC/VMware would be sweet for HP on that count. All this merger talk might amount to nothing, but EMC is at a crossroads. EMC's bread-and-butter technology, enterprise computer storage, is under attack from a whole slew of young new technologies that offer bigger, faster, and cheaper storage options — and from cloud computing.

Comment: HP has a disastrous record with acquisitions (detailed in the article). But this would be a merger - a stock swap. I think Oracle is a better match as Oracle has been somewhat moribund of late. So it could be good for Oracle. A dark horse is Seagate but Seagate's market capitalization is a fraction of EMC's. But it seems to me there is a natural synergy there.

Marco Rubio's common sense tax plan

A Pro-Family, Pro-Growth Tax Reform - Two simple income-tax brackets: 15% and 35%. End the marriage penalty and increase the child tax credit.

Excerpt:

The current tax code taxes too much, taxes unfairly, and conspires with our outmoded welfare system to trap poor families in poverty, rather than facilitate their climb into the middle class. Our reforms seek to simplify the structure and lower rates. How? By consolidating the many existing income tax brackets into two simple brackets—15% and 35%—and eliminating or reforming deductions, especially those that disproportionately benefit the privileged few at everyone else's expense. In addition, our plan would eliminate the well-known marriage penalty, which imposes higher taxes on married couples than if they had filed individually. It would also take aim at another pernicious distortion—the parent tax penalty—that is more prevalent, if less understood, even by its victims. Today, parents are, in effect, double charged for the federal senior entitlement programs. They of course pay payroll taxes, like everyone else. But unlike adults without children, they also shoulder the financial burden of raising the next generation of taxpayers, who will grow up to fund the Social Security and Medicare benefits of all future seniors. This hidden, double burden on parents isn't offset anywhere else in the system, and so true conservative tax reform needs to account for it. Children aren't consumer goods—they are investments parents make in their futures, and in the future of America, and therefore deserve to be treated as such in our tax code. Our proposal would account for this and level the playing field for working parents by augmenting the current child tax credit of $1,000 with an additional $2,500 credit, applicable against income taxes and payroll taxes—i.e., the taxes that most burden lower- and middle-income families. The credit would not phase out, and would be refundable against income tax and employer and employee payroll tax liability. .... We will also propose that businesses only be taxed in the country where income is actually earned, rather than double-taxed when the money is brought back home. The way to reverse corporate inversions and bring capital in off the sidelines isn't to punish companies for obeying outmoded laws, but to change those laws to make America once again the best place in the world to pursue happiness and earn success.

Comment: Some common sense ideas. I personally would go further and completely eliminate the Federal corporate income tax. Imagine the inversions of companies wanting to domicile in the U.S.

The Roosevelts: An Intimate History

Ken Burns: The Roosevelts: An Intimate History

Excerpt:

The Roosevelts: An Intimate History is a 2014 American documentary film directed and produced by Ken Burns. It covers the lives and times of the Roosevelt family, including Theodore Roosevelt, a Republican and the 26th President of the United States; Franklin D. Roosevelt, a Democrat and the 32nd President of the United States, a cousin of Theodore; and Eleanor Roosevelt, the longest-serving First Lady of the United States, a niece of Theodore who had wed Franklin. As a result of the influence of Theodore and Franklin as Presidents, as well as Eleanor as First Lady, a modern democratic state of equal opportunity was begun in the United States. The documentary film begins with the birth of Theodore in 1858 and ends with the death of Eleanor in 1962

Comment: We missed the 1st episode but then watched episodes 2 through 7. Then last night we watched the 1st episode. I learned so much and heartedly recommend it. I was especially impressed with the coverage of FDR's handicap (we have something in common ... weak legs!). I probably would not have voted for FDR but he was a real leader and he was the President of the whole nation, not just the Democrats. The link between the two family lines was Eleanor who was Theodore Roosevelt's niece (from his brother) and FDR's 5th cousin.Meanwhile the Republicans could learn something from this family: For Republicans, a Democratic Policy Playbook - The Party of Lincoln should take a page from the Party of Roosevelt and Kennedy.

Republicans thinking about an agenda for the future may want to borrow some ideas from an unlikely source—the Democrats of the past. Bill Clinton’s welfare reform and North American Free Trade Agreement. John F. Kennedy’s tax cuts. President Carter’s deregulation. Franklin Delano Roosevelt’s World War II resolve. Put them together and update them for the current moment, and they are the beginnings of an effective policy program for Republicans in Congress or seeking the White House in 2016. What’s more, talking about them as Democratic ideas could help Republicans capture crossover voters while also reminding them how far today’s Democrats have shifted left. The two most effective Republican politicians of my lifetime, Ronald Reagan and George W. Bush, both realized this. When Reagan accepted the Republican presidential nomination in 1980, the Gipper quoted FDR’s 1932 acceptance speech: “For three long years I have been going up and down this country preaching that government—federal, state, and local—costs too much. I shall not stop that preaching. As an immediate program of action, we must abolish useless offices. We must eliminate unnecessary functions of government.”

In the final two weeks of George W. Bush’s successful re-election campaign in 2004, Bush cited Roosevelt in 24 speeches, and Kennedy in 17. “The party of Franklin Roosevelt, of Harry Truman, of John Kennedy is rightly remembered for confidence and resolve in times of war and hours of crisis,” Bush said in Dubuque, Iowa. “Many Democrats in this country do not recognize their party anymore.” As Bush and Reagan appreciated, talking about Democrats favorably—at least those of previous generations—is good politics for Republicans. It provides reassurance and emotional comfort for those voters who aren’t in the habit of voting for the GOP. It also serves to distinguish Democratic politicians of the past from those of the present. As Reagan said during a campaign stop in 1984 in Warren, Michigan, “Whenever I talk about Franklin Delano Roosevelt or Harry Truman or John F. Kennedy, my opponents start tearing their hair out. They just can’t stand it. Well of course they can’t, because it highlights how far they, the leadership today of the Democratic Party, have strayed from the strength of the Democratic political tradition.”

Comment on Eleanor: She was no beauty later in life but was stunning in her youth. She had a hard life, an alcoholic father. She lived in the shadow of her mother-in-law, Sara; and lived with a man who was unfaithful to her. My family was touched in many ways by FDR. Dad was drafted under a bill approved by FDR, my Mother worked for the draft board, and Kathee's Father was part of the Civilian Conservation Corps. Below is a picture of Eleanor in her teens. Source

Jelly donuts: an allegory on why the Fed's policy is unhealthy in the long run

Wall Street Has A New Worry Now That The Economy Is Recovering

Excerpt:

Before the Federal Reserve lowered rates to keep money flowing during the recession, it was easy for people to retire on their savings. The interest on their money could fund visits to grandchildren and tennis club memberships — life was good. ... And the longer rates stay low without a clear sign from the Fed as to when that policy will change, the more people are beginning to think that savers need saving. While Robertson has been saying this for some time, this hasn't always been an issue people felt they needed to take up. Now it's as if there's a new sense of urgency about it. "I want to get off the lower bound as soon as possible, in part because it will benefit savers," said Dudley. Back in 2012 David Einhorn blasted Ben Bernanke for this issue in a column that used The Simpsons and jelly donuts as an allegory for why the Fed's policy could be unhealthy in the long run. "I know this isn't conventional thinking, and it certainly isn't the way the Fed looks at it, but I believe that raising short rates -- not to a high level, but to a still low level of 2 or 3% -- would be much more conducive to both growth and stability," Einhorn wrote.

The Fed's Jelly Donut Policy

Excerpt:

A Jelly Donut is a yummy mid-afternoon energy boost. Two Jelly Donuts are an indulgent breakfast. Three Jelly Donuts may induce a tummy ache. Six Jelly Donuts -- that's an eating disorder. Twelve Jelly Donuts is fraternity pledge hazing. My point is that you can have too much of a good thing and overdoses are destructive. [The Fed] is presently force-feeding us what seems like the 36th Jelly Donut of easy money and wondering why it isn't giving us energy or making us feel better. Instead of a robust recovery, the economy continues to be sluggish. ... Consider my neighbors, Homer, Marge, and their three adult children, Bart, Lisa and Maggie. Homer has retired from the nuclear plant, and he and Marge live off savings and Homer's pension. Bart is in a bit of trouble with too much credit card debt and an underwater mortgage. Lisa has been putting away her salary and has enough for a downpayment on her first home. Maggie owns her own business and is ready to expand. When interest rates are high, Homer and Marge park their savings in CDs or Money Market accounts and get a decent return. There is no incentive for them to take much risk with their money. Bart gets into trouble very quickly and defaults on his loans. Lisa decides she can't afford a mortgage until rates fall. And Maggie, who's been helping out Bart with some of his expenses, believes that she'd make money if she grew the business, but possibly not enough to service the debt she'd be undertaking. When interest rates are low, everything changes. Homer and Marge are getting only a little interest on their savings, and are struggling to live off Homer's pension. They need to rethink their finances. Bart can manage to keep up the minimum payments on his credit cards and stay in his house. Lisa can get a cheap mortgage, and Maggie doesn't need to make such optimistic assumptions in order to expand her business.

Comment: The 2nd article is 2 years old. But the point still stands. Wouldn't it be nice to make 3% on a savings account?! Mortgages would be at 6% and the stock market would decline.

Maple Grove beats out Plymouth

Maple Grove ranks No. 2 on Money's 'Best Places to Live' list
Excerpt:

Maple Grove earned high marks in Money Magazine's national "Best Places to Live" list. The Minneapolis suburb ranked No. 2 on the magazine's Top 50 list of U.S. cities with populations of 50,000 to 300,000. Great bike paths, housing prices, ample outdoor space for recreation and a thriving arts community helped propel the city to its top ranking. "The heart of the city is Town Green, a lakeside park and amphitheater that hosts music, dance, theater, and outdoor movies, " Money Magazine's report included. "The nearby library, opened recently, and community center are other hotspots." The article goes on to say that while the suburb doesn't have a classic, historic downtown area, "its Main Sreet shopping development and nearby Shoppes at Arbor Lakes are good proxy, with a mix of local and chain shops and restaurants." Maple Grove city leaders believe a wide range of factors earned the honor including housing, jobs and general quality of life. "We're absolutely thrilled. We give total credit to our fantastic city employees," Maple Grove City Administrator Al Madsen said. "They make awards like this possible." Madsen said the city offers recreational activities year round which is also a selling point.

Comment: In 2008, it was Plymouth: "Plymouth was named Money magazine’s number one Best Place to Live in 2008 for cities with populations of 50,000 to 300,000. The city stayed in the top dozen when the magazine repeated the rankings in 2010" Truth be told ... they are both nice. 

You don’t need millions to retire happy

"The Retiree Next Door": How successful retirees stretch their savings

 Excerpt:

... more than 500 retirees who shared the keys to their success in a new eBook "The Retiree Next Door" to be released on Thursday by MoneyTips.com. The personal finance education site asked retirees who considered themselves to be living comfortably to discuss everything from their net worth and income to their shopping habits and savings strategies. “About six months ago we did a survey and found that one-third of baby boomers had no retirement plan,” says Marc Diana, CEO of MoneyTips.com. “We wanted to go to the other end of the spectrum and [talk to] retirees who were successfully retired to see if they could help connect the dots.”

Comment:Link free Ebook: The Retiree Next Door. On my vacation last week: 5 1st cousins: 2 dead ... three retired. Of all the relatives we connected with: 2 still working (one 71 ... other 61) ... all others retired. My siblings: 1 retired. 1 works part time. Kathee's siblings: 1 dead ... 3 retired ... only Kathee works. Saturday we are having 2 couples by for dinner. One couple: the husband is retired ... the wife (63) still works. Other couple, the husband is retiring at the end of the month

IPOs are the "shiny objects" of the investment world

How an IPO gets done, step by step
Stick With Benjamin Graham's Advice And Never Touch An IPO

Excerpt:

1. Very few initial public offerings trade at a discount. Think about Graham's overarching philosophy when it came to investing-Graham was all about finding overlooked, underappreciated, and most importantly, undervalued securities that were trading for much less than what they were worth. When a company is going public, the interest in the security is at an all-time high. The IPOs are the "shiny objects" of the investment world. In Graham's view, the inherent novelty of a newly traded security made it a fertile breeding ground for the kind of irrational euphoria that Graham famously warned about in his Mr. Market analogies.
2. Newly traded securities will likely fall hard at the first hint of bad news. Once the newness of a freshly issued stock begins to fade, investors will often flee at the first sign of trouble (even if the business itself happens to be excellent). To use Graham-era examples, Coca-Cola (NYSE:KO) lost 50% of its share price within a year of its 1920 public offering because of supply troubles with the sugar refiners. Clorox (NYSE:CLX) lost 35% of its value following its 1928 public offering when it had to slow its expansion due to sodium hypochlorite shortages that preceded the Great Depression. IBM (NYSE:IBM) lost 75% of its value between its 1916 public offering price and its low price in 1932, even though earnings more than sextupled over that time frame (by the way, the terrible economy of the Great Depression does not alone explain IBM's drastic fall. The company had traded at an irrationally high 60-90x earnings throughout the 1910s and 1920s. As soon as CEO Tom Watson said that the company was stockpiling unsold parts at its factories, the stock fell like a stone)
3. It is very difficult to gauge the appropriate price to pay for an initial public offering. When I determine the appropriate price to pay for an ownership stake in the company, I like to have some historical context to base my decision such as: What were the company's earnings during the last business cycle? How did it hold up during the last crisis? What kind of debt is normative for this company? What's a typical earnings multiple placed on this stock? Essentially, I want details about the company's profit history. With an IPO, you have to make a naked judgment call. Graham was skeptical that a fresh offering provided enough details to make an informed decision about the proper valuation of a security.

Comment: I avoid IPO's. Main reason is # 3 above. Benjamin Graham's The Intelligent Investor

Dad's house - Lowell

Where my Father lived for several adult years. I think just before he was drafted in 1940. Perhaps from age 18 until 21 or 22. My sister thinks this was built in the 1880's

Graves - Grandpa and Grandma Peet

Nancy and Kathee found it. I had not seen it since childhood. Oakwood Cemetery, Lowell

Graves - Grandmother and Grandfather

Grandmother and Grandfather on my Mother's side. Granddad died just months after my birth. Grandmother remarried several years later to Gordon Fleet. At the Bowne Center Cemetery

Graves - Cary and Starr

Comments: Cary and Starr were my first cousins on my Father's side. Their mother, Ella, was Dad's sister. These are at the Bowne Township Cemetery near Alto MI.

Showboat Lowell

Nancy and I at the Lowell Showboat on the Flat River. An article about the history of the Lowell Showboat. Photo above was on Monday September 8th

Leach Lake Cabins

We stayed in the Lakehouse. It was a fabulous location close to all of our activities.

Afghanistan Reconstruction Costs Top WWII’s Marshall Plan

America’s $104B in Afghanistan Is Failing


Excerpt:

So far, the United States has poured more than $104 billion into Afghanistan reconstruction efforts - that’s more than all the money spent on reconstructing Europe after World War II. Much of that money, as auditors have noted, has been lost to waste, fraud and abuse. In 2010, SIGAR accountants told The Fiscal Times they could only account for less than 10 percent of that money

Comment: More. These articles disabuse the often stated view that the US has not done enough for Afghanistan. We've given our blood ... we've given our $$ .. time for the Afghans to own up for their own future

Day 2 | Sleeping Bear Dunes

Sleeping Bear Dunes National Lakeshore

Day 2 | Traverse City

Northland to Manistique | September 6th

Mattoon house - Kathee's birthplace

At the end of a gravel road with a "dead end" sign,  is the home where Kathee was born. (She was  born at home. 

Mom and Dad's graves

Kathee's mother died in 1990 and her Dad in 1991

Lighthouse Manistique

Not the best photo but a beautiful sight

Phlox house

Kathee's parents lived here in retirement. The double garage on the left is new. The room on the right is where the garage formerly was. 

Fall trip - Phlox | September 6th

Chippewa Falls, Wisconsin

Kathee was born here - Mattoon WI.

Kathee's parent's home in Phlox. Greatly modified from when they lived here

General Store in Phlox

Kathee's parents' graves in Phlox

Birthday at work

Updating my address ...

Earth's new address: 'Solar System, Milky Way, Laniakea'

Excerpt:

The supercluster of galaxies that includes the Milky Way is 100 times bigger in volume and mass than previously thought, a team of astronomers says. They have mapped the enormous region and given it the name Laniakea — Hawaiian for 'immeasurable heaven'.

Comment: So my updated address is:

Jim Peet
Cottonwood LN N
Plymouth, MN, USA, Earth, Solar System, Milky Way, Laniakea

My "Frankenstein" quip and how I ended up in the Star Tribune

Employers who look beyond disabilities find dedicated, loyal workers.

Excerpt:

Jim Peet, 65, a senior IT business consultant at Wells Fargo, injured himself in a trampoline accident in 1987 and needs crutches to walk.

“I walk like Frankenstein,” Peet quipped.

He can’t imagine not working and plans to volunteer to stay active after retirement. “Work is affirming because you’ve got to get dressed, you work with your work colleagues, some of whom become friends, and you get paid,” Peet said. “You don’t go stale.”

Pete also says he is lucky because he was hired by a supervisor who overlooked his limited IT background “and took a chance on me.”

Comments:

• The Frankenstein quip was not planned. The interviewer asked me in the phone interview if I used a wheelchair. I said something like I'm an incomplete quad and my legs are very weak so I walk like Frankenstein
• The first to use the Frankenstein allusion was a young female aid at Craig Hospital. My paralysis was fading away and I had that day (at Craig Hospital) had a consultation with my neurologist. He said that my prognosis is that I would ambulate. I didn't know what ambulate meant and he said I would walk with assistance. The ambulate prognosis was in my chart and my evening aid (who would prepare me for bed and other care details) picked up on this. That evening or shortly afterwards as I was all tucked in and ready for sleep she said: "you're going to walk like Frankenstein". She had such a great sense of humor and as she said this she held her hands out in front and walked in a stilted Frankenstein-like way. It brings a smile to my heart whenever I think of her
• How the interview came about. It's somewhat convoluted and I almost have forgotten the details. Back in the Spring I was asked to speak at an event. I actually forgot the event name. But in the audience were representatives of major Twin-Cities' companies: General Mills, 3M, Cargill, et cetera. I gave a 15 minute speech on being handicapped in the workforce
• Much later someone who had been in the audience contacted Wells Fargo and asked if I would be available for a Star Tribune article. Corporate communication contacted me.
• I completed a written biography and then for months nothing happened until last week
• The author of the article contacted me last Tuesday to ask when I could be phone interviewed. I said the next day. That interview was about half an hour. He asked if the Star Tribune photographer could come by and take some photos. I agreed
• As it turns out having one's photo taken at Wells Fargo is no simple thing. I am in a highly secure building. My manager and my manager's manager had to be contacted. Local HR was involved. And Corporate Communications had to be involved.
• The photo shoot was arranged for Thursday morning. I cleaned up my desk. I got my 20 year award out of the box and displayed it prominently on my desk. (It did not make the photos!). Corporate Communications had to accompany the photographer. My screen could not be photographed. Also my desk was completely clear of everything except my 20 year award.
• I estimate that 100 photos were taken. The photographer asked to take my picture walking. I walked over to the photocopier and he followed me. I said "don't take a picture of my butt". He moved to the front. At the copier I absentmindedly punched in a number and the photocopier spit out dozens of blank pages.
• There was much that I had in the biography and the interview that did not make the article:
• Being a  protestant minister for 16 years
• Going back to college to get a BS in computer science
• The name of the hiring manager - Jeff Williams
• Being in Toastmasters
• Wanting to volunteer at my church after retirement
• An anecdote about the elevator buttons being changed from concave to convex to help a handicapped friend be able to push the elevator buttons
• But the unplanned Frankenstein quote made it
• Actually Frankenstein (the Boris Karloff character) walked better than I do. But I walk and I am OK with that