Monthly Archives: November 2016

5 Reasons for financial planning in your 50s

A person in there 50s is in a unique situation when it comes to planning for retirement. A person in their 50s most likely has established their career as well as their lifestyle, yet they still have 10-20 years before retirement. Having a relatively stable lifestyle with retirement in the not too distant future makes financial planning both important and fruitful for most people in their 50s for 5 reasons.

Predictable Income

In a person’s 50s they have been likely working in their current career for multiple decades. Additional promotions can often happened, but they are more predictable and annual raises are probably expected. With income being predictable, savings rates can also be predicted with some accuracy such as contributions to retirement accounts (401K, IRA, etc…), figuring out if/when they can pay off their mortgage, and when they will eliminate any other debts. By using some sort of projection of asset growth a person in their 50s can accurately estimate what their assets will look like in retirement.

Retirement Expenses

I have seen two schools of though when it comes to projecting retirement expenses. The first school of thought is to actually list all of a person’s current and expected expenses and adjust for inflation accordingly. The second school of thought (and my preferred method) is to start with current income, back out savings, and adjust for lifestyle changes and inflation from there. I like the second method, because I have found people are very good at underestimating what they spend. Either way, both these methods can work as accurate predictors for retirement.

Time to Change


Once a person knows what they will have as far assets and expenses in retirement it takes a little bit of algebra to figure out their withdrawal rate. Subtract any fixed income in retirement like social security or pension income from expenses. Divide this number by the total investible assets and you have the withdrawal rate. Walter Updegrave explains what a reasonable withdrawal rate is in his article for CNN Money when he says, “That’s a judgment call, but I’d say 3% to 4% is a decent place to start if you want your savings to be able to support you 30 or more years.” As explained in my previous post 4 Ways to Plan for Retirement in your 40s, a person in their 50s can look at a number of ways to alter their plan.



If insurance products like life insurance, long term care, annuities, etc… make sense in retirement it is worth it to start looking before retirement. Insurance starts getting expensive quickly into a person’s 60s for obvious reasons. I don’t suggest anybody just start going out and buying any or all of the above types of insurance in their 50s, but it is worth seeing if some insurance options make sense with an advisor. Many annuities in particular can be much more beneficial if purchased up to 10 years ahead of when a person needs the money. I could write a whole thesis on annuities, and I will most likely dedicate at least one whole blog post to annuities.

Estate Planning

At some point everyone will hit the big one. When some one is in their 50s I would hope that they have accumulated enough assets that it is worth while to take a hard look at estate planning. For most people estate planning includes a health care directive, power of attorney, and adding beneficiaries to accounts. As the estate becomes more complex and real-estate and other larger assets become involved, a trust can make a lot of sense. Estate planning may not be the most fun discussion some one can have with their family, but by the time someone is in their 50s mortality starts becoming more of a reality and is important to plan for.


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4 Ways to Plan for Retirement in your 40s

I see a lot of people in their 60s that are getting ready to retire in a few weeks and want to start making sure that everything is in place. The first thought in my head is usually, “I wish you had come to a financial advisor twenty years ago.” In a person’s 60s, if the retirement projections don’t look right they have much fewer options available to them. Someone in their 40s however has more opportunities to make changes that can help improve the chances that they will be able to retire the way they want to. As Jim Cramer explains in Stay Mad for Life, “If you’re over 40 and you haven’t started planning and investing for retirement, it won’t be nearly as easy for you to build a hefty retirement fund.” On a basic level, people in there 40s have four ways that they can improve their retirement outlook: save more, work longer, grow their money faster, or lower projected retirement expenses.

Save More

As I discussed in Cash Flow is King in your 30s, savings is simply a matter of a person spending less than they make. Every little bit helps and making sure that a person is at least contributing to their 401K up to the match is crucial. As I have stated before, compound interest is incredibly powerful. Warren Buffet attributes his success largely to compound interest and Einstein deemed it the 8th wonder of the world.

Work Longer

Working longer is most likely the least appealing of the four options. I have found that as the idea of finally leaving the workforce grows nearer, each additional year in the workforce becomes more and more daunting. Every year a person works before retirement makes a bigger difference than most would expect. Each additional year is another year to save money for retirement, another year to grow the funds currently in the retirement, and one less year to fund retirement. Considering pushing back retirement becomes even more important when factoring in insurance costs before Medicare part A kicks in at 65.

Grow Faster

Growing money faster… Well I am here to tell you that I have an investment that will grow your money quickly, not require it to be locked up for any amount of time, and has zero risk of losing principal. If someone tells you this they are lying to you. I’m not going to go deep into investing theory, but basically the longer you have to hold on to an investment and/or the greater chance an investment has of losing value, the higher the expected return of that investment is in the long run. Luckily people in their 40s still have the ability to hold on to investments with higher short-term volatility in exchange for greater long-term gains.

Spend Less

I have found that lowering expected retirement expenses for most people ends up being more of a necessity than a planned change due to a lack of retirement planning. People can’t take a loan on retirement. Once a person is out of money in retirement (Which is generally late into retirement) they have no way of regaining any sort of wealth. I often see retired people that can make retirement work off of their Social Security checks alone, but it is not pretty. A person in their 40s projecting retirement expenses may be premature, but it is a good time to start entertaining what retirement looks like.

Take Away

If a person in their 40s can save a little bit more, work towards earning a little bit more, consider pushing retirement back a little, and look at cutting back expenses in retirement by a little it can go a long way towards a long lasting retirement.

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Cash Flow is King in your 30s

At some point in most peoples’ 30s they have a clearer picture of where their life is going. With a person who graduates with a four year college degree for instance, by the time they are in their mid 30s they have about 10 years of professional experience. Assuming a person has used there 20s to explore their path in life, someone in their 30s should begin looking at cash flow.

The concept of cash flow in personal finance is very simple. What do you spend and what do you bring in. Most people have a general idea if they are living paycheck to paycheck or are living well within their means. The 30s are the time when someone should start nailing down what their cash flow looks like.

Thanks to the miracle that is compound interest, the earlier someone starts saving the faster they can grow their wealth. It is important that a person in their 30s begin saving and they have two ways to do so: Earn more or spend less. Most people don’t have a lot of control over their pay. Ideally a person can continue to work hard, maybe go back to school, and steadily increase their pay.

What most people do have control over are their expenses. Just because a person is “all grown up” doesn’t mean they have to be spending money like a grownup. According to Brianna McGurran, “If you think adulthood means finally ditching the cell phone plan you’ve shared with your parents and siblings for years, think again.” Finding incremental ways to save a little bit of money can make a large difference in putting away money for financial goals like retirement.

When young people begin to transition from being cash flow negative to positive they are often riddled with debt. Paying off debt, especially high interest debt like credit cards is paramount to beginning to build true wealth. Jarret DiToro of Lending Tree explains, “Think of someone carrying a credit card balance like a patient who enters an emergency room bleeding badly.” Making small payments to high interest credit card can be a vicious cycle and often dramatic measures need to be taken to cut down the debt. Using a balance transfer with a promotional interest rate can often help.

At a minimum it is important that a person in their 30s is able to achieve a few key goals. A person in their 30s should have a safety fund, be able to pay for adequate insurance, eliminate high interest debt, and at least contribute to their retirement fund up to their employer’s match. Beyond these basic steps, budget goals can vary greatly between people. As stated before, the more someone in their younger years can save the better. How to invest additional funds whether they go towards retirement, to put the funds towards a home purchase, or invest in some other opportunity can vary greatly from person to person.

All of that being said every person’s situation is unique. Should a person go back to school? Should someone cut the cable bill? The answer is different for everyone. One way or another though it is very important the people begin looking at goals like retirement early. It is debatable, but I think it is too early for creating a financial plan and forecasting retirement. So much can still change in the following 30 years. In a persons 30s it is about figuring out what cash flow looks like and how that can be improved going forward so that a person can begin saving for the future.


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Investing is more than money in your 20s

Fortunately/Unfortunately most people in their 20s don’t take a serious look at their finances. I primarily see two types of people in their 20s. Most often times financial planning comes down to budgeting enough money to pay for rent and groceries. The other type of person in their 20s, albeit much more rare, is the person that is looking to build wealth immediately. I would argue that a happy medium may be appropriate when it comes to building wealth.

I like to use a metaphor of hanging up a basketball hoop over the garage. Obviously if you do not take the time to get a ladder you are not going to be able hang the hoop. At the same time it would not be good if you rush to get the ladder, run up the ladder, and start attaching the hoop to find that you did not place it where you wanted. The most appropriate action is to survey the area, in this case the driveway, and measure exactly where you want the hoop placed.

Purely from a dollars and cents standpoint in makes sense that a young professional should begin saving every dollar they can as soon as possible. Hypothetically if a person at the age of 20 were able to earn 6% on average with their money and they were able to save $1,000 over the course of a year that money would be worth over $13,700 by the time they are 65. If you increase that number to 8% that number is of $31,900. 6-8% returns are not unrealistic considering that according to Brian Bollinger of, “Historically, the stock market has been the greatest source of long-term wealth creation, with the S&P 500 delivering a 9.0% compound annual growth rate since its inception in 1871.” Point being, time is on your side in a big way when it comes to compound interest.

Money as most people know is not the be all end all. Much like the fact that someone in their 20s has an opportunity greater than anyone else when it comes to growing their wealth, young people also have the mobility to take their life in many more directions. Someone in their 20s can still move the ladder. When it comes to buying a house Emmie Martin of Business Insider explains, “It’s a long-term commitment that requires strong financial standing, and in many ways it’s about more than just money.” There is something to be said about not focusing on solely building wealth and being willing to explore. Once you are half way up the ladder it is more difficult to go back down and move it again.

It is important that young people take a hard look at what they want their life to look like and plan accordingly. Does exploring mean furthering their education, looking at starting a business, or maybe it means following a not-so-profitable passion and planning expenses accordingly. Whatever the path is, it is important that a person in there 20s explore where they want to place their ladder and prepare to climb it.

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Echo Lake to Flagpole Peak

Ryon invited Kristen and I to go on an afternoon hike along Echo Lake last Saturday.

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Ryon then decided we should go off the regular path and head up to Flagpole Peak.

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Halloween Salsa Dancing at Edge

Last Friday night Kristen and I went to Edge for Salsa dancing. At 7:30 BB & KiKi give a free salsa dance lesson. From 8:30 to 10:30 is social salsa dancing. Even though I wasn’t setting the floor on fire I had fun and would do it again.

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Filed under Events, Music

Ghost Hunting in Hunters Point

Jeremy and I went ghost hunting in an abandoned pipe factory in Hunters Point San Francisco California.



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We had to climb into a hole in the wall in-order to enter the building.

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We had to walk across this catwalk to get to the second taller building and go to the roof.

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In the basement we found the blueprints to the building.


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