Financial Literacy and Positive Future Financial Outcomes and Behaviors

Financial Literacy Is Significant Indicator of Positive Future Financial Outcomes and Behaviors

The first step for Americans to achieve a financially stable and secure tomorrow is to measure and manage your current personal financial situation. You can do this by taking a proactive approach to managing your money and controlling your spending.

Furthermore, it important to recognize the warning signs that a financial hardship may be in your future. If you’ve fallen behind in your credit card payments, are receiving calls from collection agencies, or financial issues are affecting your home life, financial literacy can provide you the skills and knowledge to help you take control of your finances.

Only 17 U.S. states require a financial literacy course in high school which might explain why U.S. adults averaged an “F” on a recent survey about financial literacy.

Taking control of your financial future and start building wealth

If you’re like most Americans, you’ve thought about financial literacy, saving, investing and building wealth.  Maybe you’ve already started. Or maybe you’re still behind the financial curve. All that matters now is that you’re heading down the responsible path of financial illiteracy and building your wealth. Because this isn’t just about making your money work for you – it’s about ensuring your current and future quality of life.

And whether that means retiring early, supporting your family, or simply having the financial safety net to pursue your long-forgotten dreams, financial literacy and getting started investing are critical.

“Achieving financial literacy for all Americans has always been an important goal”, said Harvey L. Pitt, Chairman, U.S. Securities and Exchange Commission in testimony before an U.S. Senate Committee.  “With so many individuals and employees, through their employer’s 401K plan, invested in  markets, financial literacy is now not only important but an essential skill and goal.”

Budgeting, saving and investing for retirement.

All Americans should have the opportunity and the wherewithal to participate in financial markets. Financial literacy is a crucial foundation for participation and being successful. People need to be able to “read, write and speak” basic financial concepts in order to make informed investment decisions.

Beyond basic fairness issues, there are significant economic and social benefits of financial education. People of even modest means can realize financial peace of mind and financial security and all that it promises — such as buying a home, pursuing educational opportunities and retiring with dignity. As a society, we should want all Americans to have the opportunity and the ability to focus on building up their savings accounts and to invest in financial markets. Historically, investing in the market has resulted in returns superior to other savings strategies and financial assets.


References:

  1. https://www.sec.gov/news/testimony/020502tshlp.htm
  2. https://www.nfcc.org/resources/client-impact-and-research/2019-consumer-financial-literacy-survey/#:~:text=The%202019%20Consumer%20Financial%20Literacy%20Survey%20was%20conducted,overview%20of%20financial%20literacy%20statistics%20in%20the%20U.S.
  3. https://militaryfamilyadvisorynetwork.org/milcents/

We’re passionate about teaching financial literacy advising others how to save for the future, invest for the long term and build wealth for those who want to achieve financial security and comfortable retirement.

“Once you find the thing that you will do for free, then that’s the thing that you’re going to end up doing for a lifetime.’”

Financial Literacy: Saving for Retirement

“We teach our kids everything in high school: sex education, geography, math, reading, etc. We do not teach them anything about credit cards, or debt, or investing. Then we ask ourselves why we end up in a situation as we are today, which has been highlighted by the pandemic a bit: There’s 100 million people in America that have set nothing aside for their retirement.” Kevin O’Leary

The retirement crisis in America is an ongoing worry for most Americans. As companies have shifted away from offering traditional (defined) pension plans to employees, much of the responsibility in planning for financial life after work now relies heavily on individuals. Unfortunately, the crisis is mostly due to a lack of financial literacy and consumer spending on new shiny things, and as a result, most are struggling to keep up.

A March 2019 Bankrate survey found that more than 1 in 5 working Americans aren’t saving any money for retirement, emergencies or other financial goals. Major barriers as to why respondents said they weren’t saving included not making enough money, financially helping adult children, and large credit card and other personal debt payments.

Financial assistance to adult children

Parents are helping their adult children financially and the majority of those parents say that financially supporting their adult children is hurting their savings for retirement and their financial futures, according to Bankrate. In total, 50 percent of respondents to a Bankrate survey say they have sacrificed or are sacrificing their own retirement savings in order to help their adult children financially.

Living and remaining in the workforce longer

American baby boomers are healthier and are living longer; as a result, they’ll need a bigger nest egg to fund their retirements, especially since the number of employers providing pensions has been steadily shrinking. As some reach retirement age and realize they don’t have enough saved, it’s keeping them in the workforce longer. Workers older than 55 years young filled almost half of all new jobs in 2018 even though they make up less than a quarter of the nation’s labor force, according to an analysis of Labor Department data by The Liscio Report.

“Many seniors are having a hard time making ends meet and find they have to work when they had not planned to.” Dean Baker, cofounder of the Center for Economic and Policy Research.

“Most Americans haven’t made saving [for retirement] a priority”, says Nick Holeman, CFP at Betterment. “Most people don’t like to admit that, but we live in a consumer culture and it can be difficult to turn down the new shiny gadgets.” Saving for retirement is your largest and most important financial goal. Even if it feels very far away, it’s important to start saving early.

Holeman recommends that Americans wanting to retire to take three steps:

  1. Create financial goals and a financial plan. At a minimum, you should have these two financial goals: Create an emergency fund and save for retirement. SoFi calls these “bookend goals”—your primary short-term and primary long-term goal. Your financial plan should consist of small, achievable goals; they’ll help you see your finish line and empower you to stay on track. Start by determining how much you need to retire comfortably.
  2. Come up with a strategy to execute. Selecting an investment strategy depends on your financial goal amount (how much you want to save each month or year) and the time horizon (when you’d like to use that money). Decide how you plan to save that amount.
  3. Get creative. For those struggling to save, consider retiring later or working part-time during retirement. Holeman says there are tons of other options out there, which he refers to as “levers,” like moving to a low-cost state or downsizing your home. Engaging them can help get your retirement savings back on track.

Investing

It has been regularly reported that billionaire investor Warren Buffett made 99% of his current wealth after his 50th birthday.  At an age when most Americans give up hope achieving financial independence, Buffett was just getting started on the capital assets he controls today.  Building wealth could mean financial peace, taking a spur-of-the-moment international travel.

Many older Americans are advised to sell or significantly reduce their stock holdings and frankly, this advice is antiquated, shortsighted and wrong.  Buffett built his incredible level of wealth by continuing to buy stocks despite his advanced age.


References:

  1. https://www.bankrate.com/personal-finance/financial-independence-survey-april-2019/
  2. https://www.bankrate.com/retirement/baby-boomers-unable-to-retire-gig-economy/
  3. https://www.usatoday.com/story/life/allthemoms/2019/04/24/adult-children-robbing-parents-retirement-savings-study-finds/3559812002/
  4. https://d32ijn7u0aqfv4.cloudfront.net/wp/wp-content/uploads/20170718165706/Guide-to-Investing-Intelligently_V5-1.pdf

COVID Vaccine and Return to Normal

Public health officials say that even after you get vaccinated against COVID-19, you still need to practice the pandemic precautions. That means steering clear of crowds especially indoors, continuing to wear a mask in public, maintaining 6 feet or more of physical distance from people outside your household and frequently washing your hands.

It takes time for the vaccine’s effectiveness to build up after getting a shot. Effectiveness is defined as not getting sick with COVID-19.

The objective of these first-generation vaccine candidates wasn’t to prevent COVID-19 transmission entirely. Instead, researchers were hoping the vaccines would prevent severe COVID-19 and deaths, and that’s exactly what Phase 3 trials showed. The Pfizer/BioNTech, Moderna, and AstraZeneca/Oxford vaccines can all prevent severe COVID-19 with varying degrees of efficacy.

People immunized against COVID-19 will have a high chance of avoiding a severe case of the illness after an actual infection, but infection with the novel coronavirus would be possible even after a person acquires immunity.

A new study from Israel indicates that the immunity developed from the Pfizer/BioNTech vaccine is so strong that it might prevent COVID-19 transmission. Researchers from the Sheba Medical Centre in Tel Aviv studied the immune response in 102 hospital staff members who received both Pfizer/BioNTech vaccine shots. They found that 100 people developed up to 20 times more neutralizing antibodies within a week of the second dose than COVID-19 survivors who went through severe COVID-19 cases. These higher levels of antibodies that would neutralize the actual virus upon actual encounter are believed to also prevent transmission.  With the higher the number of antibodies, the harder it would be for the virus to infect cells and replicate enough for vaccinated people to become infected.

https://twitter.com/RolandBakerIII/status/1351934025120714753?s=20

In order to put this pandemic in the rearview mirror, a large percentage of the population needs to either be vaccinated or gain immunity via an infection with the virus (a much riskier route that would include many more deaths).

When a large portion of the population has immunity to the virus because of this sort of “herd immunity,” it’s unlikely to keep spreading. Even people who haven’t been vaccinated (such as very young babies and those with compromised immune systems) are protected once this level of immunity in a population is achieved, because the illness has little opportunity to spread within the community — most people who run into the virus in this scenario are immune.

What is herd immunity?

Herd immunity (or community immunity) occurs when a high percentage of the community is immune to a disease (through vaccination and/or prior illness), making the spread of this disease from person to person unlikely. Even individuals not vaccinated (such as newborns and the immunocompromised) are offered some protection because the disease has little opportunity to spread within the community.

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Herd immunity depends on the contagiousness of the disease. Diseases that spread easily, such as measles, require a higher number of immune individuals in a community to reach herd immunity. Herd immunity protects the most vulnerable members of the population.

COVID-19 is a very contagious disease.

A large percentage of the population will need to be immune against COVID (through infection or vaccination) before herd immunity will be achieved. It is not known when that will happen, but it will depend on how many people develop immunity after COVID-19 infection, how soon a COVID-19 vaccine is widely available to the general public, and how many people get vaccinated. Throughout this time period until herd immunity is achieved, it is very important to continue to wear masks in public, to wash or sanitize your hands, and to maintain social distance to slow the spread of COVID-19.


References:

  1. https://www.npr.org/sections/health-shots/2021/01/12/956051995/why-you-should-still-wear-a-mask-and-avoid-crowds-after-getting-the-covid-19-vac
  2. https://www.nejm.org/doi/full/10.1056/NEJMoa2034577
  3. https://www.msn.com/en-us/health/medical/study-says-pfizer-vaccine-immunity-is-so-strong-it-might-prevent-covid-19-transmission/ar-BB1cTAkA?ocid=uxbndlbing
  4. https://apic.org/monthly_alerts/herd-immunity/

Hurting long before Pandemic, failing companies took stimulus money then closed anyway

Stein Mart Inc. was in desperate financial shape long before COVID-19 forced closures at its discount department stores. During the past several years, the retailer had hemorrhaged tens of millions of dollars. Like many struggling businesses, the company in June 2020 turned to the federal government’s Paycheck Protection Program, or PPP, as a possible savior. The $10-million loan didn’t last long.

Within two months, Stein Mart filed for Chapter 11 bankruptcy protection, citing more than $500 million in liabilities. The company closed all 280 stores and 9,000 workers lost their jobs. And, the company will never repay American taxpayers the $10-million.

Nothing prevented Stein Mart from taking the PPP handout on its way under.

Lenders participating in the Small Business Administration relief program shelled out more than $520 billion last year to millions of companies searching for a lifeline to stave off the economic impacts of COVID-19. Like Stein Mart, USA TODAY found that some were failing long before the pandemic hit.

Josh Salman from USA Today explains how failing companies were able to take stimulus money and close anyway. USA Today

To read more, go to: https://www.usatoday.com/story/news/investigations/2021/01/13/recipients-stimulus-funds-went-bankrupt-fired-workers-and-closed/3960382001/

Habits for a more Abundant Life

Two most important:

  • Read at least thirty minutes everyday
  • Know and pursue a goal your passionate about

Intelligence, talent and charm are great, but more often than not these aren’t what separate the wealthiest among us from the poorest.

Instead, the differences are in our daily habits.

Do you realize that these subconscious, second-nature activities make up 40 percent of our waking hours? That means that two out of every five minutes, all day and every day, we operate on autopilot.

It’s true: Habits are neural pathways stored in the basal ganglia, a golf ball-size mass of tissue right in the center of our brains, in the limbic system.

This neural fast lane is meant to save the brain energy: When a habit is formed and stored in this region, the parts of the brain involved in deeper decision-making cease to fully participate in the activity. However, we all know there are good habits and bad habits.

5 habits

We know that habits can either help or hurt your success in life. Bad habits can fester and grow into a lifestyle that takes you away from the things you want to do—and good habits can help you create a life that’s full of action and accomplishment.

If you were to look at someone you respect, someone who’s successful, you would see that they spend each day doing the things that help them accomplish their biggest goals. This isn’t to say they’re perfect—because no one is—but despite the things that are not perfect in their lives, they continue to make moves that have a positive impact. And it starts with their daily habits.

Now, while we can all study successful habits, it’s meaningless if we don’t implement that knowledge. So, according to Kimanzi Constable, here are five daily habits you can adopt to create the life you truly want to live:

1. Plan out your day the night before.

It’s easy to get off track when you don’t have a plan. Without planning what your day will look like, you wake up not knowing what you want to do or accomplish. Spend a little time the night before giving yourself clear goals for the next day. Life rarely works out as planned, but with a plan, you can adjust without losing momentum.

2. Read books and novels to get inspired.

Reading is an essential element in success—books contain so much knowledge. Forming a daily reading habit will expand your knowledge, allow you to learn more about your profession and help you on your journey to success.

3. Make your health and fitness a priority.

What you eat and how much you exercise affects every area of your life. Successful people use their exercise as a time to reset and reinvigorate. And they make smart food choices that will give them the energy they need to accomplish everything on their daily to-do list.

4. Don’t get distracted by what other people are doing.

Other people’s journeys to success can be inspiring; you can learn so much—about their mistakes, their victories, what to do, what not to do. But if you start comparing your progress to theirs, instead of using their stories as inspiration, you can lose focus and fail to keep your eyes on your own mountain top. Realize your journey is unique and can’t be compared. So don’t get stuck in the comparison trap—stay focused on your why.

5. Live each day as if it were the last.

Life is busy, it’s chaotic, and so you tend to want to focus on the future—we all do it, worry about what’s next. But while planning is important, so is living—being fully present.

Life is short, and there’s no guarantee as to when it will end. Successful people live each day as if it were their last and make the most out of each moment—and so should you.

When you look at a big goal, it’s common to get frustrated at the enormity of what you’re trying to accomplish. If you wake up each day determined to spend it forming good habits, you give yourself a better chance at success. So use these five habits as a starting place to build whatever a successful life means to you.


Read more:

  1. https://www.success.com/16-rich-habits/
  2. https://www.moneycrashers.com/productive-habits-wealthy-successful-people/

Martin Luther King (MLK) Day of Action

“The time is always right to do what is right.” Dr. Martin Luther King, Jr.

With respect towards Martin Luther King Day, this is a terrific time to think of his words and vision, and try to employ them in our daily lives at home and at work.

“Let this holiday be a day of reflection, a day of teaching non-violent philosophy and strategy, a day of getting involved in non-violent action for social and economic progress”, wrote Coretta Scott King in The Washington Post in 1983.

The day is more than a day of celebration of the civil rights leader.

“Too many Americans would rather celebrate than follow Dr. King”, as Marian Wright Edelman, President, Children’s Defense Fund, commented. “Many celebrate Dr. King the orator, but ignore his words about the need for reordering the misguided values and national investment priorities he believed are the seeds of America’s downfall.”

“We must learn to live together as brothers or perish together as fools.” Dr. Martin Luther King, Jr.

“Dr. King’s greatness lay in his willingness to struggle to hear and see the truth; to not give into fear, uncertainty and despair; to continue to grow and to never lose hope, despite every discouragement from his government and even his closest friends and advisers” Edelman advises.

Dr. Martin Luther King, Jr., in his last Sunday sermon at the National Cathedral in Washington, D.C. in 1968, said:

“It may well be that we will have to repent in this generation. Not merely for the vitriolic words and the violent actions of the bad people, but for the appalling silence and indifference of the good people who sit around and say, ‘Wait on time.’ Somewhere we must come to see that human progress never rolls in on the wheels of inevitability. It comes through the tireless efforts and the persistent work of dedicated individuals who are willing to be co-workers with God. And without this hard work, time itself becomes an ally of the primitive forces of social stagnation. So we must help time and realize that the time is always ripe to do right.” Dr. Martin Luther King, Jr.

The “time is ripe right to do what is right” and reject the ugliness, bitterness and greed that have permeated too much of our political discourse. For example, the two U.S. Senate runoff races in Georgia that determined control of the U.S. Senate laid bare the depths of despicableness and hatefulness both conservative and liberal operatives would venture to win those seats for their respective side. The political discourse over linear and social media forced many Georgians to silence their media and not answer their phones.

” We may have all come on different ships, but we’re in the same boat now.” Dr. Martin Luther King, Jr.

Moving forward

We need to move forward and not backward and relearn for ourselves and teach our children we can disagree strongly without disagreeing wrongly. “We have a voice, and we are powerful”, said Jennifer Lockwood-Shabat, President and CEO, Washington Area Women’s Foundation. “It’s how we choose to harness our voice and power in the days, weeks, months, and years ahead that matters. We cannot be overwhelmed by the tasks at hand. There are actions each of us can take in our daily lives to make a difference.” Lockwood-Shabat states that you can:

  • “Make an effort to understand opinions and beliefs that are different from yours. Read books and articles that explore different opinions and perspectives. Seek out media outlets and journalists that you may not necessarily follow. Have meaningful conversations with the friend, neighbor, or colleague with whom you may disagree.”
  • “Get involved locally. Feel passionate about an issue in your community? Get involved and learn more. Find the organization leading the charge on the issue and get connected. Attend local government meetings or hearings on the issue you care about. Volunteer.”
  • “Become politically active at the local level. Regardless of your political affiliation, become informed about races happening in your own backyard. Learn more about the candidates and their positions. Attend events and voice your opinion and concerns. Support the development of the next generation of political leadership. Consider running for office.”
  • “Use your voice. Speak up when you see a wrong that needs to be righted, whether it’s in your neighborhood, your school or your workplace. Write your local political leaders. Write a letter to the editor or an op-ed.”

MLK Day brings with it a sense of optimism and hope, whether that means you resolve to help others, spend more time taking care of yourself, learn something new. You can be more resolved and committed to fighting for a fairer and more just and equitable community for all Americans.

“Whatever your life’s work is, do it well. A man should do his job so well that the living, the dead, and the unborn could do it no better.” Dr. Martin Luther King, Jr.

It maybe unrealistic to burden you with the country’s problems, but if you can do something positive for someone or within your community, it’s a start.

The hope is that Dr. King’s words are as powerful today as when he first said them and that they will inspire positive change and development in the world. For example, he exclaimed, “Lightning makes no sound until it strikes.”

What he meant was that “Apathy cannot be tolerated by an individual, a leader or an organization. If you see something happening, don’t wait for the negative ramifications to occur. Respond to the issue and act. If nothing is said or done, then silence connotes complicity — and that’s what people remember.”


References:

  1. https://www.cnbc.com/amp/2021/01/18/martin-luther-king-jr-life-leadership-lessons.html?__twitter_impression=true
  2. https://www.huffpost.com/entry/the-time-is-always-right_b_9592976
  3. https://thewomensfoundation.org/2017/time-always-right-whats-right/
  4. https://www.wsj.com/livecoverage/trump-biden-election-day-2020/card/csOMnlXFihSgJ256gUwI

Social Security Retirement Benefits

Achieving the dream of a secure, comfortable retirement is much easier when you plan your finances.

Social Security is part of the retirement plan for almost every American worker. It is considered to be one of the three “legs” of retirement finances (retirement plans and savings being the other two), and for some it may be the only source of retirement income. It provides replacement income for qualified retirees and their families.

Planning is the key to creating your best retirement. You’ll need to plan, save and invest for decades to achieve your retirement goals. While many factors affect retirement planning, it is important that you to understand what Social Security can mean to you and your family’s financial future.

As you make your financial and retirement plan, knowing the approximate amount you will receive in Social Security benefits can help you determine how much other retirement income you’ll need to reach your goals.

Social Security replaces a percentage of a worker’s pre-retirement income based on their lifetime earnings. The portion of your pre-retirement wages that Social Security replaces is based on your highest 35 years of earnings and varies depending on how much you earn and when you choose to start benefits.

How Social Security system works

The theory behind the concept of Social Security was that taxes assessed on the wages, up to a statutory limit, of those who are gainfully employed will be used to pay the benefits to those who have left the work force due to old age. This, when you work, you pay taxes into Social Security. Social Security Admission (SSA) use the tax money to pay benefits to:

  • People who have already retired.
  • People who are disabled.
  • Survivors of workers who have died.
  • Dependents of beneficiaries.

The money you pay in taxes isn’t held in a personal account for you to use when you get benefits. SSA uses your taxes to pay people who are getting benefits right now. Any unused money goes to a Social Security trust fund that pays monthly benefits to you and your family when you start receiving retirement benefits.

You can work while you receive Social Security retirement or survivors benefits. When you do, it could mean a higher benefit for you and your family. But, if you’re younger than full retirement age, and earn more than certain amounts, your benefits will be reduced. The amount that your benefits are reduced, however, isn’t truly lost.

Your benefit will increase at your full retirement age to account for benefits withheld due to earlier earnings. (Spouses and survivors, who receive benefits because they have minor or disabled children in their care, don’t receive increased benefits at full retirement age if benefits were withheld because of work.)

Each year, Social Security Admission (SSA) reviews the records of all Social Security beneficiaries who have wages reported for the previous year. If your latest year of earnings is one of your highest years, they recalculate your benefit and pay you any increase you are due. The increase is retroactive to January of the year after you earned the money.

When you begin receiving Social Security retirement benefits, you are considered retired for SSA purposes. You can get Social Security retirement or survivors benefits and work at the same time. However, there is a limit to how much you can earn and still receive full benefits.

If you are younger than full retirement age and earn more than the yearly earnings limit, we may reduce your benefit amount.

If you are under full retirement age for the entire year, SSA deducts $1 from your benefit payments for every $2 you earn above the annual limit. For 2020, that limit is $18,240.

In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit. In 2020, this limit on your earnings is $48,600. They only count your earnings up to the month before you reach your full retirement age, not your earnings for the entire year.

When you reach full retirement age:

  • Beginning with the month you reach full retirement age, your earnings no longer reduce your benefits, no matter how much you earn.
  • SSA will recalculate your benefit amount to give you credit for the months we reduced or withheld benefits due to your excess earnings.

To Receive Benefits

The age you begin collecting your retirement benefit affects how much you will receive. There are three important things to know about age when thinking about when to start your benefits.

  • Full Retirement Age – Full retirement age is the age when you will be able to collect your full retirement benefit amount. The full retirement age is 66 if you were born from 1943 to 1954. The full retirement age increases gradually if you were born from 1955 to 1960, until it reaches 67. For anyone born 1960 or later, full retirement benefits are payable at age 67. You can find your full retirement age by birth year in the full retirement age chart.
  • Early Retirement Age – You can get Social Security retirement benefits as early as age 62. However, your benefit is reduced if you start receiving benefits before your full retirement age. Understand how claiming retirement benefits early will affect your benefit amount.
  • Delayed Retirement Age – When you delay collecting benefits beyond your full retirement age, the amount of your retirement benefit will continue to increase up until age 70. There is no incentive to delay claiming after age 70.

In 2020, if you’re under full retirement age, the annual earnings limit is $18,240. If you will reach full retirement age in 2020, the limit on your earnings for the months before full retirement age is $48,600.

Starting with the month you reach full retirement age, there is no limit on how much you can earn and still receive your benefits.

Let’s look at a few examples. You are receiving Social Security retirement benefits every month in 2020 and you:

  • Are under full retirement age all year. You are entitled to $800 a month in benefits. ($9,600 for the year)
    You work and earn $28,240 ($10,000 over the $18,240 limit) during the year. Your Social Security benefits would be reduced by $5,000 ($1 for every $2 you earned over the limit). You would receive $4,600 of your $9,600 in benefits for the year. ($9,600 – $5,000 = $4,600)
  • Reach full retirement age in August 2020. You are entitled to $800 per month in benefits. ($9,600 for the year)
    You work and earn $63,000 during the year, with $50,718 of it in the 7 months from January through July. ($2,118 over the $48,600 limit)
  • Your Social Security benefits would be reduced through July by $706 ($1 for every $3 you earned over the limit). You would still receive $4,894 out of your $5,600 benefits for the first 7 months. ($5,600 – $706 = $4,894)
  • Beginning in August 2020, when you reach full retirement age, you would receive your full benefit ($800 per month), no matter how much you earn.

When SSA figures out how much to deduct from your benefits, they count only the wages you make from your job or your net profit if you’re self-employed. They include bonuses, commissions, and vacation pay. They don’t count pensions, annuities, investment income, interest, veterans, or other government or military retirement benefits.


References:

  1. https://www.ssa.gov/benefits/retirement/planner/whileworking.html
  2. https://www.ssa.gov/benefits/retirement/learn.html
  3. https://www.aaii.com/journal/article/13102-a-primer-on-social-security?via=emailsignup-readmore
  4. https://www.ssa.gov/benefits/retirement/learn.html#h2

Meet the Teens Saving for Retirement | Money Magazine

Aside


References:

  1. https://money.com/teenagers-retirement-savings-roth-ira/?amp=true&__twitter_impression=true

Dividends are Important in Retirement

“Get paid to wait” Kevin O’Leary

Noted Shark Tank investor, Kevin O’Leary aka “Mr. Wonderful”, has one simple rule when it comes to investing in a stock. If it doesn’t pay a dividend, he does not consider the stock. His investment mantra is “get paid to wait”.

“My whole investment strategy is built around cash flow”, O’Leary said. “I have a little Charlie Munger on my shoulder every day when I look at a deal, and he’s just saying two words: ‘cash flow, cash flow.'”

Know your cash flow.

How much do you make after taxes? How much do you spend. Investors in retirement must figure out how to generate cash flow without a job from multiple income streams to meet essential living expenses and spending while also making sure they don’t outlive their income stream.

Receiving regular dividends, or “getting paid to wait” reduces an investor’s dependence on the market’s volatility and the roller coaster like price swings by stocks to make ends meet.

Essentially, dividends could become investors “cash flow” in retirement. Naturally, then, the best retirement stocks to buy in 2021 (or any other year) to accomplish those objectives are ones that pay dividends.

Regular dividends lessen an investor’s dependence on the market’s fickle price swings because it reduces or eliminates the need to sell shares to generate income. Regardless of whether the market rises or falls in 2021, a portfolio of high-quality companies can provide you with predictable, growing dividend income.

And in today’s low-interest-rate environment, dividend stocks can generate much higher income than many fixed-income instruments. Better still, many dividend-paying stocks grow their payouts, which preserves those dividends’ purchasing power. And dividend stocks, like other equities, also provide meaningful long-term price appreciation potential.

Whether or not the market rises or falls, a portfolio of quality businesses delivering predictable, growing dividend income is always preferred.

Dividend stocks, like other equities, can provide long-term price appreciation. Dividends are the periodic payouts investors can earn by investing. And because many companies pay a dividend — more than 80% of the S&P 500 stocks currently pay dividends, according to data from FactSet — investors can actually earn money even when the market is down.

Research firm Simply Safe Dividends published an in-depth guide about living on dividends in retirement here. However, a key component to this strategy is finding the best retirement stocks that can deliver safe dividends and grow in value over time.

What are Dividend Stocks

When investors buy stocks, they can make money two different ways. The first is by selling their shares for a price that’s higher than their original cost. The second is by collecting dividends. Dividend stocks are companies that pay shareholders a portion of earnings, as dividend, on a regular basis. Not all stocks pay dividends, but those that do offer shareholders a steady stream of income.

These payments are funded by profits and cash flow that a company generates but doesn’t need to retain to reinvest in the business. Shareholders can receive dividends as cash or additional shares of stock. As an investment category, dividend stocks also have an impressive track record of helping people build wealth over the long term.

To live on dividends in retirement, a key component to this strategy is finding the best retirement stocks that can deliver safe dividends and grow in value over time. Look for companies with a history of paying and increasing dividends, as well as sufficient earnings and cash flow from current operations.

Dividend Aristocrats

Dividend Aristocrats are a select group of S&P 500 Index stocks with a history of 25+ years of consecutive dividend increases. These businesses have both the desire and ability to pay shareholders rising dividends year-after-year. They are considered the ‘best of the best’ dividend growth stocks.

The Dividend Aristocrats have a long history of outperforming the market. The requirements to be a Dividend Aristocrat are that they’re in the S&P 500, have 25+ consecutive years of dividend increase, and must meet certain minimum market cap and liquidity requirements.

Dividend Yield

Dividend yield refers to a stock’s annual dividend payments to shareholders expressed as a percentage of the stock’s current market price. A stock’s dividend yield can and frequently does change over time, either in response to market fluctuations or as a result of dividend increases or decreases by the issuing company. And, it’s important to keep in mind that a high dividend yield alone doesn’t make a stock a great investment.

Dividend amounts and yield might seem small in mid-2019. The average dividend payment for U.S. stocks was 1.87% of your investment, according to Siblis Research. Regardless the size of the ratio, they can drastically impact an investor’s long-term investment performance and retirement income.

GE’s Dividend Story

General Electric (GE) has been one of America’s most widely held stocks, and countless retirees relied on the dividend payments. But, the company was under enormous balance sheet and cash flow pressure, and it became necessary to cut the dividend in half. By cutting, GE saved significant cash flow making it one of the largest dividend cuts in the history of the S&P 500 and the biggest for GE since 2009, according to S&P Dow Jones Indices.

But dividend cuts had been rare at the time since many companies were increasing them because the U.S. economy was healthy and the stock market was booming. GE’s dividend had been reliably paid for multiple decades.

Prior to GE Board’s decision to cut its dividend, GE was having problems and could not earn enough money to cover its dividend payments. Free cash flow, which measures how much cash is being generated after investing in the business, had deteriorated for six straight years.

Dividends: Cash Flow is King during Retirement

The distinction between income and cash flow is important during retirement. Generating income in retirement is focused on finding investments that pay a high yield, which necessarily means taking on more risk. Focusing instead on cash flow allows investors to take a broader perspective, assessing various aspects of their finances to determine how to creatively produce the money required for expenses. Cash flow strategies may allow retirees to reach their financial goals while not necessarily taking on a higher level of risk.

A primary financial goal in retirement is to guarantee a minimum daily standard of living so you don’t outlive your nest egg and can sleep well at night.  Some folks are able to meet that minimum income amount they need through some combination of pension income, Social Security payments, and guaranteed interest from certificates of deposit. 

 “I have found that retirement is all about cash flow, not net worth, especially after the real estate crash. I have met people who have a net worth of $2 million, which looks great on paper, but when it comes to retirement income, they are just barely squeaking by on their Social Security and a small pension. It’s great that you are worth $2 million, but ultimately, it’s your cash flow that will determine your quality of life in retirement, not your net worth.” Jason R. Parker, Sound Retirement Planning: A Retirement Plan Designed to Achieve Clarity, Confidence & Freedom

When picking dividend stocks, chasing yield can cause issues where the price has declined, which may be an opportunity for capital appreciation, but may create greater risk for income seekers since the stock may be cheap for a legitimate idiosyncratic reason.

It’s important for investors to find a company they feel comfortable with, and whose product line they understand. Next, they can look at the company’s ability to generate sufficient earnings and cash flow to pay their annual dividends, operate their business, and have enough left over to grow, remembering that not all quarters must indicate growth.

An investor’s particular situation must be considered such as their required income needs during retirement, weighed against their desire for capital growth— typically, lower-growth segments, such as utilities, pay more yield. Investors who allocate upwards of 80-100% of their portfolio to dividend-paying stocks to generate more income and achieve stronger long-term capital appreciation potential and income growth, are incurring greater risks.

Additionally, their specific risk/reward trade-off (and there is risk in all stocks), keeping in mind their ability to ride out a downturn without having to sell the stock on the way down.


References:

  1. https://markets.businessinsider.com/news/stocks/shark-tank-star-kevin-oleary-investing-yahoo-short-retail-pandemic-2021-1-1029932948
  2. https://www.kiplinger.com/investing/stocks/dividend-stocks/602016/21-best-retirement-stocks-income-rich-2021
  3. https://www.simplysafedividends.com/intelligent-income/posts/1-living-off-dividends-in-retirement
  4. https://www.forbes.com/sites/jonathanshenkman/2020/10/21/7-strategies-to-generate-sufficient-cash-flow-in-retirement/?sh=2fe4062b2ac4#click=https://t.co/qv3DensgA1
  5. https://www.spindices.com/documents/education/indexology-december-2017-can-dividends-yield-a-better-retirement.pdf?force_download=true
  6. https://www.fool.com/knowledge-center/dividend.aspx
  7. https://www.fool.com/investing/your-definitive-dividend-investing-guide.aspx

Becoming Ageless: The Four Secrets to Looking and Feeling Younger Than Ever

Don’t try to overhaul your life overnight. Instead, focus on making one small change at a time. Over time, those small changes will add up to big transformation. Don’t give up!”

A reporter once asked Albert Einstein what’s man’s greatest invention was, and the scientist, after a long pause, simply replied: “Compound interest.”

Compounding—the idea of something gaining value exponentially into the future through better decisions made in the present—is one of the greatest lessons any human being can ever learn.

In Becoming Ageless, “it is never too late to reverse how you look and feel, and to develop the mindset of how you do it. Day in and day out, if you want to live longer and live better, you need a clear and basic understanding that the outcome of your journey is the sum of its steps.”

There are no guarantees with your physical or emotional health, just as there are no guarantees with your wealth. But, you can stack the odds in your favor by making sacrifices today that are worth the gains in the long term.

And with the principles explained in Becoming Ageless, you’ll be living longer—and with greater clarity of thought, mobility, and freedom from pain. Ultimately, you can take the tactical insights about daily living and the strategic insight into the larger quest to live longer and better. After all, you can be living proof that if you’re willing to consistently and incrementally implement small changes—while keeping your eye on the larger goal at all times—you’ll boost your chances of living longer and living happier than you ever imagined.

You can have the mind, body, and spirit of someone half your age, and add more years to your life. Or, you can have people stare in disbelief when they discover how old you really are. You can become…ageless?  You can. It’s possible.

Becoming Ageless: The Four Secrets to Looking and Feeling Younger Than Ever is the result of years of research into the science of longevity. It is about looking and feeling eternal. It has worked, and it will work for you. On this effective plan, you’ll:

  • Lose stubborn belly fat and watch the pounds melt away.
  • Enjoy amazing meals, workouts, and a sense of community.
  • Look and feel noticeabley younger—for life!
  • The strategies contained inside Becoming Ageless, you’ll discover:
    • An easy and effective program for everyone that will help you flatten your gut and become healthier than you ever thought possible.
    • Delicious, healthy, and easy-to-make recipes including hearty breakfasts, easy-to-make lunches, filling dinners, and even desserts.
    • A full workout plan that will sculpt your body and help you prevent back pain and sleep better.
    • A holistic mind/body approach that really works. Look and feel better than ever without deprivation dieting, counting calories—or ever feeling hungry!

    Becoming Ageless: The Four Secrets to Looking and Feeling Younger Than Ever, explains exactly what it takes to be fit and healthy at any age with all the research to support it.

    The three most interesting things Zelnick learned about keeping the mind and body young.

    1. Try the less-is-more approach.

    When it comes to staying youthful and increasing longevity, deliberately plodding along can actually be more effective than going all out. A 2015 study looked at more than 1,000 runners and found that those who jogged slowly had lower mortality rates than those who ran faster. “I was a terrible runner, so a few years ago I worked with a coach,” says Zelnick. Even though they suggested brisk, one-hour sessions, Zelnick insisted on 45-minute jogs. “That was just at the brink of what I could live with before saying, ‘I hate this so much, I’ll never do it again,’” he says. “Taking it slow and steady was my strategy.”

    2. Stay adventurous.

    Research from the University of Texas at Dallas found that trying new, cognitively demanding activities improves memory function in older adulthood. “It’s just not true that we lose the ability to learn or improve our performance after the age of 25,” says Zelnick. “I picked up skiing in my 30s, cycling in my 40s, boxing in my 50s, and I’m picking up gymnastics and squash now.” Not only is it possible to learn new skills as you age, but doing so can keep your body and brain young.

    3. Accept the learning process.

    Study upon study shows the importance of grit in predicting success, and Zelnick believes it also keeps you young. You probably won’t pull off a world-class performance the first, even the 10th time you try something. “Don’t be afraid of failure or slow progress,” he says. “There are days when I play squash and I do really badly. And yes, I might get frustrated with myself but then I realize, you know what? I showed up, I did the best I could, I’ll do better the next time—or I won’t. But I’m still going to keep going.”

    With Becoming Ageless, you’ll feel fitter, sharper, and more energized than ever before—with the body of someone half your age! Boost your metabolism and enjoy all-day energy. Feel younger for life. All you have to do is follow the four secrets in the book.

    – Ageless Secret #1 You’ll Indulge in Delicious Foods 
    It’s true: You can eat to be younger. Most people associate eating for health or weight loss with a “diet”—It’s important to break that association. Diets fail. Instead, focus on “Forever Fuel.” It doesn’t mean you can’t eat your favorite foods; you’re just getting the best versions of them. On the Becoming Ageless plan, enjoy the following and lose 20+ pounds:

    • Unlimited Foods—Lean Protein, Salads, and Vegetables—eat as much as you want. bison, light tuna, chicken, eggs, grass-fed beef.
    • Limited Foods—Some fruits and dried fruits, nuts, and cheese—in moderation.
    • Highly restricted foods—no processed foods, fried foods, or added sugars. Processed foods account for 70% of the calories that Americans take in. They don’t just make you fat; they age you. Research has linked ultraprocessed foods to a higher risk for obesity, heart disease, and cancer. Intriguing new work even suggests that they may actually encourage overeating, possibly because their particular mashup of ingredients disrupts the hormones that control hunger, or it scrambles the gut-brain signals that tell us how much to eat.
    • Commit yourself to eating sensibly and eating yourself healthy.

    The book is packed with a ton of easy-to-make recipes that will help you get your best body ever. It’s true—even with a busy schedule, you can cook, because they’re that simple. And if you cook just three meals a week, you’ll live a decade longer, studies show.

    – Ageless Secret #2: You’ll Unlock Your Inner Strength
    Fitness is the foundation for so much success in many individuals lives—it improved their moods, shrunk their belly, got them out with colleagues (which led to promotions) and you don’t have to run an ultra-marathon or climb Mt. Everest. Just commit and be consistent. Get moving a little every day.

    Work out every morning and some evenings. Some moves take just minutes to do. Here’s a few ways to do it right:

    • Start slow—incorporate regular walks or body weight exercises to feel the burn.
    • Workout when you’re working—like with a stressball or a hand grip strengthener
    • Incorporate a complete exercise plan for building muscle. Use it and you’ll avoid back pain and get injured less.

    – Ageless Secret #3: You’ll Bulletproof Your Body
    You can’t feel younger if you’re sick all the time.  You want to turn your body into a disease-fighting machine. That’s why you should include:

    • Preventative measures—a complete checklist of all the tests you need, and when you should have them.
    • A guide to better sleep, so you can have a more peaceful rest.
    • Cover mental health too…favorite tip to boost confidence is to ditch the scale. Measure success by what you see in the mirror and how you look and feel. If you like what you see, what the scale reads isn’t important. That was a game-changer. Little changes mean big results.

    – Ageless Secret #4: You’ll Discover a Deeper Connection
    People who focus solely on the body and not the mind are shortchanging themselves. For lasting success, it’s essential to construct a support system that will hold you accountable—and provide incentives for you to succeed. Consider texting a friend after every workout, and revel in the virtual high-five; better yet, join a workout class. You’ll strengthen bonds with friends and loved ones and elevate your mood and productivity.

    It’s a benefit in embracing my spiritual side. For quiet reflection, personally integrate morning prayer. It’s life-changing, and feeds into personal success on every level. To help you focus, meditate, do yoga, and find a community that supports your new lifestyle.

    By following the pillars in Becoming Ageless, you’ll be happier and healthier; stave off disease; enhance your spiritual connections; and lose fat from where it matters most. That’s something you want at any age. It works.

    Start by asking yourself an important question: “What do I want?” That answer will drive every decision you make. It will also make the how easier to pinpoint and, eventually, accomplish. Here are a few answers to that question: You May want to . . .

    • Live as long and healthily as possible while being cogent and mobile.
    • Be fit and strong.
    • Perform my job at my highest level.
    • Have warm and meaningful relationships with my family and friends.
    • Push my limits both mentally and physically.
    • Look good in and out of clothes.
    • Feel youthful, happy, satisfied, and as stress-free as possible.
    • Be spiritually connected.
    • Help others achieve their goals.

    You don’t want is to be limited or defined by your age. Yet sometimes, we forget that, while there’s no stopping the passage of time, we can control how well we age. Because the notion that you’ll get too old to run marathons, too weak for century rides, too fragile to ski or snowboard, or too fatigued to keep up with your grandchildren at a park is just plain wrong.

    It doesn’t matter if you’re a millennial or a centenarian: Right now, you have all the resources you need to make changes to obtain or reclaim the life you want. That’s if you know what you want. So think about what you want. Be honest and don’t edit your thoughts. Contemplate it for a week if you need to. Then write down five to 10 goals. Write them right now.

    About the Author

    Strauss Zelnick is founder of the private equity firm Zelnick Media Capital and president and CEO of Take-Two Interactive, the company behind blockbuster video games such as Grand Theft Auto and NBA2K.

    “Live your truth!”