Talking Points for Worry-Free Finances
Minority women and family financial issues, including community/societal realities: multiple generations to care for, minority employees making less money, prevalence of single parent families- all leading to unique financial burdens often unrecognized by experts.
Pre-retirees or Retirees
Strategic retirement planning for any age or income, quick and easy ways to “find” money, take advantage of tax credits, annuities and savvy investments.
Financial issues related to divorce or widowhood, planning for long term care and disability as age alone, educating women on smart savings, caring for aging parents, succession planning, and smart gifting.
Tips for staying competitive in the marketplace, avoiding the pink slip, and standing out while fitting in. Smart financial strategies in uncertain times and securing or finding employment.
Health Care/Political Issues
Latest information on health care reforms and impact to businesses and individuals, social security planning, Medicare and other political hot topics
How to preserve family relationships by good planning for long term care, estate planning, and business succession planning. Caring for aging parents, creating wills and life plans.
Debt reduction, financing growth, business valuation, succession planning, and employee management or benefits. How to increase cash flow, provide valuable benefits, access capital for growth and estate planning.
Sample Questions & Answers
1.What do you mean by worry-free living? Is worry-free living a real possibility in today’s world?
If we look at the statistics regarding worry and anxiety, we will find that money is one of the major sources of worry for people in the United States. Making enough money to live the life that is desired, to have the retirement that is dreamed about, to put children through college, or to build a dream business are some of the most common concerns that occupy the minds of Americans. Health care and insurance worries are significantly impacting our financial decisions as well.
While it is not magic, living a worry –free life can be accomplished by using Princess’ strategies for financial planning. A Clear Plan + Solid Goals = No Regrets! Simply taking time to write down the current situation, identifying needs and dreams, and putting a plan in place to get there is the first step.
2. I hear so much about the importance of planning for retirement, but what elements should I be looking at before retiring?
In order to ensure a great retirement you need one of two things, either a lot of time or a lot of money. So, if you are like most Americans and operating in a deficit, then you need to begin saving for retirement early and your savings should be automatic.
*Pay Yourself First – a good rule of thumb is to put 15% of your before tax gross income into a retirement savings account and do not touch it
*Reduce Your Debt – the worst thing that you can do is to go into retirement riddled in debt.
*Develop a Household Administration System – that will allow you to keep track of your budget and manage your finances easily and securely.
3. What if retirement has “found me” before I was ready? What steps should I be taking now?
• Use your knowledge base to understand the true cost of retirement. The first step in ensuring that you have enough cash and savings during retirement to meet your obligations is to understand the true cost of your retirement. Remember the costs of food, travel, entertainment, and medical treatment don’t go down upon retirement, but may, in fact, go up. CNN Money’s website provides a good retirement calculator to help you determine how much money you’ll need in retirement at: http://cgi.money.cnn.com/tools/retirementneed/retirementneed_plain.html
• Seize opportunities and take advantage of tax favored savings in retirement accounts in an IRA, 401(k), 403(b) or annuity. If you are over 50 and feel you haven’t saved enough after completing step one, then make additional “catch up” contributions to your 401(k) and 403 (b) plans.
• If you are at least 62 years old, get the most out of your social security entitlement benefits. Waiting until you receive full benefits can ensure that you will receive a higher annual benefit, but if you are in poor health or a short family longevity you should consider applying earlier. Signing up for social security at age 62 will result in a lower benefit, but may result in higher total benefits for specific situations.
4. My biggest concern right now is paying for college for my children. How can I do that, pay my bills, and save at the same time?
The more you save the more you will earn. If your budget is tight – hone into your “hour of power”. Your “hour of power” is the first hour of everyday that you work. For example, if you earn $10.00 per hour, your first hour of $10 should be set aside for your savings. So, just know when you go to work that’s first hour is for you!
Another way to seize opportunity is to take advantage of tax credits. They are more valuable than tax deductions because they reduce your taxes dollar for dollar. These credits include child care costs, credit for the elderly or disabled, earned income credit, child tax credit and education credit.
By investing a portion of your income into appropriate areas, you will be investing in yourself and your future. An annual investment of $5000 that earns a hypothetical 6 percent annual return over 10 years could amass more than $60,000 for a down payment on a home, could pay for college, or supplement your retirement.
5. I have owned and operated my own business for many years. How can I get access to capital to grow my business? Should I do this?
Examine your business insurance policies to see if you could increase your deductibles and increase your cash flow. Check your life insurance and key man policies, or if you have a cash producing universal or whole life insurance policy there may be just enough cash in their to fund your new venture. In most cases these funds can be delivered tax free.
It is also critical to understand this question: What is your business really worth to you? Business Valuation is about knowing the true value of a business that goes beyond the emotional attachment you may have to it. Answering this question will help you determine if you should seek additional capital to grow your business, and if it is a true retirement vehicle for you.
6. How do I know what insurance products I really need? Aren’t some too costly or unnecessary?
Remember the last really great vacation you went on? You planned for it. You budgeted for it. You enjoyed it. Do the same for your future needs- by planning and budgeting now- you can increase your enjoyment of life into the future. Think of insurance in that way- as simply something that we plan for so that we can keep our quality of life the same into our later years.
1 in 96 people will have their houses damaged by a fire. 1 in 5 will damage their car in an accident and 1 in 2 will need long term care sometime in their future. Do you have long term disability protection or other products to offset these risks? Doing so ensures that your retirement income goes for the things that you want it to go – not on nursing home care, prescriptions and doctors.
While I can’t answer this question for you, it is important to think about various products in this way:
Disability insurance…. It’s paycheck protection!
Long term care insurance….It’s nursing home protection!
Annuities…Is Income for life!
Dental insurance… is the only insurance you buy and hope to use!
Cancer insurance…is protection for the most expensive disease anyone can get (and no one goes it alone)!
Prescription coverage…is about knowing you can afford your medication!
Life insurance…is protection for your loved ones!
By determining which of these best describes your personal needs, you will be better prepared to select what you need.
7. I don’t know that much about our family’s finances because my husband has always taken care of things. Do I really need to know these details?
Of course you need to know! As women we are natural caregivers, but who cares for us when no one is around? Indeed, we live longer than our male counterparts, which is why we should not only understand our family finances, but also know where all of our assets are located and how much they are worth. According to AARP, women over the age of 65 are twice as likely as men to be widowed, divorced or never married. One important thing that I suggest to all women is to find an advisor with YOU in mind, who doesn’t “defer to the male”.
8. My parents are getting older and I am finding myself caring for them more and more. What advice do you have for me?
This is an issue many women face. According to the Social Gerontology, the average American woman can expect to spend 18 years caring for an older family member, compared to 17 for her children. It’s not the ideal that we dreamed about when we played with our Ken and Barbie dolls, but it is becoming the number one thing besides our kids that we worry about. Knowing this, what should we do? The first thing we should do is talk to our parents about their plans. Of course it’s a conversation that we don’t want to have, but it one that we must have. Do they have any thoughts about how they should be cared for if something should happen to them? Resources abound to help children care for their aging parents. Perhaps you could consider long term care insurance? Many of my clients have called this “nursing home protection”, while another client told me long term care insurance is the “love letter that she wrote to her children”. She says it tells them that she loves them, she made plans and they don’t have to worry about that any more.
9. Are there unique situations that would apply to me as an African American? As a woman?
While experts share many financial strategies and tips in the news, there is often a misunderstanding or ignorance about how minority women are specifically affected. By taking a good look at the “worries” that minority women often face, we may better approach the reality of our situation, and take control of our finances in a way that honors our differences from the majority population.
Our men earn less. We buy the same goods, our kids go to the same schools and we have similar goals and dreams, yet our men earn less than their white counterparts. Much has been written about the fall of Black and Hispanic families- does wage inequality play a role? In a published reported entitled, “Black-White Wage Differentials Among College Educated Workers: The Effects of Field Study and Socioeconomic Background” the authors write that the net wage disadvantage is not reserved to high school drop outs, but college educated African American men as well.
We are financially independent earlier. The increasing number of single parent homes in minority communities is troublesome. Because divorce is growing among married couples, every woman needs to know about the financial consequences of divorce.
Divorced women face the following;
• Potential drop in standard of living
• Financial disputes
• Career considerations
In most cases, a divorce has a negative effect on a woman’s financial well being. In just the first year after divorce, the wife’s standard of living drops about 27%, whereas the husband’s standard of living increases by as much as 10%. In the first two years following a divorce, family income among white children falls about 30%, but by more than 52% for black children, as reported in a 2005 study conducted by UC Davis economists, Marianne Page and Ann Huff Stevens
We care for multiple generations simultaneously. Parents, grandparents, children and grandchildren may all fall to us to care for, and this responsibility creates a tremendous financial burden that many experts or advisors do not consider or understand.
10. I’m worried about all the risk in investing in the stock market. Is there a safer way to earn a good return on my investments?
Absolutely. I refer to this investment strategy as The Tortoise vs. the Hare. Equity investments such as stocks or mutual funds frequently have flashes of brilliance, but occasionally fall back. Most investors would be pleased with gains in four out of every five years. But do these great years offset those years with a poor or negative return?
If you started with a $100K deposit, you could invest aggressively and see something like the following:
Year one: 20% gain
Year two: 21% gain
Year three: 10% gain
Year four: 16% Loss
Year 5: 10% gain
If you chose instead to use a safer vehicle, but only gaining 8% interest, you would see a steady 8 % each year, which seems less exciting, but which actually creates the EXACT same result of $147K at the end of the 5 years. So I do highly recommend taking a look at some safer vehicles with consistent, although smaller yearly gains.