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Retirement Risk Alert!! Grown Children

grown children, denver financial adviser

There was reader question to a column called The Sweet Spot in the New York Times recently.  A mother was wondering if it is mean to ask her mid-twenties children to move out of the family home and start paying their own bills.


The columnists reacted predictably by telling the parents that by enabling their grown children to live a life of convenience and ease on Mom and Dad’s dime they are robbing said children of the privilege of struggle.  That’s right, struggle is the work that leads to the joy of resilience and self-sufficiency.


Easy for YOU to say


Why is it so easy to write this advice, yet so many are in this trap?  Maybe because parents want to be liked by their kids and making them live with 7 roommates, take the bus, and have a cell phone plan with no data isn’t the path to parental popularity.


Perhaps some hard numbers will help motivate parents to live through the short-term dislike of their kids to get them off the payroll and into a satisfying habit of working for a living.


Here’s an example


Abednego and Gizmo are 65 years old and retired.  They have $500,000 invested and a total of $25,000/year of Social Security.  Using the handy 4% withdrawal rule (for retirees in their 60’s), Abednego and Gizmo’s financial planner tells them their annual spending should stay around $45,000/year total.


This budget should allow raises for inflation, bad market returns, and income lasting 25 years to age 90.


Abednego and Gizmo’s 30-year-old daughter, Mebunnai has just moved back in with them following her divorce.  Suddenly, between paying Mebunnai’s cell phone bill, car insurance, and extra food, Abdnego and Gizmo’s budget has swelled to $50,000 per year.  This is a 25% increase over the suggested withdrawal rate.


Blame the messenger


Their financial planner warns that if this keeps up, they will run out of money in a mere 19 years at the tender age of 84.  Abednego and Gizmo now see the importance of nudging Mebunnai out of the nest and back to financial independence as soon as possible.


Remember, if you don’t want to feel like a bad guy to your kids, you can always blame your financial planner.  Don’t have a financial planner to throw under the bus?  Contact me for a 15-minute consultation to see if there is a fit for working together.

WTF (What the Finance) is Bitcoin? Let’s talk about it

bitcoin, denver financial planner

Welcome to a new recurring feature of my blog called WTF – What the Finance?  Here I will attempt to make understandable the maze of financial jargon we planners love to speak and this week I’m focusing on Bitcoin.

What’s this Bitcoin thing?

So, what’s all the fuss about trading Bitcoin?  Should you be in?  Out?  Over?  Under?  My position in Bitcoin is “over.”  As in I’m over it.


First, some explanation:  Bitcoin is one of many (but apparently the most famous) types of cryptocurrency.  Cryptocurrency can be used as payment for online transactions.  However, there is no central bank or country backing the value of the currency.  No regulation, either.

How can I use Bitcoin?

You can’t use Bitcoin at King Soopers or TJ Maxx.  Yet.  Bitcoin is accepted as payment at over 125,000 merchants, so maybe it has a future as a widely accepted currency and will become a part of our daily lives like the internet and chocolate.  However, a big concern about cryptocurrencies is that you can use it to buy some pretty illegal stuff on the internet.  Use your imagination.

Should I be investing in it?

Why has Bitcoin gotten so much attention lately?  Well, people have been betting that the value of Bitcoin (remember, backed by no government taxation or hard asset) will go up, so they are trading the digital “coins” and driving the price of the currency itself way up.  Any time an investment, term used loosely, goes up 1000% as Bitcoin did in 2017, people are going to be talking about it.


Always remember, what goes up 1000% in a year can likely drop by that amount in half the time.  As of this writing in early February, Bitcoin had dropped below $7,000 from a high of $18,000 just a month earlier.  If you got in at the peak of the frenzy, you have lost a ton of money.  And not even some awesome shoes or a car to show for it.


Agustin Carstens, general manager of the Bank for International Settlements (an umbrella organization for the world’s central banks), described bitcoin as “a combination of a bubble, a Ponzi scheme and an environmental disaster.” The last refers to the energy-intensive process of “mining” the digital currency.*  He said a bunch of other stuff that was negative, but I thought that line was the best.


An acquaintance told me a couple of months ago that she was trading Bitcoin.  She asked me if I was trading Bitcoin, too.  I replied, “No, I’m a financial planner.”



Mind over Money? Discussing Financial Roadblocks With Dr. Alec Baker

alec baker

So many money decisions are not about what we think, but how we feel.  To that end, I’ve enlisted the help of a guest blogger to address some questions around emotions and finances.  Today I present the first of 3 questions I posed to Dr. Alec Baker.


Dr. Alec Baker


Dr. Alec Baker owns and operates Peak Living Psychology – a full service psychological services practice located in South Denver.  Peak Living Psychology offers financial therapy, traditional psychotherapy, and psychological assessment services to the Denver metro area with a focus on helping individuals and families cultivate the best things in life.  More information can be found at



KS:  What are examples of psychological road blocks to financial success?  Is it lack of education?  Fear from a past mistake?  Things our parents did or didn’t teach us about money?


AB:  Psychological roadblocks come in all sorts of shapes and sizes.  Basically, they are unconscious beliefs that lead to habits and choices that prevent us from reaching our goals.  Generally speaking they are NOT a lack of education, but rather feelings that stem from core beliefs about money that get in the way of putting good information to use.  What I’m getting at here is that we all have core beliefs about money (e.g. spending is bad, saving is good) and that we have emotional responses to either living those core beliefs (e.g. pride, calm, self-esteem) or living contrary to them (e.g. shame, embarrassment, anxiety, fear) that lead us to make the choices that we make.


Here’s an example


Imagine that I’m someone with a core belief that spending money is undisciplined and frivolous while earning and saving are the only virtuous choices a person can make.  One day a tree falls on my roof and I have the option to pay my $2000 deductible and repair the whole roof or pay $1000 to patch it.  First, I have that high of a deductible because I always choose the lowest premiums possible– yay low spending!  Second, I would obviously choose the patch option because I’m spending as little as possible and living my core belief that spending is undisciplined.  The trouble is that the patch job ends up being less effective and I get a series of leaks over the next few years that a) end up costing well more than the extra $1000 to repair the whole roof, and b) cannot be covered by insurance because I did not submit a claim.


The insistence on spending as little as possible due to a faulty belief that all spending is undisciplined can lead to choices that bring me higher costs and more spending in the long run.  People may have all of the education they need here to see the most effective long-term, but they are so anxious about doing it that they ignore your advice and do it their way.  In those cases that also might be your last conversation with them.


These core beliefs can be the result of lessons learned from personal experience (e.g. I spent too much on going out and leisure activities and then didn’t have enough for an ER bill) or from family cultures (e.g. depression era parents who never spent any money and made it forbidden because you never know when the next “big one” will hit).


KS:  Stay tuned in April and May for more insight from Dr. Alec Baker.

Why are my bond funds so sucky?

bond funds, denver financial planner

A misunderstanding is that bond investments are not supposed to ever lose money.  In fact, bond funds go up and down like stocks, just not with such extreme highs and lows.


A quick primer on bonds

Bonds are a way for a company or government to get a loan from the public.  Loans are made for a specific period with a set interest payment that is communicated up front. Most bonds are issued in increments of $1,000.


If Walmart wanted to raise money temporarily to buy a new fleet of trucks, it could issue bonds for 5 years paying 4% interest per year.  At the end of 5 years, the bond holders would get their original investment back.  Buying 10 of these hypothetical Walmart bonds would cost you $50,000 and earn you $2,000/year interest until your $50,000 is returned to you at the end of 5 years.


But what if…?

What happens if you need your $50,000 back in Year 3 of the 5-year bond?  Walmart isn’t going to pay you early, so you must go out and see if someone else will buy your bond investment.


You propose to your neighbor that he buy your bonds.  Your savvy neighbor knows that new 5-year bonds are paying 6% interest.  Why would he pay full price for your sad 4% interest bonds?  He offers to pay $45,000 for your bonds and you accept.  You have just lost money on your bond by not holding it to maturity.


Conversely, if you proposed the same transaction to your neighbor and new 5-year bonds were only paying 3%, you could ask for more than the $50,000 because he can’t get better interest now than what your Walmart bond pays.  In this case you’ve made money on your bond purchase.


Transactions like these happen by the thousands every day in the bond market.  This is why individual bonds and bond mutual fund prices go down when there is a whiff of the Fed raising interest rates.


The Federal Reserve now thinks the US economy is strong enough to handle higher borrowing costs, so they are slowly raising the target fed funds interest rate.  This is bad in the short term for bond mutual fund holders because the value of their existing bonds goes down when interest rates rise.


Don’t despair!

Bond funds are constantly getting in new money, so the managers can buy new bonds at the new, higher interest rates.  If you own individual bonds, the short-term swings in valuations don’t mean anything to you as long as you hang onto your bonds until they mature and your principal gets paid back to you by the bond issuer.


We hold bonds and bond mutual funds in our portfolios because they don’t go up and down as extremely as stocks.  Also, when stocks are down bonds are usually up, so they provide diversification.  But that doesn’t mean they never go down at all.


Hold tight, don’t sell in a panic, and talk to your financial advisor about rebalancing your account at least once per year.

Love and Money – The Super-Rich Really Are Different


A movie that came out recently that I really wanted to see was All the Money in the World about the kidnapping of John Paul Getty III.  I probably won’t see it until it’s out on Netflix because all my movie theater experiences are driven by teenage boys (Star Wars, anything Marvel related).


Spoiler alert:  Don’t read ahead if you haven’t seen the movie and still want to.

Known as Paul, the kidnap victim was the grandson of industrialist tycoon J. Paul Getty.  The Senior Getty, although worth untold millions, refused to pay initial $17million ransom.  He finally negotiated the ransom demand down to $3million after receiving his grandson’s severed ear in the mail. He paid $2.2million himself.  This amount was the maximum he could get a tax deduction for.  The remaining $800,000 he loaned to his son, the victim’s father, at 4% interest.


Now, that all may seem pretty cold.  There could be other ways Mr. Getty could have saved money.  For example, he was married five times.  Ex-wives are super-expensive.  Just ask Phil Collins.  But, J. Paul Getty thought that by paying this first ransom, he would be endangering his other 14 grandchildren and encouraging terrorism and lawlessness. *


Here are some other things extremely wealthy people have done for love.  Would these tokens of affection be enough for you to stick around?


Kobe Bryant

After being accused of raping a 19-year-old hotel employee in Vail, Kobe bought his wife (and brand-new mother of his baby) a $4 million diamond ring.  Um, not enough for me to stick around, but Vanessa stuck by her man.


Kendall Jenner

On her 21st birthday was gifted a Rolls Royce by a complete stranger.  A much older man, of course.  I’m sure he wasn’t expecting anything in return.


Jaden Smith

For Mother’s Day gave his mom Jada Pinkett Smith a $500 gold grill to wear on her teeth.  I’ll stick with getting kitchen supplies and earrings from Kohl’s from my kids.**


As you can see, there is a gift for every occasion and money can sometimes get you out of trouble spots.  All the more reason to meet with a financial planner to move toward those (sometimes bizarre) fiscal goals!




5 Cheap Things to Do for Valentine’s Day

valentine's day

Sure, your sweetie wants to be surprised by a romantic gesture on Valentine’s Day.  You know what’s even more romantic?  A partner who is financially stable and saving steadily for the future.  So, how can you be both the dreamy AND smart partner?  Read on for a few inexpensive ideas that will have his/her all starry-eyed for you.


Poster Board Valentine

Buy red poster board and candy bars to stick to it.  Cut out in the shape of a heart.  Use the candy bars as ways to describe your lovely on the poster board.  So sweet!


Hot Chocolate and Ice Skating

Most cities have a winter skating rink that is cheap or free. Bring your own thermos of hot chocolate (spiked or not, it’s up to you) and slide around on the ice, clinging to your honey for dear life.  That’ll warm you up!


Local Tourist

Visit a museum or landmark in your city that you’ve never explored before.


Hidden Love Notes

Hide small notes with candy around the house and let your lovely know that the hunt is on!


Valentine’s Day doesn’t have to break the bank.  Creativity is more fun, anyway!

How Dark Chocolate is Good for the Body…and Maybe Even your Finances!

tam john

Welcome back guest blogger Tam John, Certified Nutritionist!  In honor of Valentine’s Day, I asked her to tell us the scientific benefits of dark chocolate.

From Tam John:

Imagine indulging in amazing food while keeping your wellness factors of looking great and feeling great.  This is the basis of Personalized Nutrition.Here are my top 5 reasons to augment your healthy regimen with a little dark chocolate every now and then.  After all, food is meant to bring you pleasure.

Antioxidant & Flavonoid rich

Antioxidants fight free radicals which cause cellular havoc.   Flavonoids also support cardiovascular and nervous system health.  Studies suggest they may be anti-cancer and improve cognitive function.  You should get most of your flavonoid rich free radical fighting anti-oxidants from fresh, seasonal whole fruits and veggies, nuts, grains, seeds, green and black tea.

Magnesium powerhouse

Magnesium is a necessary mineral that supports cardiovascular health and muscular relaxation.

Good for overall cholesterol profile

Cocoa butter in dark chocolate contains polyphenols said to be involved in cholesterol control; and increased HDL (good) cholesterol.

Small quantities support healthy blood pressure and blood sugar levels.

Dark chocolate is an aphrodisiac

It contains tryptophan, a building block of the feel-good neurotransmitter serotonin; and phenylethylamine, a stimulant related to amphetamine, which is released in the brain when people fall in love.


Choose the highest levels (70% is a good target) of cacao which totes the most benefit of dark chocolate.  As with all good things, moderation makes us appreciate them more.  Appreciation begs great benefits.  Savor each and every decadent bite, if it appeals to you, and indulge in a little dark chocolate now and then.  Like I always say:  Buy the best dark chocolate you can afford!  After all, Valentine’s Day is just around the corner!


Tam JohnTamara’s new book title:  A Fresh Wellness Mindset:  Personalize Your Food Life & Find Your Truth about Gluten is now available on Amazon , through Tamara… and coming soon to retailers.  The book addresses two trending topics in health & wellness:  Personalized Nutrition (because one diet isn’t right for everyone and not all ‘healthy’ food is healthful for everyone); and how to navigate the Gluten Free Movement (easily live life free of gluten if needed/wanted) and reintroduce gluten or other once distressful foods healthfully.   Because Wellness is True Happiness ™



This article is for informational purposes only. It is not intended to treat, diagnose, cure, or prevent disease. This article has not been reviewed by the FDA. Always consult with your primary care Physician or Naturopathic Doctor before making any significant changes to your health and wellness routine.

ALL RIGHTS RESERVED © 2018 EatRight-LiveWell ™ & Tam John  

But how could chocolate help my finances?

Okay, so Tam has you convinced that eating dark chocolate is good for your health.  Would you like to put your money where your mouth is?  Keeping in mind this is NOT stock trading advice, here are a few ideas for investing in chocolate.


First, you could buy stock in some publicly traded chocolate names.  Hershey (HSY), Tootsie Roll Industries (TR), Mondelez International (MDLZ), and Rocky Mountain Chocolate Factory (RMCF) can all be purchased in your online brokerage account.  If you are going to trade individual stocks, you should research the company and decide what your buy price and sell price is before purchasing.


You could also use an Exchange Traded Note that tracks the commodities futures of cacao.  The iPath Pure Beta Cocoa (CHOC) and IPath Bloomberg Cocoa Subindex Total Return (NIB) both track the prices of cacoa.  These are VERY volatile and illiquid investments (meaning the prices swing up and down drastically and there aren’t always willing buyers when you want to sell), so tread carefully.


Any of these investment ideas, just like eating Valentine’s Day candy, should be done in small, well-thought-out quantities, if at all.

Stay Safe: Watch out for These Phone Scams

phone scams

A conversation that has come up repeatedly for me lately is the number of elderly people being scammed over the phone for money.  Phone scams are nothing new, but just a reminder to keep an eye on your older friends and relatives who may fall victim to this popular mode of theft.


Here’s what to look for


The premise is an old one and perfect for more mature victims.  The phone rings and someone tells Aunt Gertrude that her grandson is in the hospital in Mexico where he has been on a mission trip.  The doctors are demanding money to treat him and you must wire $_____ (you name it) to this bank account in order for Ebenezer Junior to get his urgent medical care.


Sometimes the financial requests are truly bizarre.  I heard of one recently where the thieves demanded the victim buy a Best Buy or other gift card and mail it.  By the time someone figures out what’s up, the gift card has been spent and the scammers are untraceable.


If you are looking after an older friend of relative, remind them of this common scam and encourage them to call you for help if they are ever asked for money over the phone.

Shopping Throughout the Year: What you can save on each month

shopping, Denver financial planner

Now, I’m not in the business of encouraging shopping for shopping’s sake.  However, there will be times you really need that new mattress, microwave, or Mini-Cooper.  There is an art to timing these purchases, as this article from NerdWallet illustrates.

Here is a quick summary:


Linens (remember the White Sales of long ago?  They are still out there.), fitness equipment, and electronics (Super Bowl, anyone?).



TVs (still – why would anyone pay full price?), winter clothing and sports goods, home goods (think President’s Day mattress sales).



Golf clubs, grills, and St. Patrick’s Day essentials.  I did not make this last one up.  What would those be?  Trash cans and lamp shades?



Vacuums (for all your spring cleaning needs) and jewelry (avoid buying close to a major holiday).



Spring cleaning stuff (yuck) and furniture (those endless Memorial Day commercials come to mind.).



Negotiate a good deal on a gym membership.  They are slower in the summer when people want to be outside.  Man stuff to take advantage of Father’s Day sales.


Anything you like in the red-white-and-blue color scheme will be on sale for Independence Day.  Electronics also go on sale as retailers have started this Black Friday in July thing to boost revenue mid-year.



Laptops are now considered a back-to-school necessity, so there can be deals in August. Lawn mowers and swim suits are on sale to make room for show shovels and ski jackets.



Mattresses – they love those 3-day weekends!  The iPhone that gets supplanted by Apple’s newest product, generally released in September, will drop in price.  If you are remodeling your kitchen, Labor Day sales will be great for your appliance purchases.



Outdoor furniture, jeans, and Halloween Candy.



Black Friday is there to lure you in with hot deals on laptops, tablets, appliances, and gaming systems.  Enjoy that 4am line at Best Buy!



Toys, Christmas decorations/wrapping (if you have the storage to keep them for a year), and cars.  Those dealers are looking to meet quotas and get inventory off the lots for tax purposes, so negotiate hard!


Happy saving in 2018!

Divorce Over 50? Welcome to the World of Gray Divorce

gray divorce

It’s a new year and maybe one of your resolutions is to get rid of your tired old spouse.  If so, you wouldn’t be alone.

What is gray divorce?


One of the biggest retirement stories over the last couple of years has been the spike in divorce for people aged 50 and over.  According to a Pew Research report in March of 2017, the number of divorces for couples over age 50 is twice that in the 1990’s.


There are a variety of reasons for this trend, but a big one is longevity.  If you are 60, retired, the kids are gone, and in good health, you could live another 30 years.  Maybe the idea of spending 24/7 with someone you don’t like so much isn’t something you can put up with.  If that’s the case, be aware of some pitfalls:


It’s more expensive to live separately than together.

Expect your lifestyle to adjust downward.  And for goodness sakes (ladies, especially) don’t fight for the marital house!  You will both need something smaller and less expensive that you can sustain on your new smaller asset pool.


Your social life could suffer, and your grown kids may react in ways you don’t expect.

Be ready to make new friends and let go of old relationships that may grow awkward.  Be patient as your kids adjust to the new situation. Remember, now they may have in-laws to juggle holidays with and visiting two sets of natural parents will be inconvenient.  Try not to be resentful of the split time with your kids.


Women tend to suffer financially after divorce, and men tend to suffer more socially.

If you have been married for longer than 10 years AND REMAIN UNMARRIED, you can qualify for a spousal Social Security benefit of about half of your ex-spouse’s benefit.  This will not affect his/her payment from Social Security.  If you had your own work income, it’s possible your own Social Security will offer the higher payout, but check first before you decide which benefit to take.


As you age or your health changes, care-giving expenses will go up because you may have to hire out help that your spouse could have provided.

If college is not finished for your kids, you will need to decide how to handle that cost going forward.  Most importantly, you must communicate any changes to your student, so he/she can prepare for any variations your divorce will bring to their education plans.  Remember, promises you made pre-divorce may not be able to be kept post-divorce.


At a very minimum, consult a Certified Divorce Financial Advisor ™ when figuring out how to split assets, divide pensions, and calculate maintenance.  A CDFA could save you tons in tax mistakes and help come to a more equitable financial agreement without costly court proceedings.


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