Nauset Wealth Managment

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Category: Financial Plan

Planning for Assisted Living: The Promise, The Truth

Over the past several years my wife has managed her elderly parents’ care in an assisted living facility. Sadly, Geeta Anand’s New York Times article, How Not to Grow Old in America, is an accurate reflection of our experience of the care promised versus the care delivered, especially in the memory care unit. Paying for a full-time outside aide was the only way her folks got the help they needed. The take-aways from this article and our experience are:

  1. Do your research before the need arrives. The cost of assisted living can be more (maybe substantially more) than expected.

  2. Consider a wide range of options including moving to a different area, but still close to family. Assisted and retirement living facility costs vary widely around the country.

  3. Involve adult children if possible. This can be challenging but, in our experience, it can be critical for ensuring parents receive the care they need. Calling isn’t enough. They need to visit and have an open line of communication.

How Not to Grow Old in America

Two isn’t better than one, it’s critical.

As wealth advisors, when we work with couples it is a lot easier to have one point person on money issues. However, the other partner, no matter their age, needs to participate in discussions and decision-making. If they don’t, then two unfortunate consequences can occur:

  1. Couples that need to make changes to put them on a good financial path struggle to do so and watch their goals slip away;
     
  2. If the point partner dies, the surviving partner is left to learn and execute an estate and financial plan under duress and, once they understand it, they don’t like it.

Couples often think that the person who is most financially literate should manage their money — yet research shows why, especially as partners age, that’s a problem.

Read more about it in this New York Times article:

You’re the ‘Money Person’ in Your Relationship? That’s Problematic

Redefining Wealth

I have come to believe that most people view wealth as having more money than they currently have. However, I assume that at some asset level that definition changes. Amazingly, at least according to a Spectrum Group study, the number may be more than $25,000,000. How can this be? I remember in Paul Sullivan’s book, The Thin Green Line, his observation that the wealthiest person he ever knew was his grandfather, who was as a mailman. How is this possible? He lived comfortably, and apparently happily, within his means.

As I reflect on it, our clients who feel the wealthiest are not necessarily the ones with the most money. For them, wealth is about spending and enjoying the life their assets and income offer.

There are two actions we find that help clients become wealthier and neither involve having more money. First, look at money as the mirror of wealth, not the definition itself. Let your assets and your income tell you how to become wealthy by living within your means. Second, apply your life’s timeline to your definition of wealth. Do you want to act wealthy today by out-spending your means only to be poor in the future?  That’s short-term wealthy. Don’t you want to be long-term wealthy by living comfortably for your lifetime?

It’s not always so easy to figure out what lifestyle you can afford over the long term. It’s even harder to make decisions about what to keep or cut out of your lifestyle in order to be long-term wealthy. Having helped clients go through this process, I can tell you it’s worth it.

http://spectrem.com/Content/wealthy-define-wealthy.aspx

 

6 Money Mistakes Made by Smart People

A few of the more common mistakes I have uncovered in the past year.

  1. They spend too much time on things they can’t control: compensation and investment returns. Recommendation: Work hard at your job, don’t make your karma worse than it is, and stop looking at your portfolio.
  2. They spend too little time on the things they can control: spending and saving.  These factors will determine if you are wealthy, regardless of income. Recommendation:  Read Paul Sullivan’s book “The Thin Green Line” to understand what wealth is and isn’t.  There’s also some good dirt on ridiculously wealthy people.
  3. They hold too much cash.  With 2% inflation, over a 5 year period every $1 held in cash has the purchasing power of $0.90.  In 10 years it’s down to $0.82. Recommendation: Don’t hold more cash than you really need.
  4. They don’t realize that “optional expenses” easily become viewed as essentials and hard to get rid of if required. Recommendation: Please, please, please have a spending and saving plan in place and follow it.
  5. They pay down their mortgages too fast or took too small a mortgage. Big debt on house you can’t really afford is not a good idea but used properly debt can boost your financial plan. Recommendation:  View debt as an tool not an evil.  Understand when and how to use it and try not be too emotional about it.
  6. They read generic quick fix lists. Recommendation: Ok, they can be fun but you really do need a financial plan specific to your situation.

Street cred: I am a Principal of Nauset Wealth Management, an SEC registered RIA. We help clients achieve their life goals through integrated wealth planning and management.  As crazy as it sounds I like working with financial services professionals and other people in complex situations. I have been an investment management professional since 1989 as a portfolio manager, pension consultant and a Founding Partner of Casey, Quirk, the largest global consultant dedicated to advising investment management firms.