Your Top Questions Answered

Read more of Debra’s answers to top questions on Investopedia

1.  I have read that 1 million dollars in savings is not enough anymore.  What is?

Everyone’s number for financial security is different, principally because your level of spending is the key component of arriving at how much is enough?  Figure that company pensions or Social Security may add to your existing nest egg, as well as the possibility for part-time employment or self-employment income during retirement.  Insurance policies—-health, major medical, life, disability, liability, etc.–can minimize some of the risks that could otherwise foil a great retirement plan.  The discipline regarding insurance however, is you must buy it when you do not need it.

2. My biggest fear is running out of money before I die. What do I need to do?

1 of 3 things can prevent people from running out of money—spend  less, earn more on your savings, or a combination of both. Saving at least 10% of your earnings is advisable, especially if you are not covered under a company pension.  Control what you can control–spending, investment expenses and where you invest.

3. How do we know how much we need to retire?

Once you have written down your current expenses in one column, make edits to those expenses in another column as to which expenses will not change, which ones will go up, and which ones will vanish during retirement. Add new spending items to your retirement column as applicable, then annualized that figure. Gather any company pension and/or Social Security statements and total the future annual payments from all sources. Total all your current savings and investments, excluding the value of your principal residence. Now contract a fee-only Certified Financial Planner™ to crunch the numbers for you.

Once you tell them how many years until your retirement, they will use your life expectancy, a presumed inflation-adjusted total return and calculate the present value of that required future amount considering your retirement cash flows.

Your Chief Financial Navigator:

Debra L. Morrison

About Debra L. Morrison

Debra draws on her four decades of financial expertise, including her  Master’s Degree in Retirement Planning where she partnered with clients to chart their financial plan, and managed their assets accordingly on a Fee-Only Fiduciary basis. She holds the Accredited Estate Planner designation which armed her with specialty knowledge that helped her clients and their families KEEP more of their hard-earned estates, leaving rich legacies.

She has since retired from active financial planning and asset management and now serves as the Founder and Chief Navigating Officer of Women Navigating Finances.

Yes, she’s equally passionate about alerting women to pitfalls to avoid as well as charting, and then navigating each woman’s finances.

She strategizes with her growing number of coaching clients to either accumulate maximum wealth or, once retired, enjoy an inflation-adjusted lifetime income stream so that they can still afford to buy higher priced goods and services as they age.  Together, Debra and each client, discuss both how to avoid financial perils while at the same time, effectively managing the sequence of return risk as well as the challenges inherent in increased longevity.

4. Where does fear come into play?

Women often fear ANY loss or fluctuation in their investment principal. Far scarier however, is the effect long-term inflation has on a fixed-income portfolio.  Women also tend to fear that they will make an irreparable financial mistake, which is VERY hard to do, with the singular exception of irrevocable retirement plan distribution decisions.

5, Is there a way to not invest with my emotions?

Yes, strategize a plan with a defined asset allocation–for example, 60% invested in stocks & 40% invested in bonds; then invest in various types of stocks and bonds within those percentages. For example, your 60% stock portion may include:

• 35% invested in United States Large Capitalized stocks,

• 15% in Foreign Large Cap

• 4% in US Small Cap

• 3% in Foreign Small Cap

• 3% in Real Estate (REITs)

So also your 40% in Fixed income would be invested in both US and Foreign bonds–some very short duration, and some 5-yrs, for example, and then stick with those investments.

Annually, you will systematically sell off the excess winners–if after 1 year in your 60% stocks/40% bonds original asset allocation, your portfolio had shifted to a 70% stocks, 30% bonds allocation for example, you would sell off 10%–the excess percentage of stocks over your target/original 60% allocation–and buy bonds with that 10%, for example. This is called re-balancing, which is done void of emotions, period.

Invariably your current winners will cycle and perhaps drop in value, whereby the current depressed assets may in fact be on the upswing. This allows you to sell high and buy low, just like our mothers told us.

6. Is it bad to have a male financial planner/advisor due to the difference in emotions and the like relating to your question?

The gender of your advisor is less important than how your advisor is compensated. There are commission, commission + fee (also called fee-based) and fee-only advisors.

• The commission salesperson gets paid a percentage commission of your purchased annuity, mutual fund, insurance policy, etc., and thus has the most conflict of interest.

• The commission & fee salesperson also gets paid a commission on the products sold you, and also receives a fee for a written financial plan. Conflict of interest is palpable here, especially when the financial plan recommends your buying a fat life insurance policy, on which substantial commissions are paid.

• The fee-only planner, however, has NO conflict of interest, acting instead as a fiduciary; your financial goals are their goals. They typically charge a percentage of assets under management, so when your account goes up, they make more money, and conversely they receive less compensation when your account drops in value. Fee-only advisors are highly and exclusively recommended.

Next, determine whether your advisor listens to you, incorporates varying risk tolerances into the investment allocation, if you are part of a couple, and then gauge your overall comfort level; It is a relationship-built business.

7. What do fund managers do?

Decide which specific stocks or bonds to buy or sell within the scope of the mutual funds prospectus definition of that particular mutual funds investment objective.

8.  How do I come back from a massive loss, or a really bad investment pick/strategy?

One mistake investors make is to stay out of the market for an extended period of time after a loss, or to abandon future investments where the principal value fluctuates, and flee instead to Certificates of Deposit, whose underlying value is guaranteed not to go up–gotcha!  It is guaranteed, yes, not to go up or down.  Alternatively some investors take unwarranted risks to make up for lost time.  Dollar cost averaging back into the market will allow you to average the cost of re-entry, generally resulting in a lower annual cost than choosing to invest a lump sum of money all in one day.  Investing is long-term; time leeches risk out of the market.

9. What should I currently be investing in?  I’m nervous I’m going to lose it all.

You will never lose all your money, unless it is all invested in one particular security and that security goes bankrupt with no insurance; VERY rare indeed. Diversification protects investors from huge price fluctuations, in that historically when one type of investment is under-performing another type is out-performing, giving your portfolio much needed balance.  Select a mix of stocks and bonds that historically have given returns that you (and perhaps your fee-only Certified Financial Planner™) decide is necessary to meet your goals.

What Others Are Saying:

"Just one tip from Debra and I immediately found $180 per month!" ~ Ruth

"Having Debra's coaching prowess, honed over 42 yrs. as a financial planner, is invaluable. I love being able to ask her questions about my specific situation." ~ Trish

"Debra is filled with great information that helps me navigate the complex financial world. She's sassy, she's fun, she's funny. My only wish is I had met her sooner!" ~ Charli

Sarah after Camp Widow Presentation and Workshops (2015)

Elizabeth Streb, Renowned Performance Artist & 2013 Recipient of Doris Duke Artist Award & MacArthur "Genius" Award-winner.

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