Scammers, fraudsters, and other criminals are taking advantage of rapidly changing data and facts associated with COVID-19, both in the workplace and in our homes. Government agencies, corporations, and news outlets continue to warn individuals to be mindful of increased fraudulent activities during these uncertain times.

These scams, which can be sent via email, text message, and social media claim to provide COVID-19 updates, sell products, ask for charitable donations, or reference government aid packages. These messages appear to be legitimate in nature but seek to fraudulently obtain personal information, financial gain, and create panic. Use these tips to identify and avoid scams:

  • Watch for emails claiming to be from the Centers for Disease Control and Prevention (CDC) or experts claiming to have inside information on the virus. There are currently no vaccines, potions, lozenges, or other prescriptions available online or in-store to treat or cure COVID-19.
  • Do your homework prior to donating to charities or crowdfunding sites. Confirm the validity of the organization as fraudsters are now advertising fake charities. Do not let anyone rush you into a donation, particularly those who ask for cash, gift cards, or wiring of funds.
  • Do not click on links or open attachments from sources you do not know. Cybercriminals are using the COVID-19 headline as a tactic to spread viruses and steal information. Do not provide personal information, payment information or sensitive workplace information via suspicious email addresses.
  • Be suspicious of urgent demands and emergency requests. The health and safety of you and your family is the top priority. Do not fall for scammers threatening fees or fines, cancelled deliveries, and health concerns in exchange for financial gain.
  • If it sounds too good to be true, it likely is. Many individuals have begun to receive robo-calls and social media requests for social security numbers, banking information, and gift cards. Scammers promise high paying work from home opportunities, free sanitation and cleaning, as well as COVID-19 protection in exchange for payment and sensitive information.
  • Be mindful of scammers using government aid packages for criminal gain. Lawmakers have announced plans to send Americans checks to assist with the financial burden of the virus, with details still in discussion. The government will not request payment, nor will anyone reach out requesting personally sensitive health or financial information in exchange for financial support.
  • Obtain your news from a trusted source. Be mindful of text message scams, social media polls and fraudulent email accounts sharing false information to create panic. Before acting on information, review its source and check a trusted news outlet to confirm its validity.

When in doubt, ask a coworker, family member, or friend for their opinion. Two sets of eyes are better than one. If you believe you have fallen victim of a scam, call your local police at their non-emergency number and consider reporting to the FBI’s IC3 Internet Crime Database.

If you have any questions or concerns during this, please do not hesitate to reach out.

We continue to wish everyone good health as we all work to get through this challenging time.

Tracking # 1-969549

The following article is courtesy of the Wall Street Journal

By Jason Zweig

March 13, 2020

With U.S. stocks down—at their worst—around 27% in 16 trading days, investors need to get out of the prognostication business. Nobody—not epidemiologists, not government officials, not economists and certainly not market strategists—can say how large an impact the coronavirus will end up having. The optimists might be wrong; so, might the pessimists.

Investing, now more than ever, is about controlling the controllable. You can’t control the markets. You can’t control the coronavirus. You can control your own behavior, although that requires making accurate, honest predictions about yourself.

Controlling the controllable doesn’t just mean shrugging off whatever is out of your power. It also means putting some calm and serious thought into what is within your power. Your future success may depend less on what markets do—and more on spending a few quiet minutes figuring out who you are as an investor.

Years ago, the psychologist Daniel Kahneman told me that one of the keys to investing is having what he called “a well-calibrated sense of your future regret.” By that, he meant that you need to be able to tell, in advance, how bad you will feel if your decisions turn out to be wrong. As he warned with that word “well-calibrated,” it isn’t as easy as it sounds.

Investors are full of false bravado. It’s a cinch to say you’ll buy more stocks if the market goes down 10%. It isn’t even that hard not just to say it but to do it—a few times. Buying the dips is almost fun when the market goes down a little bit every once in a while.

But when stocks go down 7% or more in a day twice in a single week, the person you thought you were last Friday isn’t the person you are this weekend. A week ago, you thought you were ready for whatever the market could throw at you. Now, you’d flinch if a toddler tossed a marshmallow at you.

Will you be able to keep buying all the way down if the market goes down another 25%—or more? Will you even be able to hold on? Can you stand watching every dollar you had in stocks turn into 50 cents or less?

On the other hand, what if the panic subsides and stocks resume their climb—after you impulsively moved to the safety of cash and bonds that generate almost no income? How badly will you kick yourself over getting out of the market because of fears that didn’t fully materialize?

At the most basic level, those are the two potential regrets most investors face: the risk of losing massive amounts of money if the epidemic worsens, versus the risk of missing out on what could be a robust rebound if the virus abates.

You can minimize one risk, but not both. As the poet W.H. Auden wrote in 1936, you can only take one path at a time:

“Clear, unscaleable, ahead

Rise the Mountains of Instead

From whose cold, cascading streams

None may drink except in dreams.”

Only by creating a circle of calm around yourself can you honestly evaluate which type of regret is likely to bother you more down the road.

First, if you were investing back in 2008-09, go back and look at your actual account activity—not your warm and fuzzy memories of it—to see what you did the last time markets were in meltdown.

If you bought or stood pat as the U.S. stock market dropped more than 55% between October 2007 and March 2009, you’re a good candidate to be able to weather this downdraft, too, without panicking.

However, if you’re in or near retirement now, then the need to protect your capital from further sudden erosion could make you more conservative than you were back then. So, consider that now, when you can—rather than later, when you will have to.

Also, regrets tend to be hotter and more painful when an outcome appears to be caused by your own actions rather than circumstances that seem beyond your control. Regret is also more intense when you take an action that is an unusual departure from your normal pattern.

So, taking small actions over time, rather than making a big drastic decision all at once, should help reduce your future regrets regardless of what the markets do from here.

If you feel you must sell stocks to calm yourself, do it gradually rather than in giant steps—ideally, by setting a new target level and then moving toward it over time in automatic fixed amounts or percentages that will take some emotion out of the decision.

Consider, also, that if you have tuition or another large bill coming due, you could pay with shares of stock or funds rather than cash. If you have shares that have fallen below your purchase price, you may be able to sell them to meet a large payment and then use up to $3,000 of the resulting loss to reduce your taxable income or to offset current or future gains. (Consult your accountant first!)

Conversely, if the market collapse makes you want to buy stocks, don’t do that impetuously either. Nibble in equal amounts over the course of weeks or months.

Above all, small steps are the best way to avoid big regrets.

I’m sure you’ve seen the headlines, but if not, you should know that the global stock markets are dropping as a result of fears about the spread of the coronavirus.  The statistics keep changing, but currently by far the most deaths (2,664) have been confined to China, with 15 reported in Iran, 11 in South Korea, 7 in Italy and four on a Diamond Princess cruise ship off the coast of Japan.

We have no idea how far or fast the disease will spread, and neither do the markets.

What is the best course of action today?  The first 3% drop in the U.S. stock markets was completely unexpected, and nobody could predict the second day’s fall.  The options now are:

Sell today, and then watch to see how the spread of the coronavirus plays out in the minds of day traders and quick-twitch “investors.”  The odds are that the markets will recover before the end of the epidemic, so you’ll eventually have to buy back at a higher price than you sold at—and look like a bit of a fool.

Wait until there is confirmation that we are, indeed, in a real bear market, sell at or near the bottom, and then see the markets rise past where you sold—and look like a bit of a fool.

Hold tight, ride out the downturn (however long or short it might be) and experience the next rise (whenever it comes) and breathe a sigh of relief that the markets were not down permanently for the first time in human history.  You’ll do some sweating along the way, but in the end you’ll look like a winner.

Market timing during times of market stress is psychologically appealing, but in the real world it is pretty much impossible to execute.  Not knowing when to get out (Yesterday?  Two days ago?) and especially not knowing when to get back in, mean that your odds of getting it right twice are about 25% or less—and remember that you already missed the first timing decision.

So in the real, rational world, you have two choices: ride it out, or contact our offices if you are feeling real mental distress over these two days of downturns.  It could mean that you need a permanent reduction in your portfolio’s risk profile before you make a mistake, out of panic, that could cripple your financial future.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

LPL Tracking# 1-956459

A lot of “smart” investors will tell you that you should never invest when the market has been moving up, but instead should wait until there’s a pullback in order to buy at a bargain price.  But is that really a good strategy?

The biggest problem with this strategy is that you never know when the market will bottom out and start rising again.  But what if you actually did?  Would this strategy lead to incredible returns?

In a recent blog post, market analyst Nick Maggiulli decided to compare dollar-cost averaging against this perfect foresight of waiting to buy in until the markets hit a recent low, right before they started the next rise.  He found that if you randomly picked any trading day for the Dow Jones Industrial Average since 1970, there was a 95% chance that the market would close lower on some other trading day in the future.  That would be the time to buy, right?

Looking back, he found that just one in 20 trading days closes at a price that will never be seen again.  Between those days, our astute investor would hoard the cash that would otherwise be invested, and put it all in at the low point.  Maggiulli found that his hypothetical “buy at market lows” strategy would outperform a simple strategy of investing the same amount every day in the market by (get ready for this) 0.4% a year.

And remember, this strategy requires you to have perfect foresight—which, to be clear, none of us have.  In the real world, you are 95% likely not to get the best possible price when you buy into the market.  There’s no alternative but to accept this.

Even so, this is actually good news.  It means you don’t need a crystal ball to get pretty much the same returns that you would have gotten had the crystal ball somehow given you a view of the future.  All you have to do is continue to invest in a disciplined manner from now until you need the cash (in retirement?), and if the past is any indication, the market itself will take you where you want to go.

Source:

When was the last time you looked at the content of your portfolio?

From time to time, it is a good idea to review how your portfolio assets are allocated – how they are divided among asset classes.

At the inception of your investment strategy, your target asset allocations reflect your tolerance for risk. Over time, though, your portfolio may need adjustments to maintain those target allocations.

Since the financial markets are dynamic, the different investments in your portfolio will gain or lose value as different asset classes have good or bad years. When stocks outperform more conservative asset classes, the portion of your portfolio invested in equities grows more than the other portions.

To put it another way, the passage of time and the performance of the markets may subtly and slowly imbalance your portfolio.

If too large a percentage of your portfolio is held in stocks or equity investments, you may shoulder more investment risk than you want. To address that risk, your portfolio holdings can be realigned to respect the original (target) asset allocations. 

A balanced portfolio is important. It would not be if one investment class always outperformed another – but in the ever-changing financial markets, there is no “always.” In certain market climates, investments with little or no correlation (a statistical measure of how two securities move in relation to each other) to the stock market become appealing. Some investors choose to maintain a significant cash position at all times, no matter how stocks fare.

Downside risk – the possibility of investments losing value – can particularly sting investors who are overly invested in momentum/expensive stocks. Historically, the average price/earnings ratio of the S&P 500 has been around 14. A stock with a dramatically higher P/E ratio may be particularly susceptible to downside risk.1 *

Underdiversification risk can also prove to be an Achilles heel. As a hypothetical example of this, say a retiree or pre-retiree invests too heavily in seven or eight stocks. If shares of even one of these firms plummet, that investor’s portfolio may be greatly impacted.1

Are you retired or retiring soon? If so, this is all the more reason to review and possibly adjust the investment mix in your portfolio. Consistent income and the growth of your invested assets will likely be among your priorities, and therein lies the appeal of a balanced investment approach, with the twin goals of managing risk and encouraging an adequate return.

*The P/E ratio (price-to-earnings ratio) is a measure of the price paid for a share relative to the annual net income or profit earned by the firm per share. It is a financial ratio used for valuation: a higher P/E ratio means that investors are paying more for each unit of net income, so the stock is more expensive compared to one with lower P/E ratio. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification and Asset Allocation do not protect against market risk. Stock investing includes risk, including loss of principal.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – thebalance.com/normal-pe-ratio-stocks-2388545 [2/27/19]

The article below include comments from thought-leader Bob Veres on the question we get occasionally on interest rates, the “inverted yield curve,” and the potential performance of bonds. Please reach out to us if you have any questions.

Rich Arzaga, CFP®

There’s almost zero chance that you missed the alarmist headlines on Friday about the inverted yield curve, which (you probably also read) inevitably signals an upcoming economic recession.  So the smart move is to retreat to the sidelines until the economic bust is over, and get back into the market once the yield curve has developed a healthy steepness.  Right?

Investors certainly thought so.  The S&P 500, on Friday, dropped 1.9%, as people reacted as if a recession would happen on Monday.

It would be nice if investing were that simple.  But in the current case, it is much further from simple than normal.

Why?

The yield curve is a line plotting out the interest rate (yield) that is paid to investors across maturities, from three month to 30 year.  An inversion happens whenever the shorter maturity bonds provide higher yields than longer-term ones—which is counterintuitive since the risks of holding bonds longer-term are greater than if you’re parking your money for a few months.  Longer-term, you could experience inflation, default or a rise in interest rates that will make you look stupid for committing your money at a particular rate for 10 years or longer.

This current so-called “yield curve inversion” really looks more like a flat line stretching from short-term to intermediate-term bonds.  What was widely reported was a (probably brief) moment when the 3-month Treasury note offered higher interest than the 10-year bond—by (get ready to be shocked) 0.022%.  You could see roughly the same spread difference around the beginning of 2006, which was not a very clear signal and did not result in a recession until a year and a half later.  Some months afterwards, the yield curve inverted with a vengeance, although it righted itself before worst carnage of 2008.

The lesson here is that, yes, we have experienced a yield curve inversion sometime before each of the last seven recessions.  However, there have also been two false positives—an inversion in late 1966 that was followed by economic growth, and a largely flat curve, like the one we are experiencing now, in late 1998 that also didn’t presage a recession.

Moreover, even if we accept the idea that a yield curve is a recession signal, the actual timing is almost impossible to predict.  Data from Bianco Research has shown that over the last 50 years, a recession followed, on average, 311 days later—roughly a year.  This is an average of some pretty broad fluctuations.  Following that brief inversion in 2006, the economy didn’t experience recession for another 487 days.  An inversion in December of 1978 was followed by a recession—389 days later.  In contrast, it took just 213 days for the U.S. economy to enter recession territory after a July, 2000 yield curve inversion.  Based on this evidence, selling the day after an inversion seems like a poor strategy.  Selling a month, or six months after doesn’t make sense either.

Finally, some economists think that the yield curve is not nearly the accurate signal that it once was.  The reasons are a bit technical, but they have to do with the increasing control that the central banks—including the U.S. Fed—have on the shorter end of the yield curve.  The Fed and other central banks have been buying up government bonds for their balance sheet, which means the shorter-term yields can no longer be seen as market driven.

So what IS an accurate signal of upcoming recession?  There are some tried-and-true signs, including an overheating rate of GDP growth (which we haven’t seen at all in this long, slow recovery), rising unemployment (nope) and spiking interest rates (no sign yet).  Another sign that directly impacts the yield curve is a sudden demand for longer-term bonds as a safe haven for nervous investors, causing the bond rates to drop below shorter-term paper.  There has been no indication of a shift in demand for bonds over stocks.

So what does all that mean?  The simple lesson is: don’t fall for clickbait.  We are still as much in the dark about what the economy and markets will do in the future as we were before 3-month Treasury bills returned a shocking 0.022% more than 10-year Treasury bonds.  We might experience a recession this year, or next, or in 2022.  All we know for sure is that we WILL experience one, possibly with a few unexpected market ups and downs in the meantime.

Sources:

https://www.marketwatch.com/story/the-yield-curve-inverted-here-are-5-things-investors-need-to-know-2019-03-22

https://seekingalpha.com/article/4250705-inverted-yield-curve-another-viewpoint

https://www.marketwatch.com/story/sp-500-could-fall-40-as-yield-curve-inverts-says-analyst-of-one-of-2018s-best-hedge-fund-returns-2019-03-22

https://www.forbes.com/sites/simonmoore/2019/03/23/the-yield-curve-just-inverted-putting-the-chance-of-a-recession-at-30/#2f7232bb13ab

https://www.cnbc.com/2019/02/20/a-recession-indicator-with-a-perfect-track-record-over-70-years-is-close-to-being-triggered.html

What follows is a useful article from the Wall Street Journal for those looking for ideas to add a little more distance between yourself, or family members, and credit fraud. The headline is a little misleading – this strategy can apply to people of all ages.

For my own purposes, I am sharing this article with my two daughters as a way to educate and get their buy-in. Full disclosure: my wife and I use credit freezes. It helps me sleep a little bit better each night.

Please forward to anyone you feel might find value in this message.

Rich Arzaga, CFP®

YOUR MONEY: Wall Street Journal Dec. 28, 2018

A new law requiring credit bureaus to offer you free freezes applies to children, too. It’s easier than you’d expect, but you may still have questions. Here are some answers.

You can now freeze your child’s credit files for free — and it isn’t as difficult as even the most cynical among you might expect it to be.

Do you remember what it was like trying to maneuver through the credit bureaus’ systems after the Great Equifax Hack of 2017? Many people seeking credit freezes spent hours (or days!) fighting their way onto websites that were not built for moments of mass panic. Some of those folks had to pay fees to protect their own information, which was galling.

Thanks to a new federal law, free credit freezes are available to everyone from your infant to your great-grandmother. And on the first day that kiddie freezes (and here, kids are 15 and under) were mandated, I froze the files of my two daughters just to see how badly things would go.

To my surprise, the experience wasn’t bad at all. But I had some questions for the credit reporting companies, and I tried to anticipate the things that might confuse you, too.

What’s a credit freeze?

When you have a credit freeze with the major bureaus — Equifax, Experian and TransUnion — most companies can’t look at your credit record unless they are already doing business with you. This has the effect of icing out a thief who’s trying to get a credit card in your name, since the card company won’t open the account unless it can check your credit first.

Do I really need to do this for any offspring as well?

It’s a good idea. Thieves can find a way to use your children’s credit files for their own nefarious purposes, just as they can with yours. Most people aren’t in the habit of monitoring their children’s credit, which gives thieves more time to do their work. Plus, kids tend not to have black marks in their credit files yet — another enticing feature for thieves.

Many adults don’t like the inconvenience of having to temporarily thaw their credit files whenever they want to get a car loan or take advantage of a sign-up bonus for a new card. But this isn’t a factor for children, making their freezes less onerous.

Children Credit Freeze Pages

So, what do I do to set up a freeze for a child?

Each of the credit bureaus has instructions on its website. Generally, the law requires companies to collect proof that you are who you say you are and that your child is really your child. This usually means mailing them copies of some combination of your child’s birth certificate and Social Security card, and your driver’s license and Social Security card.

If all goes well, a couple of weeks later you’ll get a note back confirming that the companies have frozen the files.

Wait, they want me to put copies of Social Security cards in the mail?

Yes. There is no electronic upload available for your documents, although an Equifax customer service representative named Richie tipped me off to a fax option (1-888-826-0598) if you think that’s a better option.

I didn’t like dropping copies of such sensitive documents into a mailbox, but I held my breath and did it anyway. An Equifax spokeswoman described the mail requirement as “industry standard.”

That doesn’t make it right.

An Experian spokesman acknowledged that it could make people uncomfortable and said handling the documents another way was “an area of opportunity” the company could explore. But he also said that plenty of people mailed these kinds of documents to the government, health care organizations and the courts, and that the company had a secure post office box that was not at risk for theft.

Equifax and TransUnion want us all to use an address on the envelope that includes the word “freeze” in it: “Equifax Security Freeze” and “TransUnion Protected Consumer Freeze.” That seems to essentially invite identity thieves to pick out these envelopes first if they get their hands on a mailbag, given the likelihood that essential documents would be inside. Maybe “Steal this envelope!” would be more appropriate.

I blew off the instructions just to see what would happen. My kids still got their freezes.

Just to be sure, I circled back to Equifax and TransUnion about the addresses, and both companies say your request won’t be misdirected if you leave “freeze” out of the address. They will still process your request.

I have more than one child. Can I just toss their documents in one envelope?

It wasn’t clear to me, either, so I tried it both ways with different bureaus — separate envelopes to two and one envelope to the third — and both approaches worked. The companies confirmed that putting everything in a single envelope is fine.

Experian and Equifax both have forms they want you to fill out, so complete one for each child. Then, for all three bureaus, write a clear-as-day cover letter explaining how many files you are seeking to freeze. Don’t forget to include all of the documents needed for each child in the envelope.

My child is over 15 but under 18. Does that matter?

Yes. You may think of your 16-year-old as a minor, but adulthood arrives early in credit land, as soon as you turn 16.

Here’s how I’d handle a request for a 16-year-old. Go to the adult freeze sections of the bureaus’ websites and try to request a freeze there. You’ll probably be told that your teenager does not have a credit file yet and that you’ll have to mail in much or all of the same identifying information that you would have to send if your child were 12.

If you have a 16-year-old and a 12-year-old, figure out the situation with the 16-year-old first. If you can request an adult freeze online, great. If not, you can do all the photocopying and licking and stamping and cover-lettering in one fell swoop for both kids. But in that case, I’d use two envelopes. One is coming from an “adult” who may need to send the documents to a separate post office box or address.

How can this turn into a giant fiasco? There must be a way.

The quickest way to make a hash of your neatly frozen files is to misplace the personal identification number that the credit bureaus give you. You will need to provide the PIN when temporarily or permanently thawing your own file or when your child wants to do it some day many years from now.

So, don’t lose the PIN. You can get a new one, but it might take weeks.

I did it! I can stop worrying now, right?

Nope. Thieves can still take control of your accounts, or find ways to impersonate you to steal your income-tax refunds, or use your information to get free medical care.

But credit freezes are the best tool we have to protect ourselves and our children from many kinds of identity fraud. Given how imperfect the security systems are that protect our data from the bad guys, I see no reason not to take advantage of free tools that can make us all a little bit safer.

Ron Lieber is the columnist and author of “The Opposite of Spoiled.” He previously helped develop the personal finance web site FiLife and wrote for The Wall Street Journal, Fast Company and Fortune.

Many middle-class Americans are financially unprepared for retirement—and that is leading to an array of social tensions

This is an interesting article, and a potential “need-to-know” for those planning to move when they retire. According to this Wall Street Journal article, an unexpected problem could surface when you move from your pre-retirement “work” home into your ideal retirement home… in a community occupied by long-time residence.

As you make your new house a home, you and other transfers to the community may want to “upgrade” the community and improve services. While you might find the cost of these enhancements to be of high value, it is possible that the long-time residence will not see the same opportunity. In fact, you could be in for a fight. Not because long time residence don’t want changes to their community. But because they simply cannot afford these enhancements. For many, their hand-to-mouth retirement lifestyle cannot absorb anything beyond the fixed costs already difficult to manage. So, it is really a conflict of economics.

There are no take-aways from this article, no lesson except to be aware of a potential problem. My assessment is, it is a good idea to get to know the profile, or psychographics, of the neighborhood you are thinking about retiring to. Are you moving into a community or city with residence who generally share your economic profile? In the case of the article, the residence are tied together by a retirement community association. More likely for most a retirement community does not apply. But this same conflict can surface in communities where you are likely to be dependent on a majority vote or the resources needed to accomplish the same objective.

~ Rich Arzaga, CFP®

By Jennifer Levitz | Photographs by Rachel Bujalski

SANTA ROSA, Calif.—On a Saturday morning in retirement paradise, Ken Heyman stepped out to his front porch and found a brown paper bag. Inside was the chopped-off head of a rat.

Mr. Heyman was acting president of the homeowners’ association at Oakmont Village, an enclave in Northern California’s wine country for people age 55 and over. For months, the community had battled over the unlikeliest of topics: pickleball, a game that is a mix of tennis, badminton and ping pong. Some residents wanted to build a pickleball court complex that would cost at least $300,000. Others didn’t, saying they didn’t want to see their dues go up.

Residents shouted at each other at town-hall gatherings. One confrontation got so heated that a resident called the police. The governing board appointed a security guard to keep order at meetings.

Photo: Oakmont residents play pickleball—a game that’s like a gentler version of tennis, played with a paddle and a plastic ball with holes on a badminton-sized court. 

For many, of course, the issue wasn’t really about pickleball. It was about a divide that had opened between wealthier residents who moved to the village more recently and the less well-off, who said clubhouse updates, new fees and expensive amenities would be budget-busters.

Mr. Heyman’s predecessor as president was a leader of the anti-pickleball faction. She felt she had been chased out of office by pickleball partisans. On the paper bag was a note.

“You’re next,” it read, according to a police report.

Around 10,000 baby boomers are turning 65 every day, and the same number will continue doing so for years. Some are on solid financial ground after a lifetime of planning and the fortune of well-timed home purchases and stock investments.

Most of the rest are unprepared. Fifty-four percent of households with middle incomes—ranging from around $48,000 to $95,000 a year—don’t have enough saved to maintain their quality of living in retirement, according to the Boston College Center for Retirement Research. Some of those who saved were hit by unforeseen health-care costs. Others took on debt for education. Yet more made investment mistakes or lost their savings in the 2008 financial crisis.

Those wildly different circumstances are leading to hard-to-resolve social tensions, which are playing out every day at retirement communities across the country. In Oakmont, the issue was pickleball.

Founded in 1963, Oakmont Village was long an option for the middle class that benefited from California’s rising real-estate values. They could move into attached duplexes or triplexes or wood-sided single-family ranch-style homes and enjoy three swimming pools, a lawn-bowling green, honor-system lending library and the 130-plus clubs and activities.

Living near one another is an increasingly popular option for retirees. The population of the U.S.’s 442 federally designated “retirement destination counties” rose 2% last year, compared with the national average of 0.7%, according to Census Bureau figures. Retirement communities often provide social connections that can fray when people leave the workplace, live alone or have families spread across the country.

Steve Spanier, the current president of Oakmont’s homeowners’ board, said the mountain-view community started “moving more upscale” in recent years when retiring baby boomers in San Francisco and Silicon Valley discovered it on weekend wine-tasting trips to Sonoma County. Coming from places where real-estate prices are especially high, they began buying and gutting homes. The community has about 4,700 residents.

The community now splits neatly into two camps. Some believe it should only “fix things that break,” he says. “Then there are people like the people who are starting to move in. They have a lot of money and want to live the lifestyle to which they’ve become accustomed and they want to do it here,” he says. “People are having more trouble getting along.”

The October wildfires that tore through Northern California’s wine country last year fleetingly eased the divisions, says Mr. Spanier. The fires forced Oakmonters to temporarily evacuate and destroyed two of the village’s roughly 3,200 homes. The fitness center sold “Oakmont Strong” T-shirts, and the mood mellowed for a bit.

“It got better for a period of time,” he says, “then that feeling of unity created by the fire left.”

Homes in the resident-owned Oakmont Village fetch between $350,000 for smaller dwellings up to about $1.2 million for ranch-style homes that have been remodeled by wealthy newcomers. A few years ago, million-dollar sales were unheard of.

After retiring in 2015, Iris Harrell sold her part of the remodeling company she founded in Mountain View, Calif., and says she is “never going to have to worry about money.” She and her wife, Ann Benson, sold their home in Silicon Valley for $3.8 million and bought a hillside ranch-style home in Oakmont for about $800,000, she says.

They raised the roof to allow for windows tall enough for a view of the top of nearby Hood Mountain. So they can age at home, they installed an elevator and added 1,300 square feet of space, including a spacious wing that could house a live-in caretaker. Ms. Harrell now calls the wing “the best guest suite in Oakmont.”

“We’re spoiled and we know it, but it just worked out for us,” says the fit 71-year-old.

She became the chairwoman of Oakmont’s building construction committee and set about trying to also refurbish the 55-year-old community.

“You can’t be premier and look like the 1960s,” Ms. Harrell says. “It’s not making the statement we want.”

She says that retirees moving in—“post Google-ites” she calls them—are willing to pay for better amenities and that Oakmont’s future shouldn’t be dictated by the “small minority” who aren’t willing. She suggested those pinched for money should look into a reverse mortgage.

Oakmont resident Gary O’Shaughnessy, who lives in a unit of a triplex down the hill from Ms. Harrell’s house, calls that suggestion “insensitive.”

“That attitude I can’t live with,” he says.

A former school-bus driver for disabled children, Mr. O’Shaughnessy says a diagnosis of Parkinson’s led him to retire in his 60s, earlier than planned.

While he was working, he rented a house in Santa Rosa. He bought his place in Oakmont for $280,000 in 2010 with help from an inheritance from his mother and $50,000 from his own retirement account. He is single and 71 and has $40,000 in savings. His monthly income is around $2,000, from Social Security and a small pension.

He says he typically walks dogs seven days a week to “make ends meet”; his bills include a mortgage, supplemental medical insurance and more than $300 in monthly dues at Oakmont.

Everyone in the resident-owned community pays $67 a month per person to the main Oakmont association, up from $58 last year. Households pay another $220 a month, on average, to various sub-neighborhood associations for services such as water or landscaping.

Mr. O’Shaughnessy started attending meetings and signing petitions as plans, backed by Ms. Harrell and others, proceeded for a roughly $300,000 tournament-quality pickleball complex with tiered spectator seating.

“There was a big fight and it kind of divided the community,” he says. “The people who have money just want to throw it around, but there are a lot of people on fixed incomes.”

A 2015 survey sponsored by the Oakmont association found that 48% of residents said they were very or somewhat concerned about their current financial needs. That figure rose to 57% for those under age 66.

Overall, 52% were “not at all concerned.”

“We are an extremely wealthy community,” resident Vince Taylor, a former software-company owner, said, during an open forum at an association meeting in March 2017. “We shouldn’t be acting like a poverty community.”

Mr. Taylor, who is 81 and retired, says he has more than $1 million in his retirement savings and lives off investment earnings without touching the principal.

His public comments provoked discussion on Nextdoor, an online neighborhood social-networking service. A discussion titled “Disparity of wealth in Oakmont” drew nearly 80 comments.

One Oakmont resident suggested retirees with tight budgets get jobs. Another, Bob Starkey, a 69-year-old renter and retired museum director, wrote that illness had depleted his savings and that he lived with anxiety his car might die.

“Please remember that pensions have become a thing of the past,” wrote Margaret Babin, a retired home-day-care operator who is 62 and is selling her collection of French Quimper pottery on eBay to pay for extras.

“At some events, I feel out of place even though I shouldn’t, because I’m doing OK,” she says, noting that she sees more fancy cars in the community. “The separation seems to be getting wider and wider.”

By early 2017, she and other frustrated residents had organized behind a slate of candidates who aimed to win a majority on the homeowners’ board and halt the pickleball project, which had been approved by Oakmont leaders but not yet built.

On the morning of April 3, a phone call woke up Ms. Babin. “I just couldn’t believe what I was hearing,” she recalls.

One day before the votes would be tallied in the election, a bulldozer was breaking ground on the pickleball complex. Supporters and detractors rushed over. One resident called the Santa Rosa Police Department at 7:24 a.m. to report a “verbal disturbance” at Oakmont.

“There is a heated argument going on at this time,” the police report said. An officer who went to the scene wrote that there were “two warring factions over a pickleball court.”

The next day, the candidates opposing the pickleball complex were victorious. Construction stopped.

“We face some of the same challenges as the rest of our state and our country,” Ellen Leznik, the new president, said at a public association meeting days later. “One such challenge is the disparity of wealth in our membership.”

Some pickleball proponents rose to defend themselves.

“We’re not the mean, vicious and entitled people our opponents and Nextdoor critics would have you believe,” one speaker said.

Oakmont eventually converted two existing tennis courts into six pickleball courts at a fraction of the cost. The new board ushered in a tone of frugality and oversight that some saw as heavy-handed. Rhetoric at public meetings grew so hostile that the board brought in a security guard to keep order.

“Why don’t we just wait till we’re all dead?” an Oakmont man who favored the pickleball complex declared at one meeting. “Guess what? Oakmont is our last stop. The train ends here. This is the Hotel California.”

Ms. Leznik, a 60-year-old former lawyer who retired early because of a disability, resigned less than four months after she became president, in July 2017. She says she had heart palpitations from the stress.

That left her ally, Mr. Heyman, as acting president.

The next month, at 9:15 a.m. on Aug. 12, the police again got a call from Oakmont, this time from Mr. Heyman, who is 61 and still works in corporate communications.

On Mr. Heyman’s porch sat “a bag containing the chopped off head of a rat,” according to the police report.

“It freaked me out,” says Mr. Heyman. He says he has “no doubt” the rat served as retribution for killing the pickleball project and for the disputes that followed.

At an association meeting soon after, another board member likened “the battle being waged at Oakmont” to “Armageddon.”

Mr. Heyman left the board and later moved out of Oakmont.

“There were clearly sides. One side felt that we’re an active-adult community and it’s our responsibility to provide activities and facilities to the membership,” says Oakmont resident Al Medeiros, 71, who now sits on the board. He counts himself in that group, which he says had been “vilified.”

“The other side seemed to think that well, we’re poor, so we really need to make sure our dues don’t go up and we should just provide the minimum,” he says.

In February, the board discussed remodeling a dated auditorium where hundreds of events, from dances to movies to meetings, take place every year. Some residents talked about constructing a new center and repurposing the old one into a state-of-the-art gym.

The board is also weighing a divisive request from the private golf club that borders many homes in the retirement community. The club is asking all Oakmont residents, golfers or not, to pitch in to help the club meet economic challenges. Someone suggested $5 a person every month.

Mr. Spanier, the new board president, says it “could potentially make pickleball look like a tiny issue.”

Oakmont Village, with views of Hood Mountain, includes roughly 3,200 homes.

#RetirementHome #Retirement #WealthGap #FinancialBehavior #FinancialPlanning #PersonalAdvice #Real Estate

This article was prepared by a third party for information purposes only. It is not intended to provide specific advice or recommendations for any individual.

By Cornerstone Wealth Management

Before it is too late, let’s clear up some important misconceptions. While some retirement clichés have been around for decades, others have recently joined their ranks. Let’s explore seven popular retirement myths.

  1. “When I’m retired, I won’t need to invest anymore.” Many see retirement as an end of a journey, a finish line to a long career. In reality, retirement can be the start of a new phase of life that could last for decades. By not maintain positions in equities (stocks or mutual funds), it is possible to lose ground to purchasing power as even moderate inflation has the potential to devalue the money you’ve saved. Depending on your situation, a good rule of thumb may be to keep saving money, keep earning income, keep invested, even in retirement.
  2. “My taxes will be lower when I retire.” Not necessarily. While earning less or no income could put you in a lower tax bracket, you could also lose some of the tax breaks you enjoyed during your working years. In addition, local, state and federal taxes will almost certainly rise over time. In addition, you could pay taxes on funds withdrawn from IRAs and other qualified retirement plans. This could include a portion of your Social Security benefits. Although your earned income may decrease, you may end up losing a meaningfully larger percentage of it to taxes after you retire.1
  3. “I don’t have enough saved. I’ll have to work the rest of my life. If your retirement resources are falling short of what you might need in later years, working longer may be the most practical solution. This will allow you to use earned income to cover expenses for a longer period, and shorten the number of years you would need to otherwise cover when you stop work. Meanwhile, you may be able to make larger, catch-up contributions to IRAs after 50, and remember that you have savings potential in workplace retirement plans. If you are 50 or older this in 2018, you can put as much as $24,500 into a 401(k) plan. Some participants in 403(b) or 457(b) plans are also allowed that step-up. And during this time, you can downsize and reduce debts and expenses to effectively give you more retirement money. You can also stay invested longer (see #1 above).2 The bottom line is, don’t give up, and fight the good fight.
  4. “Medicare will take care of my long term care expenses.” Not true, and among the most costly of these myths. Medicare may (this is not guaranteed) pay for up to 100 days of your long-term care expenses. If you need months or years of long-term care and do not own a long term care policy or own a policy and don’t have adequate coverage, you may have to pay for it out of pocket. According to Genworth Financial’s Annual Cost of Care Survey, the average yearly cost of a semi-private room in a nursing home is $235 a day ($85,775 per year).3,4 In Northern California, the cost will likely be higher.
  5. “I should help my kids with college costs.” That’s a nice thought, an expensive idea, and for many not a good idea. Unlike student financial assistance, there is no such program as retiree “financial assistance.” Your student can work, save, and or borrow to pay to cover their cost of college. S/he will have decades to pay loans back. In contrast, you can’t go to the bank and get a “retirement loan.” Moreover, if you outlive your money your kids may end up taking you in and you may be a financial burden to them, which for many is a parent’s worst nightmare. Putting your financial requirements above theirs may be fair and smart as you approach retirement.
  6. “I’ll live on less in retirement.” We all have an image in our minds of a retired couple in their seventies or eighties living modestly, hardly eating out, and relying on senior discounts. In the later phase of retirement, couples often choose to live on less, sometimes out of necessity. However, the initial phase may be a different story. For many, the first few years of retirement mean traveling, new adventures, and “living it up” a little – all of which may mean new retirees may actually “live on more” out of the retirement gate.
  7. “No one really retires anymore.” It may be true that many baby boomers will probably keep working to some degree. Some people love to work and want to work as long as they can. What if you can’t, though? What if your employer shocks you and suddenly lets you go? What if your health does not permit you to work as much as you would like, or even at all? You could retire more abruptly than you believe you will. This is why even people who expect to work into their later years should have a solid retirement plan.

There is no “generic” retirement experience, and therefore, there is no one-size-fits-all retirement plan. Each individual, couple, or family should have a strategy tailored to their particular money situation and life and financial objectives.

If you or someone you know would like to get coaching on the most appropriate approach to planning for retirement, we welcome your call.

#retirementmyths #financialmyths #retirementfail #FinancialBehavior #FinancialPlanning #PersonalAdvice #RetirementIncome  #RetirementPlanning

This material was prepared by MarketingPro, Inc. and does not necessarily represent the views of the presenting party nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – money.usnews.com/money/retirement/iras/articles/2017-04-03/5-new-taxes-to-watch-out-for-in-retirement [4/3/18]
2 – fool.com/retirement/2017/10/29/what-are-the-maximum-401k-contribution-limits-for.aspx [3/6/18]
3 – medicare.gov/coverage/skilled-nursing-facility-care.html [9/13/18]
4 – fool.com/retirement/2018/05/24/the-1-retirement-expense-were-still-not-preparing.aspx [5/24/18]

What do you do with sudden money?

Provided by Cornerstone Wealth Management

Imagine getting rich, quick. Liberating? Yes of course. Frustrating and challenging? Most likely.

Sudden money can help you resolve retirement saving or college funding goals, and set the stage for your financial independence. On the downside, you’ll pay higher taxes, attract more attention, and maybe even deal with “wealth envy.” Sudden Money may also include grief or stress if associated to death, divorce, or a employer buy-out.

Sudden Money does not always lead to happy endings. Take the example of Alex and Rhoda Toth, a real-life Florida couple down to their last $25 who hit a lottery jackpot of roughly $13 million in 1990. Their story ended badly: by 2006, they were bankrupt and faced tax fraud charges. Or Illinois resident Janite Lee, who won $18 million in the state lottery. Eight short years later, Janite filed for bankruptcy; had $700 to her name and owed $2.5 million to creditors. Sudden Money doesn’t automatically breed “old money” behavior or success. Without long-range vision, one generation’s wealth may not transfer to the next. Wealth coaching firm The Williams Group spent years studying the estate transfers of more than 2,000 affluent households. It found that 70% of the time, the wealth built by one generation failed to successfully migrate to the next.1,2

What are some wise steps to take when you receive a windfall? What might you do to keep that money in your life and in your family for their future?

Keep quiet, if you can. If you aren’t in the spotlight, don’t step into it. Aside from you and your family, the only other parties that need to know about your financial windfall is the Internal Revenue Service, the financial professionals who you consult or hire, and your attorney. Beyond those people, there isn’t generally an upside to notify anyone else.

What if you can’t keep a low profile? Winning a lottery prize, selling your company, signing a multiyear deal – when your wealth is more in the public domain, expect friends and strangers and their “opportunities” to come knocking at your door. Time to put on your business face: Be fair, firm, and friendly – and avoid handling the requests directly. One well-intended generous handout on your part may risk opening the floodgates to others. Let your financial team review requests for loans, business proposals, and pipe dreams.

Yes, your team. If big money comes your way, you need skilled professionals in your corner – a tax professional, an attorney, and a wealth manager. Ideally, your tax professional is a Certified Public Accountant (CPA) and or Enrolled Agent (EA) and tax advisor, your lawyer is an estate planning attorney, and your wealth manager is “big picture” and pays attention to tax efficiency.

Think in increments. When sudden money enhances your financial standing, you need to think about the immediate future, the near future, and the decades ahead. Many people celebrate their good fortune when they receive sudden wealth and live in the moment, only to wonder years later where that moment went. Many times, it is better to identify what needs immediate attention, and delay anything else until life becomes more stable.

In the short term, an infusion of money may result in tax challenges; it may also require you to reconsider existing beneficiary designations on IRAs, retirement plans, and investment accounts and insurance policies. A will, a trust, an existing estate plan – they may need to be revisited. Resist the immediate temptation to try and grow the newly acquired wealth quickly by investing aggressively.

Looking down the road a few miles, think about what financial independence (or greater financial freedom) means to you. How do you want to spend your time? Do you want to continue working, or change your career? If you own a business, should you stick with it, or sell or transfer ownership? What kinds of near-term possibilities could this mean for you? What are the strategies that could help you defer or reduce taxes long term? How can you manage investment and other financial risks in your life?

Looking further ahead, tax efficiency can potentially make an enormous difference for that windfall. You may end up with considerably more money (or considerably less) decades from now due to asset location and other tax factors.

Important idea: Think about doing nothing for a while. Nothing financially momentous, that is. There’s nothing wrong with that. Sudden, impulsive moves with sudden wealth can backfire.

Welcome the positive financial changes, but don’t change yourself. Remaining true to your morals, ethics, and beliefs will help you stay grounded. Turning to professionals who know how to capably guide that wealth is just as vital.

If you or someone you know would like to get coaching on the most appropriate to sudden money, we welcome your call.

This material was prepared by MarketingPro, Inc. and does not necessarily represent the views of the presenting party nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.

Citations.

1 – bankrate.com/finance/personal-finance/lottery-winners-who-went-broke-1.aspx#slide=1 [5/23/18]
2 – money.cnn.com/2018/09/10/investing/multi-generation-wealth/index.html [9/10/18]

This article was prepared by a third for information only. It is not intended to provide specific advice or recommendations for any individual.