A couple weeks back I received a letter from the ASIAN AMERICAN FEDERATION soliciting contributions for their 20th anniversary. What caught my attention was the last sentence of the first and the fourth paragraphs of the letter, they read: 1) ….as reported in the Federation’s 2008 poverty report, "Working but Poor", one in three Asian seniors in New York City lives in poverty; 2) Right now your contribution will count even more because all gifts that we received through December 2009 will be fully matched dollar for dollar by the W.K. Kellogg Foundation (of the breakfast cereal fame, whose foundation mantra is “to help people help themselves).
The letter opened with a story on Mr. Lin, who is 85 years old and living alone in Chinatown for 40 years. He suffers from arthritic hands and knees that he developed as a cook and can’t really climb the 3 flights of stairs to his apt. He lives in seclusion and his only human contact is with a former co-worker who delivers groceries to him once a week. His story is all too common in the immigrant community. I shudder at the thought that if my father were still alive and had no children to look after him, he could have been Mr. Lin. But it isn’t about my father who could have been Mr. Lin that tugs at my heart string; it is the stunning statistics of one in 3 Asian seniors actually live in poverty in NYC. I know what poverty is as I grew up poor, but thank goodness I never felt isolated or in seclusion. But even though life wasn’t always easy, especially when I was growing up in Hong Kong and in the South Bronx, I always had a roof over my head, a meal on the table, and clothes on my back. Imagine if you have no means of putting food on your table? According to CITY HARVEST, nearly 1.5 million New Yorkers live in poverty, struggling to afford basic necessities such as rent and medical care while trying to put food on their tables. Each day City Harvest deploys a fleet of 17 trucks and 3 cargo bikes rescuing more than 68,000 pounds of food and deliver free of charge to 600 pantries and soup kitchens in all 5 boroughs, feeding 260,000 hungry New Yorkers each week! For a mere $36 (one Venti flavored Starbucks coffee daily for a week), you can help feed 28 children for an entire week! For $135 ($.37 a day), you can help feed 2 seniors for an entire year!
BEFORE you decide which non profit organization to give, analyze where your money will go and how much of every dollar you give will end up in the actual program vs. in the administrative (compensation) arena. While it may satiate your visceral need of feeling good to give base on an event or on a particular cause, do you really want to give an organization your hard earned money if the bulk of it may go towards paying someone half a million dollars in compensation to administer where your contributions will go? Check out these 2 websites that analyze various charities and read thru Form 990 to get a sense of the deployment of programs and expenses, and make your own judgment: 1) Charity Navigator; and 2) Guidestar.
FINALLY, times are difficult for everyone; there is a way to give without spending your hard earned dollars: participate in charity programs that are sponsored by major organizations. One such recently caught my eyes is the Chase Community Giving and Facebook partnership, where they have teamed up to give away $5 MILLION to nonprofits across the country. The nonprofit that gets the most votes wins $1 million, the 5 runner-ups win $100,000, and then the next 25 win $25,000. Over 500,000 charities are included in the program, and you can add to the list if the charity of your choice qualifies. Each Facebook participant is given 20 votes, first round of voting is underway and the final round will end on Jan 22, 2010, with the million dollar winner announced on Feb. 1st.
Reflect on how blessed we all are on a daily basis if we are able to afford not only the basic subsistence, but also the finer things in life.
HAPPY THANKSGIVING.
Wednesday, November 25, 2009
Tuesday, November 17, 2009
Take Control of Your Life & Career
Of late I have been contemplating what I should really do when I grow up, now that I have taken 2+ years from the rat race. It is remarkable how time flies when you are having fun, even when you do not have any income coming in! Alas I also recognize that all the things I love doing require money and don't make any money: writing, traveling, eating and drinking! Though I would not trade any of the moments in the past 2+ years for anything else, in the recess of my brain I often felt a constant urge to go back to work to have a greater purpose in life, in addition to repadding my diminished nest egg should I live to 100 yrs old, the other truth be told!!.
But now I want to work in an environment where I will truly want to get up every morning and look forward to going there, as oppose to doing it because I have to. That, I also come to realize, is a lofty proposition and a luxury that most people in the world do not have and may never attain, for most people need to put a roof over their heads, put food on their tables, and to look after their family. I recall the latter years that I spent on Wall Street being on auto pilot, not really cognizant of what day of the week or what time of the day it was, I was just rushing from one place to another, in the name of making the most amount of revenue for the firm and in turn, hopefully for myself in the form of a big bonus. All of this because I felt I had to - to pay for my mortgages and for material things.
Now for my next chapter, what is it that I really want to do and how do I find a happy medium?
In discussing my quandary with a friend, who had at one point taken 3 years off to travel and re-energize her life, she suggests that I watch a series of workshop videos on Oprah.com , titled “Take Control of Your Life and Career” by Markus Buckingham. The opening video certainly resonated with me as the participants discussed why they were there to take the workshop, I identified with some of the responses given.
http://www.oprah.com/media/20080601_orig_151007004OCOMINTROECmix2_O_VIDEO_1
My general take away from the workshops:
1) No one has the perfect job
2) Really know your own strengths (usually things you enjoy) and weaknesses (usually things you hate about yourself)
3) You will never be great at something that you hate
4) FREE (Focus, Release, Educate and Expand) your Strengths: Highly successful people build their jobs and lives around the best of their strengths
5) STOP (Stop, Team Up, Offer up, Perceive) your Weaknesses, or suck it up and do it. You must close one door before you can open another
Though the single most interesting take away that I took from the entire segment was when Markus said: “The world is ambivalent about you and your strengths, the world doesn’t really care about you and your strengths, the world wants you to get a job done, your family wants you to get a job done… ”
So in short, while it is great to understand your strengths, but if you can’t get a job done, all the strengths and passions you have are for not, whether it is working for someone else or working for yourself.
So back to the drawing table: What is it that I want to get done with all the strengths that I have?
But now I want to work in an environment where I will truly want to get up every morning and look forward to going there, as oppose to doing it because I have to. That, I also come to realize, is a lofty proposition and a luxury that most people in the world do not have and may never attain, for most people need to put a roof over their heads, put food on their tables, and to look after their family. I recall the latter years that I spent on Wall Street being on auto pilot, not really cognizant of what day of the week or what time of the day it was, I was just rushing from one place to another, in the name of making the most amount of revenue for the firm and in turn, hopefully for myself in the form of a big bonus. All of this because I felt I had to - to pay for my mortgages and for material things.
Now for my next chapter, what is it that I really want to do and how do I find a happy medium?
In discussing my quandary with a friend, who had at one point taken 3 years off to travel and re-energize her life, she suggests that I watch a series of workshop videos on Oprah.com , titled “Take Control of Your Life and Career” by Markus Buckingham. The opening video certainly resonated with me as the participants discussed why they were there to take the workshop, I identified with some of the responses given.
http://www.oprah.com/media/20080601_orig_151007004OCOMINTROECmix2_O_VIDEO_1
My general take away from the workshops:
1) No one has the perfect job
2) Really know your own strengths (usually things you enjoy) and weaknesses (usually things you hate about yourself)
3) You will never be great at something that you hate
4) FREE (Focus, Release, Educate and Expand) your Strengths: Highly successful people build their jobs and lives around the best of their strengths
5) STOP (Stop, Team Up, Offer up, Perceive) your Weaknesses, or suck it up and do it. You must close one door before you can open another
Though the single most interesting take away that I took from the entire segment was when Markus said: “The world is ambivalent about you and your strengths, the world doesn’t really care about you and your strengths, the world wants you to get a job done, your family wants you to get a job done… ”
So in short, while it is great to understand your strengths, but if you can’t get a job done, all the strengths and passions you have are for not, whether it is working for someone else or working for yourself.
So back to the drawing table: What is it that I want to get done with all the strengths that I have?
Monday, November 16, 2009
WSJ: Have You Learned Your Lessons Yet?
Over the weekend, the Wall Street Journal published a very interesting and SOBERING survey written by Glenn Ruffenach on lessons learned in the past year during the financial crisis. It was done in a Q&A format spanning 6 categories: Bearing Up, Nest Eggs, Health, Savings & Spending, and Social Security & Looking Ahead. Some of the statistics will pose question of sample size error and is not representative of national averages, but it gives one a sense of what the future may hold in retirement planning, maintaining one’s standard of living in retirement, and healthcare, given the financial crisis and aging of the US population.
I summarize for you the findings of the survey:
BEARING UP:
1) In 2008, NOT a single asset class that is theoretically uncorrelated to stocks rose in value against the S&P 500 (-37%) and hence invalidated the theory of diversification.
2) For the 10-year period ended Sept 30, stock as measured by the S&P 500 delivered an annual average return of -.2%, while bonds, as measured by Barclays Capital US Aggregate Index, delivered an annual average return of 6%.
3) 31% of the surveyed workers (done by Bankrate Inc) said that they still plan to retire on their original schedule, in the wake of the financial crisis. 20% of the workers said they plan to leave office between 1 and 5 years later than first planned; 18% said they will never be able to retire; while 13% said 6 to 10 years later than planned.
NEST EGGS:
1) 26% of workers age 55+ have savings and investments (ex homes and pensions) that total $250,000 or more (done by Employee Benefit Research Institute in DC). 59% have less than $100,000.
2) 47% of workers ended up leaving the work force earlier than expected due to health problems or disability (42%) and changes to their company, including downsizing (34%). If these workers are taping into inadequate savings or tapping into savings earlier than expected, they will be unable to maintain their standard of living in retirement.
3) 80% of workers (out of 1.2 Mil workers in 1,500+ retirement plans – U. of Michigan Survey) NEVER made any changes in their 401K in the past 2 years. 11% made one trade. There is no evidence of shifting risk with age.
4) At the end of 2007 (right before the market really crashed), 43% of workers age 56 – 65 had 70% or more of their 401K funds in stocks. 22% of older workers had 90%+ in stocks. Concentration of risk is high.
5) 20% of workers age 55-64 in employer retirement programs made the maximum contribution to their acct in 2008; while 13% age 50+ took advantage of catch-up contributions (done by Vanguard with 3 mil participants).
HEALTHCARE:
1) How much savings will men and women (greater longevity) need respectively for a 50% chance of covering the cost of healthcare premiums (for a Medigap policy + Medicare B and D), and out-of- pocket drug expenses in later life, assuming one retires at 65 in 2009 WITHOUT employer health benefits, starting with $900 out-of-pocket healthcare cost in year 1? ANSWER: Men = $86,000, WOMEN = $125,000.
And if you want to cover 90% of covering healthcare cost, you will need this much savings: Men = $177,000, Women = $221,000!!! Don’t underestimate how much your healthcare expenses will cost you.
2) The age group that has the highest obesity rates in the US is between 40 – 59, 40% of this group is considered obese! Obesity will cause health complications which will eat into your healthcare costs. Start eating and exercising right.
SAVINGS & SPENDING:
1) Only 44% of workers surveyed have tried to calculate how much money they will need to save for a comfortable retirement. Same 44% said they guessed at how much money they will need in later life!
2) It is estimated that one needs 80% of your pre-retirement income to have a successful retirement; the caveat is your living standard.
3) 43% of households age 65-74 have housing debt.
SOCIAL SECURITY:
1) In retirement, Social Security will likely replace 33% of your pre-retirement income. Will your savings and assets be sufficient to generate the balance?
2) Among the best ways for a couple to maximize Social Security payments over their lifetime is for the lower-earning spouse to claim benefits early (at age 62) and the higher-earning spouse to claim benefits later (at age 70), the 62/70 strategy, depending on the couples.
LOOKING AHEAD:
1) Working longer is now the single best cure for a battered nest egg! This will maximize your social security payout and hopefully allow your retirement savings to grow.
2) The economic crisis is not really prompting major changes in strategies to help people build and protect their nest eggs; people don’t know what asset classes to diversify into.
In conclusion, Mr. Ruffenach suggests you write out a financial plan; save at least 10% of your paycheck; diversify your holdings; keep debt to minimum; spend less than you make; build a cash reserve; insure your risks where possible; and watch your health. Seems like sound advice to me.
I summarize for you the findings of the survey:
BEARING UP:
1) In 2008, NOT a single asset class that is theoretically uncorrelated to stocks rose in value against the S&P 500 (-37%) and hence invalidated the theory of diversification.
2) For the 10-year period ended Sept 30, stock as measured by the S&P 500 delivered an annual average return of -.2%, while bonds, as measured by Barclays Capital US Aggregate Index, delivered an annual average return of 6%.
3) 31% of the surveyed workers (done by Bankrate Inc) said that they still plan to retire on their original schedule, in the wake of the financial crisis. 20% of the workers said they plan to leave office between 1 and 5 years later than first planned; 18% said they will never be able to retire; while 13% said 6 to 10 years later than planned.
NEST EGGS:
1) 26% of workers age 55+ have savings and investments (ex homes and pensions) that total $250,000 or more (done by Employee Benefit Research Institute in DC). 59% have less than $100,000.
2) 47% of workers ended up leaving the work force earlier than expected due to health problems or disability (42%) and changes to their company, including downsizing (34%). If these workers are taping into inadequate savings or tapping into savings earlier than expected, they will be unable to maintain their standard of living in retirement.
3) 80% of workers (out of 1.2 Mil workers in 1,500+ retirement plans – U. of Michigan Survey) NEVER made any changes in their 401K in the past 2 years. 11% made one trade. There is no evidence of shifting risk with age.
4) At the end of 2007 (right before the market really crashed), 43% of workers age 56 – 65 had 70% or more of their 401K funds in stocks. 22% of older workers had 90%+ in stocks. Concentration of risk is high.
5) 20% of workers age 55-64 in employer retirement programs made the maximum contribution to their acct in 2008; while 13% age 50+ took advantage of catch-up contributions (done by Vanguard with 3 mil participants).
HEALTHCARE:
1) How much savings will men and women (greater longevity) need respectively for a 50% chance of covering the cost of healthcare premiums (for a Medigap policy + Medicare B and D), and out-of- pocket drug expenses in later life, assuming one retires at 65 in 2009 WITHOUT employer health benefits, starting with $900 out-of-pocket healthcare cost in year 1? ANSWER: Men = $86,000, WOMEN = $125,000.
And if you want to cover 90% of covering healthcare cost, you will need this much savings: Men = $177,000, Women = $221,000!!! Don’t underestimate how much your healthcare expenses will cost you.
2) The age group that has the highest obesity rates in the US is between 40 – 59, 40% of this group is considered obese! Obesity will cause health complications which will eat into your healthcare costs. Start eating and exercising right.
SAVINGS & SPENDING:
1) Only 44% of workers surveyed have tried to calculate how much money they will need to save for a comfortable retirement. Same 44% said they guessed at how much money they will need in later life!
2) It is estimated that one needs 80% of your pre-retirement income to have a successful retirement; the caveat is your living standard.
3) 43% of households age 65-74 have housing debt.
SOCIAL SECURITY:
1) In retirement, Social Security will likely replace 33% of your pre-retirement income. Will your savings and assets be sufficient to generate the balance?
2) Among the best ways for a couple to maximize Social Security payments over their lifetime is for the lower-earning spouse to claim benefits early (at age 62) and the higher-earning spouse to claim benefits later (at age 70), the 62/70 strategy, depending on the couples.
LOOKING AHEAD:
1) Working longer is now the single best cure for a battered nest egg! This will maximize your social security payout and hopefully allow your retirement savings to grow.
2) The economic crisis is not really prompting major changes in strategies to help people build and protect their nest eggs; people don’t know what asset classes to diversify into.
In conclusion, Mr. Ruffenach suggests you write out a financial plan; save at least 10% of your paycheck; diversify your holdings; keep debt to minimum; spend less than you make; build a cash reserve; insure your risks where possible; and watch your health. Seems like sound advice to me.
Subscribe to:
Posts (Atom)
Posts
