BUZ LIVINGSTON: What I learned at summer camp
Ninety-three degrees in Denver, Colo., is very different from 93 degrees in Santa Rosa Beach. Fortunately for me, the 15th Garrett Planning Network's annual conference was held just outside Denver. Everyone else thought it was hot, but not me. Let me share my continuing education with you.
Dr. Michael Finke of Texas Tech presented new research on stages of retirement and life satisfaction. Longevity increases one year every decade. While 35 year olds have longer life expectancies than 65 year olds, our younger cohorts will likely face lower market returns. More years in retirement with lower returns means younger people need increased savings.
Higher income Social Security beneficiaries live longer than retirees with lower lifetime earnings. Part of this is tied to health and healthcare availability, but higher earners have less physically demanding jobs, too. A man's lifespan is consistent with how much they earn.
Money can't buy happiness, but people in the top 10 percent are happier, on average, than the rest of the population. Higher income leads to more social interaction and logically that makes people feel better. Married couples are happier than singles with happiness peaking between 65 and 70. Interestingly, the happiest people are divorced women between 60 and 70. Not surprisingly, positive relationships with adult children and spouses lead to increased happiness. Living in your own home and happiness are positively related.
If you relocate to be closer to your grandchildren, don't get too close. Retirees who move to within 10 miles of grandchildren are dramatically less happy. You risk becoming the babysitter. Another situation which can lead to problems is when one spouse retires and the other continues working. Sometimes clients retire then go back to work. A strategy Finke recommended was to take a month off and practice retirement.
Getting older is not for sissies. Your body changes and health problems increase. Statiscally, your brain starts to slow down at age 53. Financial literacy peaks at age 49 but confidence stays the same. Once you reach age 60, the chances of dementia doubles every five years. Cognitive decline leads investors to make irrational decisions. While it sounds self-serving as you get older you need to work with an investment professional. It doesn't have to be full-blown Alzheimers or dementia, someone experiencing cognitive decline will be more likely to dump equities in a down market.
Rick Ferri and Christopher Sidoni went over asset allocation. Most people see asset allocation as mind-numbing but not an audience of financial planners. Asset allocation helps provide a strategy to reach your goals but it does not protect against bad markets. Bad markets happen. In the distribution phase of retirement you should look to take the least amount of risk while in the accumulation phase you can be more aggressive.
I flew to Denver and took a shuttle to the conference. At the motel we took a shuttle to dinner, no cars were necessary. We should do the same thing in South Walton. Building more parking lots won't solve 30A's congestion. Colorado's figured it out, SoWal should, too, or our goose will be cooked.
Even though Buz Livingston is a fee-only certified financial planner this should not be considered personal advice. For specific recommendations visit online at livingstonfinancial.net or at the office in Redfish Village, 2050 Scenic 30A, M-1 Unit 230. Follow us on Twitter @BuzLivingston.