Retirement Planning Alternatives

Check out these alternatives to traditional retirement planning:


My wife wanted the kickstand back on her bike. I had taken it off years ago when we were competing in triathlons. No serious triathlete (which we weren’t) would have a kickstand on her bike.

I tried to put the kickstand back on myself. How hard could it be? There was only one screw and one nut and seemingly only one place it could go. Yet I couldn’t figure out how to get it back on in the few minutes I devoted to trying.

Since the bike needed a tuneup anyway, I took it to a bike shop. The repairman could not do the tuneup that day but said that he would be happy to install the kickstand for me. It was on and ready to go in about two minutes.

At first I was embarrassed that the kickstand was so easy to install and I hadn’t figured it out. But the more I thought about it, I realized that repairing bikes is what this guy does for a living. It’s his expertise. He has the tools, knowledge, and experience to work on bikes efficiently.

This experience got me thinking about financial advice. It’s not rocket science, yet many advisers go out of their way to make you think it is. Most of the information you get from a good financial adviser, you could research yourself if you had the time and interest.

The difficulty is separating the sound financial advice from the noise. An objective and experienced financial adviser can efficiently guide you. We have the tools and knowledge, and we know where to look.

I realized something else during my short visit to the bike shop. The repairman never made me feel dumb for not knowing how to install the kickstand. I have had experiences when a professional or tradesperson has patronized me for not knowing about something that is his expertise. I have wanted to ask him to tell me the equation for the Capital Asset Pricing Model (something only geeky finance types would know) to get my point across, but I never do.

When I give financial advice, I remind myself that the reason that my clients come to see me is that they are not experts in personal finance. They are experts in their own fields. Something that is simple or matter-of-fact to me may be completely foreign to them. It’s my job and privilege to share with them the knowledge I’ve gained from years of study and practice. I help them put on their kickstands.

Are your Emotions Costing you 5%?

I’m a staunch believer that emotions and investing do not mix. The right approach is to determine an appropriate asset allocation for yourself, let the markets do what they will, and then rebalance your portfolio back to its target allocation at pre-determined intervals. I encourage most of my clients to rebalance on an annual basis.

However, many investors do not take this type of approach and, instead, let their emotions determine their asset allocation. When the going gets tough, they abandon their allocation to stocks and flee to safety. Then they wait until the waters are calm and a sharp recovery has taken place before getting back into stocks.

What’s the big deal? On average, investors are getting a 5% lower return on their stock mutual fund investments than the funds’ reported returns. This is mostly due to investors buying in and out of funds based on emotions.

I encourage you to listen to‘s recent, four-minute podcast on the subject.

Ideas and Links from the NAPFA Conference

I attended the national conference for the National Association of Personal Financial Advisors (NAPFA) in Chicago this week. NAPFA is a professional organization for financial advisors who are committed to Fee-Only and comprehensive financial planning. Below are some of the new ideas and time-tested reminders that I took away from the conference.

Estate Planning

  • If you are the parent of a minor and you do not have a Will, a court will determine his or her guardian. Please prioritize putting a Will in place if you are in this boat.
  • You may need to appoint a short-term guardian in your Will if the primary guardian for your minor child does not live nearby. This will prevent your child from ending up in the care of an agency until your primary guardian arrives.
  • A presenter recommended the book Who Gets Grandma’s Yellow Pie Plate for help in determining how to divide assets in your estate plan.
  • Use an attorney who specializes in estate planning to draft your estate planning documents. You wouldn’t let your general practitioner perform brain surgery on you, so don’t let your real estate attorney draft your estate planning documents.
  • Visit and to find attorneys in your area who specialize in estate planning.
  • Use this checklist provided by the American Bar Association to think through decisions you will need to make in your medical directives.

Property Division in Divorce

Debt Management

Healthcare Reform

College Education Savings

  • A speaker, Jean Chatzky, recommended paying for college education in thirds: 1/3 from savings, 1/3 from cash flow while your child is in college, and 1/3 from student loans taken by the student. She feels that this approach allows the student to have some skin in the game. Research has shown that students who pay for part of their tuition take college more seriously.
  • In 2011, all colleges that participate in Title IV student financial aid programs will required to have net price calculators on their websites.

Please note that this blog post is for educational purposes only and should not be construed as advice specific to your situation. You should get advice from a legal, accounting, or investment professional before deciding what course of action is appropriate for you.