Category Archives: Travel

Even the “rich” can’t afford retirement.

Investment Approach

Registered Investment Advisors (RIAs) deal with people at all wealth levels but most are upper income even if they are not billionaires.  There is a retirement crisis and it’s not just hitting the working class.

The typical median wage earner making $50,000 a year and retiring at 67 can expect Social Security to pay him and his wife about $2400 per month.  To maintain their previous spending levels this leaves a gap of about $1000 a month that has to be made up from savings. But many of these middle income people have not saved for their retirement.  Which means working longer or reducing their lifestyle.

This problem is also hitting the higher income people.  How well is the person earning over $200,000 a year going to do in retirement?  The issues that even these so-called “rich” face are the same:  increased longevity, medical care, debts and an expensive lifestyle are all issues that have to be considered.

“The $200,000+ executive expects a fine house, two cars, two holidays a year, private schools, to pay for his kid’s university tuition, and so it goes on. And this is not to mention the tax bill he’s paying on his earned income. A bunch of all this was really debt-funded, so effectively the executive spent chunks of his retirement money during his working days.”

When high income people are working, they usually don’t watch their pennies or budget.  But once retired, that salary stops.  That’s when savings are required to bridge the gap between their lifestyle and income from Social Security and (if they’re lucky) pension payments.  At that point the need for advance planning becomes important.

Before the retirement date is set, the affluent need to create a retirement plan.  He or she needs to know what their basic income needs are; the cost of utilities, food, clothing, insurance, transportation and other basic needs.  Once the basics are determined, they can plan for their “wants.”  This includes things such as replacing cars, the cost of vacation travel, charitable gifts, club dues, and all the other expenses that are lifestyle issues.  Finally, there are “wishes” which may include a vacation home, a boat, a wedding, a legacy.  The list can be a long one but it should be part of a financial plan.

If the plan tells us that the chances of success are low, we can move out our retirement date, increase our savings rate or reduce our retirement spending plans.

This kind of planning will reduce the anxiety that is typically associated with the retirement decision making.

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You and your Super-Yacht.

The OceAnco – Igor Lobanov Y708 85.60m Superyacht – Superyachts ...

Have you ever glanced at the pictures of the rich and famous having a party on the deck of a Super-Yacht somewhere in the Caribbean or Mediterranean?  Have you wondered what would it cost to party like that?  Well, it is expensive, but not impossible.  You see, they probably don’t own the yachts, they rent them.

In the April 15th issue of Private Wealth, they discuss what it takes.

Lounging in the Caribbean aboard a beautiful, 100-foot superyacht sounds pretty great, but it might be hard to relax when you’ve got a hefty engine repair bill to pay and crew payroll paperwork to review. The annual cost of operating a 180-foot vessel is $4.75 million, or about 10 percent of the yacht’s original cost. With high maintenance costs in mind, ultra-high-net-worth individuals looking to explore the high seas are increasingly turning to charters.…

A week on a superyacht can cost $115,500 to $190,000, on average, the report found, while the average purchase price is a bit more than $10 million …

Of course that puts it out of the price range of all except the ultra-high-net-worth individuals; those with a minimum worth of $30 million.

But the number of ultra-high-net worth people keeps growing and they often decide to rent a yacht or lease a jet rather than buying one.  It’s a business that keeps growing.

And for people who are climbing the financial ladder (or win the lottery), it doesn’t hurt to dream big.

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Buy an Irish Castle for $7 million

It’s fun every once in a while to think about what it would be like if money was no object.  For today’s thought experiment we went to Ireland and found a storied castle for sale.

It’s Glin Castle, 700 years old, which was the ancestral home to the FitzGerald clan.  Think of it as Downton Abbey set in Ireland.  Located in west County Limerick, it sits on 380 acres, 23 of which are “pleasure grounds”—the woodland walks and gardens, both landscaped and informal, that surround the building. It’s been upgraded and operated for a time as a luxury bed-and-breakfast.  The furnishings are extra.  See HERE for more views.

... of <b>Glin</b>, who gave me a private tour of her residence, <b>Glin Castle</b>

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It’s about making people’s lives better

It’s not just about money.

In most people’s minds the term “financial advisor” has all the emphasis on “financial” and very little about “advisor.” We disagree. We think of ourselves as advisors to the family, helping guide families with a whole range of issues. Some don’t have anything to do with investing.

We have gone car shopping for a client who didn’t want to deal with car salesmen. We have helped people choose the right retirement community.  We help educate young people about investing to make sure they get a good start in life.  We explore vacation destinations for our clients. We review our clients’ estate plans and beneficiary designations to make sure that they are in line with their wishes. We wrote a book designed to help people provide critical information to their heirs before they pass on (Before I Go).

And, of course, we have provided peace of mind to clients who worried about running out of money in their retirement years. This allowed them to do the things they wanted such as travel, spend time with their grandchildren or just relax with a good book.

We do more than manage portfolios. We assist the people who come to us for advice with the deeply personal things in their lives. Making people’s lives better is our goal.

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Castles On Deep Discount In Eastern Germany

For those who have everything, here’s an unusual gift”

Mutzschen Castle

 

For sale: 18th century castle with a medieval prison tower, moat and lake on 14 acres. The price: 350,000 euros ($445,000), less than the cost of a Manhattan studio. The catch? It’s in eastern German.

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6 things the middle class can’t afford anymore

A recent article in USA Today discussed the “middle class” and the ways it has been pinched financially. The middle class was defined as

…those [with a] reasonable amount of discretionary income. Middle-class people do not live from hand to mouth, job to job, season to season, as the poor do…. Perhaps, anyone who earns between the 25th percentile and 75th percentile is a member of the middle class …. Today’s bourgeoisie is composed of laborers and skilled workers, white collar and blue collar workers, many of whom face financial challenges.

So what are the things that the middle class has a problem paying for?

Vacations
At least not without saving on other things like dining out, movies or purchasing big ticket items like TV sets.

New cars
Middle class people buy new cars but it’s usually not a wise decision. “Just because you can manage the monthly payment doesn’t mean you should let a $30,000 or $40,000 ride gobble up all such a huge share of your paycheck.”

To pay off debt
According to one source the average family has at least three credit cards and owes them over $15,000. In addition there are student loans, mortgages, car loans and medical debt.

“In 2013, consumer debt was $9,800 per person, which was 13.4% of the average household income of $72,600.”

Emergency savings
Do you have an emergency fund in case something breaks or you lose your job? Having six months of earnings in an emergency fund is considered a minimal requirement. A Bankrate survey found that only one in four households had this amount set aside.

Retirement savings
Saving for retirement is one of those things that people find easy to put off. If you do, unless you are fortunate enough to have a pension, your income will be what Social Security provides or what you can earn as you pass the traditional retirement age. It’s estimated the one in five people near 65 have not saved anything for retirement, and many more worry that they have not saved enough.

Medical and Dental care
Medical care is becoming increasingly expensive, insurance premiums are going up and so are the deductibles. Given the cost, the government is seeking to reduce the amount it allows the doctor and hospital to charge. There are also changes in the kinds of procedures that are going to be covered by programs such as Medicare. An increasing number of people are simply forgoing medical and dental procedures to save on costs.

Many people have financial issues. We can’t help with all of them, but if you have a financial issue that is troubling you, give us a call to see if we can help.

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Fundamental Sources of Retirement Income

Traditional sources for retirement income—such as Social Security and defined benefit plans—are less certain to satisfy retirement needs than they were in the past. The rising cost of living, a diminishing number of defined benefit plans and a social security system that requires reform in order to pay benefits for younger workers in the distant future are worrisome. As a result, it’s increasingly more important for investors to work closely with their advisors to create a comprehensive plan that will enable them to meet their income needs during retirement.

The traditional sources of retirement income include:

  • Employee sponsored retirement accounts
  • Pension plans
  • Social Security
  • Employment
  • IRAs
  • Fixed income securities
  • Dividends
  • Annuities

How much is enough?

Running out of money in retirement is a concern for many investors. It’s a challenge to calculate exactly how much they’ll need, given that many factors—from investment returns, healthcare costs and inflation to Social Security’s future and individual life spans—are nearly impossible to predict.  What is certain is that individuals are living longer. In fact, at least one member of a 65-year-old couple has a high probability of living into his or her 90s, 35 years beyond what has historically been considered a “normal” retirement age in the United States.

Experts often estimate retirees will need 75 to 85% of their pre-tax, pre-retirement income.  But often there will be no reduction at all in the cost of living in retirement due to medical bills and the desire and the time for travel.

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Private Jet Flying – now by the seat.

Have you daydreamed about at least taking a ride in a private jet?  In the beginning, unless you were flying somewhere on a company plane, the only way you were going to ride on a private jet was to buy one.  If you are one of the ultra-rich, like Oprah Winfrey, that was your only option.  Since that was out of the reach of even the common multi-millionaire, the industry developed the shared lease program where you bought a number of hours of flying time on a jet you shared with others, the plane being owned by the leasing company, like Net Jets.  But that still costs hundreds of thousands of dollars.  The newest concept is the “per-seat charter” where you share the ride with others who have bought their seats on the same ride.

As a per-seat traveler, you give up the luxury of having the cabin to yourself, the control of specifying when you want to take off and, in some cases, what airports you want to use. But you still avoid hassles ranging from security lines to the delays and cancellations that come with airline travel. And per-seat savings over traditional charter can be considerable. BlackJet guarantees a seat on a Los Angeles–New York flight for $3,500, its highest fare. Xojet, which helped bring transparent, point-to-point pricing to the charter industry, charges $25,300 or more for that route. And per-seat providers pledge to maintain the quality level associated with charter.

If you’re among those who have always wanted to have the experience, let us know.  We provide a great many concierge services for our clients.

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Top Retirement Destinations Overseas

Financial Planning made a list of the top retirement destinations overseas:

Clients often dream of retiring overseas for a change of scenery and lifestyle. Here’s what a handful of RIAs have to say about some of the most popular overseas retirement destinations among their clients.

  • Costa Rica
  • Panama
  • South of France
  • Mexico
  • Bermuda
  • Hawaii
  • Staying Local [Florida]

But those who actually do go to another country are still rare.  It means giving up your neighbors, friends and close relatives.   Says one advisor:

Many clients talk about this, but few actually do it. I always advise to do a trial run and move just for a few months. Most get disillusioned. They usually choose tropical places, but living in those places is very different than vacationing. Car repairs, groceries, etc. are harder in a second language. Costa Rica does seem really popular these days, but clients quickly get disillusioned with infrastructure.”

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Raffles Singapore

Raffles Hotel Singapore

1887 – Raffles Hotel Singapore opens, offering 10 rooms in an old bungalow-style building overlooking the beach and the South China Sea. It soon becomes – and remains – the most fabled hotel in the Far East, with a guest list that reads like a Who’s Who.

The hotel’s legendary Long Bar is where the famous cocktail, the “Singapore Sling” was created in 1915. Other exclusive drinks added to the menu include “personality cocktails” inspired by Somerset Maugham and James Michener, writers who stayed at the Raffles. The playwright, novelist and actor, Noel Coward was a guest at Raffles several times beginning in 1931. However, the hotel’s literary tradition is believed to date back to 1888, when Joseph Conrad was a guest, and Rudyard Kipling dined there. The Writers Bar in the hotel’s lobby honors these writers. During the 1950s, Hollywood stars, Ava Gardner and Elizabeth Taylor were Raffles guests.

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