What would you do if you found a pot of gold?

“Only when the tide goes out do you discover who’s been swimming naked.”
– Warren Buffett

When things are going well, we take more risks and loosen up on the habits and principles that got us to that point. Sometimes we do this with our health…sometimes it’s our time…sometimes it’s our money. We don’t worry as much about how much debt we have…or how much we have in emergency funds…or where every dollar is going because there are more dollars than ever before. But as the waters recede, we’re left standing naked.

Unfortunately, it’s much easier to identify these risks in hindsight than in real time. So, it’s important to ask ourselves, “If the tide went out today, am I comfortable with my choice in bathing suit?”

With that said, here are the stories that caught my eye this week:

MONEY: Social Security Underpays Widows and Widowers (U.S. News & World Report)
A recent audit of the Social Security Administration found a significant flaw in how retirement and survivor benefit options are presented to widows and widowers. What was the flaw? The Social Security Administration failed to inform widows and widowers of the option to delay their retirement application until age 70, which would have resulted in a higher monthly benefit amount. What was the impact? The audit determined that 82% of the reviewed cases should have delayed retirement benefits rather than claiming earlier. It’s estimated that the early claiming of benefits resulted in 9,224 beneficiaries (age 70+) being underpaid approximately $131.8 million in total. I anticipate that the Social Security Administration will address this operational flaw in the near future, but this serves as a good reminder of the importance of understanding and considering all your options before making a permanent decision in claiming your Social Security benefits.

LIFE: Why Sunlight Is Actually Good For You (Forbes)
I feel like this article may have been targeted to me specifically. As a fair-skinned, ginger, I have a love/hate relationship with the sun. I love it…it hates me. But, there’s good news! It may not hate me as much as I have always assumed. It turns out that scientific research has found that soaking up some sun may actually be a good idea. Sunlight elevates mood by releasing serotonin, improves sleep by increasing melatonin levels at night, strengthens the immune system by increasing Vitamin D levels in your body, lowers blood pressure through exposure to UV rays, and, most interesting of all, reduces the risk of melanoma (and other cancers) through exposure to UVB radiation. Of course, like most other things in life, enjoying in moderation is key!

KENTUCKY PENSIONS: ‘Stopgap’ budget, tax bill heads to Ky. Senate. Will it be enough to salvage pensions, education? (Herald-Leader)
This week has been full of conversation and speculation about state pension and tax reform but has lacked solid change…except the new House tax/budget bill. On Thursday, Kentucky House of Representatives passed a bill to increase taxes on cigarettes and introduce a new tax on opioid prescriptions. The new tax revenue will be used to help provide funding for the education cuts that were proposed in the original budget (i.e. SEEK, transportation, retiree health insurance). The bill is being promoted as a “Stopgap” or band-aid to address immediate budget issues while allowing more time to create more comprehensive tax reform. It’s important to note that the budget and tax bill still requires input and approval from the Senate which may lead to changes in the proposal, but nevertheless, still feels like a unified step in finding funding for some of the education budget issues.

KENTUCKY TEACHERS’ PROPOSED PENSION CALCULATOR: Unfortunately, the calculator is still in update-mode while legislators continue to debate and change the new pension reform bill presented last week.

Ding…Ding…Ding. Round Two!

And so continues the battle on Kentucky Pension Reform. Late on Tuesday evening Senate Bill 1 was officially filed, proposing new changes to the state pension system.

To be completely honest, I am still sifting through the 269-page bill (ugh!) to make sure I fully understand the proposed changes. But…here’s what I’ve gathered so far:

• If I’m a teacher with 20+ years, I’m feeling slightly better about the changes to my retirement benefits, but if I plan to retire before turning 65, I’m very concerned about the lack of funding for retiree health insurance in the current budget.
• If I’m a teacher with less than 20 years, I’m not sure how I feel. I don’t know that I feel better about the changes, but I don’t know that I feel worse either. It feels like there was some slight-of-hand involved with the changes simply being repackaged, but delivered with the same results.
• If I’m a future teacher, I’m not happy. To put it simply, it’s like telling someone you don’t like squash…so they hand you a zucchini. They may be different colors, but they’re still going to taste the same on the way down.
• If I’m in charge of finances of the school district, I’m a little uneasy. What’s the old saying about “something” always flowing downstream? The state just shifted their revenue problems down the line to local gov’t and school districts.
• And for all Kentucky residents, prepare for conversations about increases in local property taxes to begin in the near future, as school districts try to find ways to deal with their increased financial responsibility.

Overall, this round of changes feels like a compromise. Slap a band-aid onto the bleeding budget and hope it buys enough time for the problem to fix itself in the future.

With that said, here are the stories that caught my eye this week:

MONEY: Do You Really Need Long-Term Care Insurance? (Forbes)
Woof! This is a tough one to answer, but I’ve increasingly found myself having to help people navigate their options. The probability of a long-term care event occurring is steadily increasing. For a person who reaches the age of 65, there’s a 70% chance that long-term care will be needed in some form. At the same time, many insurance companies are either exiting the long-term care insurance market or increasing their premiums to account for increased probability of claims. To sum up the article, the prime time, from an affordability standpoint, to consider LTC insurance is your mid to late 50’s, and as always, it’s important to research options that fit your specific needs.

LIFE: How freeskier Elizabeth Swaney made it to the Olympics with a very simple halfpipe run (NBC Olympics)
Well played! In my opinion, Elizabeth Swaney deserves a round of applause. She fulfilled her dream of being an Olympian by using her brain instead of her athletic ability. She’s the Women’s Half-Pipe skier who skied the half-pipe intent on doing zero tricks, focused on not crashing, and content with finishing dead last. So how did she get to the Olympics? She studied the system and qualifying standards…and then she played them like a fiddle. Despite being a US citizen, Ms. Swaney entered the Olympics under her grandparents’ native country of Hungary, chose a newer sport with a low number of competitors, traveled the world to attend carefully selected qualifying events in order to meet minimum Olympic requirements, and then hoped for the tiniest bit of good luck for herself by having someone else drop out…and she got it. She studied the rules, she followed the rules, she put in the time, she will forever be an Olympian.

KENTUCKY PENSIONS: 7 things Kentucky teachers need to know about the Republican pension bill (Herald-Leader)
The new bill scaled back quite a bit from the original plan released last fall. Here are the highlights: for current teachers to receive “enhanced” retirement benefits, teachers who currently have less than 20 years of service will have to to have work for 35+ years and be 60 years of age; cost-of-living adjustments on retirement benefits will likely be cut in half for up to 12 years (dependent upon the health of the pension plan) ; there will be a cap on unused sick days put towards retirement (as of 7/1/18); new teachers (as of 1/1/19) will be placed in new retirement plan that is a hybrid between a 401(k) and a traditional pension; new teachers will not have an inviolable contract, meaning that their benefits can be changed at any time by lawmakers.

KENTUCKY TEACHERS’ PROPOSED PENSION CALCULATOR: The calculator is currently being updated to reflect the newest pension changes. I have restricted access to the calculator until the update is complete, which will hopefully be finished by the end of next week. If you are curious about how the new changes will affect you, check back in periodically for the completed update.

Maybe it’s because I have a newborn at home…maybe it’s because of all the tragedy in the news lately…or maybe it’s because I spent a significant amount of time preparing for and presenting on the topic, but estate planning has been on my mind this week. I know, a riveting topic, right? I don’t enjoy thinking about dying. I’m going to assume that you, like most others, also don’t enjoy thinking about dying. So…it’s no wonder that we continually find reasons to delay the inevitable conversation of planning for our own demise.

How many of us could answer the following questions?

• Who do I want to make health care decisions for me when I can’t make them for myself?
• What kind of medical treatment do I want or not want?
• How comfortable I want to be?
• How do I want people to treat me?
• What do I want my loved ones to know?

Daunting, right? I can hear the collective groans and uneasy squirming from here. But what if the conversation was simpler? What if you didn’t have to think? What if you could just check a box, circle an answer, or fill in the blank? Would it be an easier conversation?

The Five Wishes document from AgingwithDignity.org does exactly this, and I’ve become a big fan of its simplicity. It takes those five highly emotional, open-ended questions (above) and simplifies the conversation into, essentially, a multiple choice and fill-in-the-blank form; taking the weight of verbalizing our emotions and intentions off of our shoulders.

You are likely not prepared to have that conversation today and that’s understandable, but when you are ready, I highly encourage using the Five Wishes document to help start the conversation.

If you want to learn more about advanced directives/living wills and the Five Wishes initiative, follow the link to view a sample copy of the Five Wishes living will.

Important C.Y.A Disclaimer: I’m not an attorney and I don’t pretend to be one. This is not intended to be legal advice but rather a jumping off point to make the estate planning conversation easier. Always consult with an actual attorney before putting important legal documents into effect to make sure that they are 1) valid/acceptable and 2) properly completed.

With that said, here are the stories that caught my eye this week:

MONEY: Here’s What Happens If You Don’t Leave a Will  (Wise Bread)
Let’s stay on the estate planning train for a moment. Here are a few stats to consider, “according to a recent Caring.com survey, 58 percent of Americans currently do not have a will. For those with children under the age of 18, the numbers are even worse — only 36 percent of these parents and guardians have a will, meaning a full 64 percent of people who are taking care of minor children have no end-of-life plans in place.” It’s important to remember that if you die without a will, you are choosing to let the state decide what happens to the rest of your belongings and responsibilities.

LIFE: Is Retirement Killing Men? (401k Specialist)
Researchers recently found evidence of a spike in mortality among men at the age of 62. Why 62? That’s what the researchers asked as well and they found that spike conveniently coincided with the ability to claim Social Security.
“[T]here is also suggestive evidence that males engage in more unhealthy behaviors once they retire. In combination, the results suggest decreased labor force participation upon turning 62 as a key reason for a discontinuous increase in male mortality, although other factors may also play a role.”

KENTUCKY PENSIONS: Kentucky pension reform: Switching workers to 401(k)-like plans won’t be in revised bill (Courier-Journal)
Finally…some promising news! After weeks (or months) of wondering if anyone was actually going to consider the numbers and costs of an outright switch from a pension to a 401(k)-like plan, it appears that legislators in Frankfort have received feedback that the switch may not produce the cost-savings that they were hoping for. Senate President Robert Stivers “told reporters Wednesday afternoon that the revised bill will mandate no move at all to 401(k)-like plans.” Per the article, Stivers also said, “It will not contain a five-year COLA (cost-of-living adjustment) freeze for retired teachers.” Now that hints or details of the revised bill are being discussed, will we see the final version soon? The waiting game continues.

Well…hello again, Mr. Market Volatility! It’s been so long since I last saw you that I was beginning to forget what you looked like. No offense, Mr. Volatility…and I say this with all due respect…life was less stressful while you were gone.

Thru the end of January, it had been 94 days since the stock market moved up or down more than 1% in one day, steadily climbing to new all-time high after new all-time high. That…Is…NOT…Normal.

That’s like driving to work and getting 94 straight green lights (and maybe an occasional yellow). As fantastic as that sounds, you know without a doubt that your improbable run will eventually end and life will start sprinkling in some red lights with the green…because that IS normal.

Our rational selves know that the stock market goes up and the market goes down. That’s how it works…but, holy **** is it tough to ignore the emotions and anxiety when the media use phrases like, “Stocks Plunge”, “Markets in Turmoil”, “Massive Drop”. It’s important to remember that headlines are written to attract readers and increase ratings. The more sensational, the better.

If the headlines have you feeling anxious, that’s completely normal. When emotions are high, facts and data are our friends and may keep us from doing dumb things with our money. Here are some facts about the markets to help calm the nerves (courtesy of A Teachable Moment):

• Markets average one decline of -14% each year (two steps forward, one step back)
• Markets finish the year positive 3 out of 4 years
• Daily dips of 2% or more occur about 5 times a year
• Every 5 years or so stock markets decline 30% or more
• Selling low and buying high NEVER works
• Over long periods, markets significantly beat inflation
• Turn off the TV & don’t check your account
• Never make important decisions based on emotion

With that said, here are the stories that caught my eye this week:

MONEY: This is the Normal Part (Bps and Pieces)
Just to hammer the point home…market volatility is normal and the ensuing uneasiness we all feel is ALSO normal. “Typically, even the best years have some very bad days, weeks, and even months. Last year was an exception to the rule.” It’s important to avoid making long-term decisions based on short-term reactions.

LIFE: One Surprising Habit That Could Help You Retire $100,000 Richer (Time)
Follow your doctor’s orders. Not only will it help your everyday health, but it may help you increase your bank account in retirement too. “A 45-year-old man with high blood pressure can save an average of $3,285 in health care costs annually over his lifetime if he makes a few simple lifestyle adjustments like taking medication as directed .”

KENTUCKY PENSIONS: Bevin broke law by hiding financial analysis of pension plan, Beshear rules (Lexington Herald-Leader)
The Kentucky Attorney General’s office issued a ruling stating, “Gov. Bevin’s administration violated the Kentucky Open Records Act when it refused to release an actuarial analysis (for state and local gov’t workers) showing how much the Republican governor’s proposed pension reform plan would cost.” The ruling calls for the document to be released to the public immediately. From here, the governor’s office can either release the analysis or challenge the ruling in circuit court.