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The Independent Investor: Retirement should be a part-time job
By Bill Schmick On: 11:14AM / Friday June 20, 2014
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Only 40 percent of those who retire find that their quality of life improved. That’s because the majority of Americans, especially men, fail to understand that retirement can have a sudden and stressful impact on their lives and especially their marriage. Don’t let this happen to you.

Remember that throughout history, most people worked until they died or were physically or mentally unable to hold down a job. It is only recently that people had the luxury of choosing to retire. For many, it comes down to the dollar and cents ability to have saved enough money to live on through their remaining years. But just because you have the money doesn’t mean that you should.

In my experience, anecdotal evidence indicates that those of my clients who are happiest in retirement are actually those who hold down part-time jobs, created new jobs or have developed interests and hobbies that keep them busy and out of the house for the good part of every day.

On several occasions when my clients have expressed an interest in retiring over the next year or two, I have urged them to spend that time trying out new roles and identities. In many cases, I have urged my clients to think outside the box and pursue interests that seemed outside their grasp up until now. One client loved to swim and already taught classes part-time. Another had organized a mountain-biking club and in his spare time taught newcomers the sport. One loved to bake, another to ball-room dance. Some considered opening a business, others started or joined charities or social groups.

For those management types who loved a good business plan, I recommended building a business plan for retirement. I urged them to develop and share this plan with their spouse, which brings us to the topic of marriage and retirement.

Retirement is the fastest way to discover the holes in your marriage. Think about it. For years an unhappy marriage could exist by avoiding each other by simply going to work. Retirement will change that. Now, you are together with your spouse 24/7, which will mean adjustments, big adjustments if that marriage is going to survive. Issues that you should have resolved years ago will demand immediate solutions. No wonder the divorce rate among retirees is increasing.

How do you begin, or if you are in a pretty good relationship, how do you adjust to retirement? Well, first you have to sit down and talk about it (preferably before and not after). First on the agenda is establishing a retirement lifestyle that you can both enjoy and one that meets the needs of both partners.  That may mean sharing the household chores, something most men have avoided their entire lives. There may be personal habits that have to go and it most certainly will require teaching old dogs new tricks. Private time for both is also going to be important. The point is that becoming a couch potato, keeping your feelings to yourself and continuing old behaviors are not the answers.

For most couples, retirement will be a process. At first most couples experience a short-term honeymoon period where everything works. You can sleep later, go out to eat more often, watch television together and visit the kids in California. However, after a few weeks or months, reality hits. Senior citizenry no longer has the cache you thought it had and you come to realize how “bossy” that person who shares your life really is.  

To survive retirement together your first rule of thumb is that communication is essential. For many men that is an earth change in behavior. Men have to get out of the house and find part-time work, paid or non-profit, social or otherwise. I call it work because men are usually not comfortable in new social settings. They rely instead on their wives to do that for them. No more.

Remember too that being retired does not mean you have to spend every waking moment with your spouse. No matter how likable you think you are, you’re not. You both need the confidence and sell-esteem to take care of yourself and have time alone.

The best way to look at retirement is as simply as a job change. You may work fewer hours at something new or different. You may get paid less or nothing at all. Like any new job, there will be a learning curve, failures and successes along the way and lots and lots of changes. If that bothers you, don’t retire.  But if you do retire, embrace the change and treat it with the respect and planning it demands and serves.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.
 



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The Independent Investor: Unhappily Ever After
By Bill Schmick On: 02:44PM / Friday June 13, 2014
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Over the next decade roughly 75 million Americans will retire. While most of us are well-aware of the need to plan, save and invest for that momentous moment, very few of us are actually prepared for the non-financial challenges of retirement itself.

Recently, as a result of one local company’s early retirement incentive plan, as well as the bankruptcy of a local hospital, I have had some firsthand experience in dealing with the expectations of retiring clients in this area. What I have found is that the majority of men are ill-prepared for retirement, more so than women. At the same time, their spouses are extremely worried — with good reason.

Studies show that men have a much harder time adjusting to retirement than do women and are far more naive in understanding what retirement does to one’s quality of life. Those who retire unexpectedly due to sickness, job loss, those who have become accustomed to working long hours or who bring their work home with them have the most difficulty in retirement.

It seems that most men tend to define themselves and their self-worth on the basis of their careers and the money they make. After 30 or 40 years of polishing their identities as providers, senior workers and/or producers, they find themselves at a loss when that ends. Many men are suddenly faced with an identity crisis they have not confronted since they were teenagers. The more of a workaholic they are, the less likely they will have developed other outside interests that could help define and transition them to a new identity and role.

Women, on the other hand, are much more likely to have several roles — worker, mother-caregiver, community activists, etc. — throughout their life, all of which aid in a transition to retirement. Women are much more likely to have had their working careers interrupted by child-rearing or by taking care of elderly parents than men.

I know my own wife, Barbara, the COO of our company, also maintains a successful career as a photographer, has a large network of friends and acquaintances and is a member of several community organizations and social groups. In general, I believe women tend to be more engaged with others and more connected to their communities in terms of social support and networking. Retirement, to them, may be just another change in a life that is full of changes.

Seventy-five percent of workers believed that their quality of life would improve once they retired, but only 40 percent of retirees found that it actually did. So if you are planning to retire, forget about your dreams of being perfectly happy walking on the beach every day or playing golf or minding the grandkids. None of that is guaranteed to fulfill you, or even hold your interest beyond the first couple of months. There is no free lunch in retirement.

The only sure thing in retirement is that at some point you will die. Your problems do not disappear, they just change in nature and many times, your problems actually grow in size and importance (since you have little to distract you).  Sure, you may live longer by retiring from a stressful job that was either physically or mentally taxing, but that doesn’t mean you will live healthier.  Your chances of becoming addicted to alcohol, narcotics or prescription pills actually increase.

Finally, the most important truth of all is that you will never be able to save enough money to retire happily ever after because money and happiness have nothing to do with each other. In my next column, I will give you some pointers on how to become one of those 40% of retirees who actually enjoy retired life. I’ll leave you with a big hint — it starts with your spouse.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.



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@theMarket: June Swoon
By Bill Schmick On: 02:37PM / Friday June 13, 2014
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This week the stock market was actually down three days in a row. It caught many investors off guard, but by the end of the week, traders were expecting the dip buyers to arrive. They did not disappoint.

As we approach the first days of summer, the stock market appears to be becoming more, rather than less, volatile.  The VIX, the volatility index, actually jumped a bit from its record lows as turmoil in Iraq and a subsequent spike in oil prices spooked the markets.

Earlier in the week, the World Bank also cut their economic forecast for 2014 global growth from 3.2% to 2.8%. And here in America, the election defeat of Eric Cantor in the Virginia Republican Primaries provided additional uncertainty for investors. Given the news, who could blame traders for taking a little off the table, especially at these record-high index levels?

So can we expect the markets to regain the losses suffered this week? It looks like we could see the S&P 500 Index hit the 1,950 level before all is said and done. Some think that could be the top but calling an end to this bull market has been a fool’s game. I would suggest there are better things to do.

On the economic front, there is plenty to be happy about. The deficit is improving dramatically, bank lending among the smaller, regional banks is surging and we are even seeing some improved lending from the larger banks as well.  

On the negative side, the rate of national debt is still growing, although at a reduced rate. So far, thanks to the extremely low interest on that debt, the servicing costs remain low but that will change as interest rates rise. It is a problem and one that needs to be addressed fairly soon.

Corporations are still hoarding cash. The money they do spend is being used to pay dividends or buy back their stock or someone else’s. As a result, merger and acquisition activity is at record highs. As this rate, it will soon become cheaper to build rather than buy additional capacity. And that will be a good thing for the nation’s health. Our stock of nonresidential equipment in this country is getting older and there is a widening gap between that stock and its rate of replacement.

When and if corporations decide that the future economic picture looks strong enough to risk building new plant and equipment, employment will rise and so will wages. That day is coming. We have recently witnessed the rise of a number of activist’s hedge fund managers who are urging corporate managements to either increase their capital expenditures or sell out to someone that will.  

So overall, the picture is brightening. If I look out over the longer term, I see more positives than negatives for the economy. All we need do is get through the next few months of uncertainty and stock market volatility. This month may be the beginning of that pullback I’ve been looking for. If it occurs, it shouldn’t last more than a month or two. All it requires is a little patience.

That’s not so bad, is it?

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.



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@theMarket: Europe Is a Good Bet
By Bill Schmick On: 12:34AM / Sunday June 08, 2014
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When the allies invaded the coast of Normandy on June 6, 1944, no one knew how much was at stake. It was a risky move that not only put an end to years of bloodshed within Europe but also ushered in a new world order that continues today. European leaders are hoping that their central bank's actions this week will provide an economic D-Day of their own.

The greatest risk to the economies of Europe is deflation. The European Central Bank (ECB) maintains a 2 percent inflation target for the EU, but the inflation rate as of May was a mere 0.05 percent.  While unemployment remains above 12 percent and economic growth continues at a sub-par rate, the EU could face an era of stagnation similar to that which had plagued Japan for twenty years.

Over the past three years, the ECB has shoveled over one trillion Euros in loans without conditions to the banking sector. Little of that money found its way to the private sector. Instead, the banks simply re-deposited those funds with the ECB and banked the interest or used it to trade for their own account in the stock and bond markets. In the meantime, lending to the private sector keeps shrinking and the economy stalling.

The ECB has now cut a key interest rate to below zero. It essentially means that European banks in a complete reversal will now be paying the ECB to park their funds there. This negative rate of interest in intended to spur financial institutions to begin lending that money to companies and other credit-hungry entities. The ECB also suspended their sterilization operations (taking money out of the market) which should inject a further 165 billion Euros into the mix.

The bank also promised over $500 billion in discounted loans to banks, providing they lend that money to companies and not other financial institutions. I'd give the bank an "A" for effort, but more needs to be done.

Investors were taken by surprise by the boldness of these latest moves. You see, the markets have long been inured to the actions of the ECB as too little, too late. Unlike the U.S., where our Fed answers to no one, the ECB has to juggle the conflicting views of many member nations of the European Union. While the Fed can take decisive and far-reaching steps to jump-start our economy, the ECB needs to build consensus among its members. This takes time.

This week's actions are, in my opinion, only the first of several steps to grow the European economy. A quantitative easing program that emulates the asset purchasing that both the U.S. and Japanese central banks have implemented might be the next step. So far, Germany, with its deep-rooted fear of hyperinflation (pre-WWII) has been against this action.

But Mario Draghi, the bank's president, went on record promising more, if these efforts failed to accomplish his goals. "Are we finished?" he asked. "The answer is no."

I believe him.

So let's bring this down to you and your portfolio. Readers may recall that well over a year ago, I suggested some exposure to Europe either through a mutual or exchange traded fund. That has worked out well since European averages, although still selling at a 15 percent discount to their American counterparts, are all at record highs. I think more exposure to Europe would be a wise move.

Right now, most readers have 25-30 percent in cash based on my advice. Over the next few weeks, I suggest you move some of that cash to Europe. Exactly how you do that is up to you. Take notice, however, that if the ECB's strategy works, one can expect the Euro to weaken against the U.S. dollar while their stock markets rise. It would make sense to look for a fund that combines those two elements. If one decided to simply ignore the currency aspect, remember that Germany is probably the strongest country economically, while Italy offers the most value. Invest according to your own preferences or call or e-mail me for more advice.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.



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The Independent Investor: A Road to the Future
By Bill Schmick On: 04:02PM / Thursday June 05, 2014
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There is a growing national buzz among scientists and engineers over a driveway in Idaho. This green-hued stretch of hexagonal tiles of hardened glass in an Idaho suburb represents one prototype idea for revolutionizing the nation's highways. It could be a road to the future.

The concept of Scott Brusaw, a down-to-earth, electrical engineer who lives in a rural Idaho community, is to convert America's broken-down highway system into a nationwide network of solar panel highways. In doing so, this solar highway would generate three times the energy used in the U.S. each year while reducing greenhouse gas emissions by 75 percent.

These new roadways would consist of three layers of individual panels. The top layer would be manufactured of high-strength, textured glass. It would provide better traction for vehicles than concrete or blacktop and is strong enough to support trucks weighing three-to-four times the weight of the 18-wheelers that chew up our road system every day.

Embedded underneath that first layer would be an array of solar cells for gathering and generating energy, as well as a system of LED lights (powered by the sun) that would be able to function as road and warning signs. Finally, a base plate layer would distribute the power as well as provide heat to melt snow and ice on the roads and prevent seepage, a major cause of road destruction on today's highways.

Does this sound like pie in the sky? Right now, I would say so, but stranger things have become realities in this country. Prior to The Wright Brothers, flying was an unproved technology. So was Brainiac, before the U.S. government proved that computers were possible.

In this case, all of the technology involved in a solar highway process is proven and available.

Tempered glass is used in countless products and big companies are already working on creating even stronger glass technologies. Solar cells and panels exist and their costs are rapidly decreasing, while their efficiencies skyrocket. Energy storage and new battery technology is becoming an everyday occurrence and can be found in airplanes, autos and any number of other new products.

As a result, the rollout of such a new road system comes down to cost. In today's political climate, our highway system is lucky to be just limping along at the present level of funding (see my column "Potholes Take Center Stage"). Our politicians can't see beyond the cost of fixing a pothole or two. But that does not mean it will always be this way.

Right now estimates put the cost of one square foot of solar highway at $70, compared with anywhere from $3 to $15 for asphalt or cement, depending on the quality and strength of the road. Given that just in the lower 48 states, we have roughly 29,000 square miles of paved road, the cost of building a solar highway would be in the trillions of dollars. The cost of maintenance is unknown as well and detractors can come up with an array of reasons why solar roads won't work. But costs will come down over time and as they do, solar roads will look more and more possible, in my opinion.

Remember that 20 years ago, electric cars were considered impossible because the battery to power them would be twice as big as the car and three times as expensive. Fortunately, the federal government thinks the idea is worth investing $ 1 million or so to encourage more research and feasibility studies. They did the same thing 15 years ago to further oil and gas fracking technology and we all know how that turned out.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.



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Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



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