Category: Financial

Book Review: IOUSA

by Gary L. Fisher

iousa-book-cover“We suffer from a fiscal cancer. It is growing within us and if we do not treat it, it could have catastrophic consequences for our country.” – David Walker, Former Comptroller General of the United States.

David Walker made this statement on a 2007 episode of Sixty Minutes. Walker used to be the nation’s #1 accountant. As head of the US Government Accountability Office or GAO, he was charged with “improving transparency, enhancing government performance, and assuring accountability for the benefit of the American people. “ The GAO is the non partisan office charged with telling us how we’re doing fiscally, from a national perspective.

Walker left that role ultimately to proselytize to the nation about the financial illness that was developing in the nation’s fiscal infrastructure. Believing as he did, that if he approached the message from an individual basis he could garner more interest and attention, since many people find GAO pronouncements about as exciting as a story problem.  His appearance on television was part of that process. Unfortunately, his message didn’t create much more action that it did when he was inside the government tent.

When Walker first started his outspoken crusade the federal debt was 8.7 trillion. Today that number has increased to a breathtaking 18 trillion under the Obama Administration. That’s right. The federal debt has more than doubled the amount it took nearly 232 years to build to.* You don’t need to be an economist to know that it simply isn’t a positive trajectory. Rather, it’s “categorically unsustainable”, as Walker said, when it was ‘only’ 8 trillion. The federal debt is the sum of two numbers. The first is $12.92 trillion in public debt, which consists of all the outstanding Treasury bills, notes and bonds held by individuals, corporations, foreign governments and others. By the time you read this that number will have risen precipitously. However, to obtain a real – time number simply go to www.usdebtclock.org. You can watch the numbers clicking away in a very rapid fashion.

IOUSA is the best book that I’ve ever read which addresses this situation, putting it in to layman’s terms. Authors Addison Wiggin and Kate Incontrera have assembled commentary and insight from Walker among others that helps illustrate the impact on the average person in America. Since it’s 2007 publication date until now, many of the issues discussed appear to be coming to fruition.

One of the key concepts that they illustrate is the idea of the federal debt as a percentage of Gross Domestic Product (GDP). GDP is the total market value of goods and services produced by labor and property located within a country in a given year. It’s useful to know the debt as it relates to GDP because it is highly indicative of any particular country’s ability to actually pay back the debt owed.  So to put this in to perspective, America’s GDP was 13. 5 trillion in 2007 when the federal debt was a mere 8 trillion. Today the GDP is approximately 17.4 trillion with a debt of 18 trillion.  That means our debt is nearly 95% of our GDP, and it’s predicted to get much worse.  (This quote is from the book. Sadly it was right on target. “US Debt to GDP was 101.5% in 2014 according to tradingeconomics.com. and Forbes “The US Debt; Why It Will Continue To Rise”, 9/18/2014.”).

The largest components of the debt are*:

Medicare :  923 billion

Social Security : 861 billion

Defense/War: 595 billion

Income Security: 310 billion

Net Interest on Debt: 238 billion

Federal Pensions: 250 billion

*Source: USDebtClock.org

What this means to the average American is disturbing.  The current portion of this debt per American citizen is $185,000, or an astounding $732,000 per family!  As Walker is quoted in the book, “The facts aren’t Democrat or Republican, the facts aren’t liberal or conservative. The facts art the facts…our financial condition is worse than advertised and we need to act; we need to act soon because time is working against us”.  Remember that Walker said this before the election of President Obama and the creation of an entirely new government program with the Affordable Care Act, and the increase of the federal debt by another 10 trillion.

The very first director of the Congressional Budget Office was Alice Rivlin. She discussed the current (as of 2007) state of affairs in the book. “ Deficits matter”, says Rivlin.  “Deficits occur when the federal government is spending more than it’s collecting in revenue, and that means it has to borrow money. We are not paying the government’s services we are asking our government to provide. The government then in turn, borrows money and passes the IOU or bill right along to the next generation.

Rivlin went on to say: “Increases in longevity and rising medical care spending are symptons of being a rich country. However, we have to do something about it. Unless we are willing to raise taxes and keep on raising them, or close down the rest of the federal government, we’ve got a very big problem staring us in the face.”

Ultimately, that’s the core message of IOUSA. While politicians on both sides of the aisle continue to kick the proverbial can down the street, future generations of bright-eyed young people, retirees, and the elderly face a future of rising taxes, diminished or vanished services, and extended waits for promised benefits. The Social Security statements that people have recently started receiving stipulate clearly that under current trend lines, they will only be able to pay a percentage of promised benefits by 2033. That’s most unfortunate news for millions who have been paying in to the system for decades.

Thomas Jefferson said “No generation can contract debts greater than may be paid over the course of its own existence.” While that sounds great, it’s fundamentally untrue. Our nation is in fact passing along this legacy of debt to future generations (as well as current ones). As for Jefferson, his public proclamations aside, he lived a lavish lifestyle, funded almost exclusively by debt. He died broke. His estate had to be sold off for pennies on the dollar. His grandson, Jefferson Randolph, paid on the remaining debt for most of his life. Luckily, we can’t experience that same thing today. When one passes on now, their debt passes on with them. However, on a national level, IOUSA makes it clear that we are following Jefferson’s example of letting our grasp exceed our reach fiscally. The ramifications of which may be manifest for years to come, unless and until some real action is taken by our political representatives. Until then, bracing for a future of lowered benefit expectations and higher taxes just might be a prudent financial course of action.

*Source: http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo5.htm

The opinions voiced in this material are for general information only, do not necessarily reflect the views of LPL Financial, and are not intended to provide specific advice or recommendations for any individual. 

Securities offered through LPL Financial, Member FINRA/SIPC. Investment Advice offered through Oak Point Financial Group, a registered investment advisor. Oak Point Financial Group and MyRetirementMentor are separate entities from LPL Financial. 

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The Risks of Retirement

What Are the Challenges You Face? Knowing Them Helps You Prepare for a Happy Retirement

by Gary L. Fisher

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In the wake of the dot.com bubble bursting in 2000, many American companies stepped back and took a long, hard look at the structure of their pension obligations. For the first time in a very long time, the real risks of making long-term promises to employees in the face of plummeting asset values, increasing competition, and volatile markets became quite real, as many companies were either careening towards bankruptcy or already in the throes of a meltdown. Others feared that they might be next.

As a result, many firms chose to move the obligation (and risk) for retirement planning away from the rms and on to the backs of employees. is was a seismic shift, as retirement planning had always been referred to as a ‘three legged stool’, consisting of pensions, social security, and personal savings and investments.

When the next bubble hit in 2009, it only exacerbated the problem. Personal savings fell, and even more firms faced bankruptcy, went out of business, or laid people off.  Millions lost their homes, their jobs, and their pensions. The shift to defined contribution plans, instead of defined benefit plans, had finally reached critical mass. Many people started to understand fully that, if they were to retire as their parents and grandparents had, they would have to figure it out on their own.

The primary issue is one of education and understanding. What should we focus on when it comes to retirement planning? Just as important, what are the risks we face when doing so? An article in The Harvard Business Review, “The Crisis In Retirement Planning (Harvard Business Review, July – August 2014), summed it up nicely when it stated, “Our approach to saving is all wrong: We need to think about monthly income, not net worth.” This statement comes from the article’s author, Robert C. Merton, Nobel Prize winner.

My 23 years of practicing in the retirement planning arena had long ago convinced me that monthly income is indeed the critical factor in retirement success. I would also say that personal health and fitness, both mental and physical, is the second half of the retirement happiness equation.

However, having adequate monthly income is often the precursor to health and well-being. In fact, the American Psychological Association’s “Stress In America” survey results for 2014, shows that 72% of adults report feeling stressed about money at least some of the time, and 22% say that they experience ‘extreme stress’ about money. Top reported triggers include: paying for unexpected expenses, paying for essentials, and saving for retirement. (American Psychological Association, February 4, 2015; American Psychological Association Survey Shows Money Stress Weighing on Americans’ Health Nationwide).

According to APA CEO and Executive Vice President Norman B. Anderson, PhD speaking about the study: “Regardless of the economic climate, money and finances have remained the top stressor since our survey began in 2007. Furthermore, this year’s survey shows that stress related to financial issues could have a significant impact on Americans’ health and well-being. Indeed, stress about money and finances has a significant impact on many Americans’ lives. Some are putting their health care needs on hold because of financial concerns. Nearly 1 in 5 Americans say that they have either considered skipping (9 percent) or skipped (12 percent) going to the doctor when they needed health care because of financial concerns. Stress about money also impacts relationships: Almost a third of adults with partners (31 percent) report that money is a major source of coflict in their relationship. So, solving these retirement income challenges is crucial, if we are to have any expectation of a long, healthy, and happy retirement. There are seven key risks that retirement income planners have to take in to account if we are to properly prepare.

Seven 7 Risks Table.png

Each of these risks are real for each of us to varying degrees. e manner in which you approach solving them, and properly planning for adequate monthly income, can make all the difference when it comes time to make work optional in your life. Structuring a retirement income plan can have many moving parts, so it’s crucial that you have a thoughtful plan in place that takes each one of these risks in to account.

Let us help you navigate this mine field and create a plan that makes sense for you and your goals. For a complimentary consultation to review what you are doing to prepare for an appropriate retirement income, call us at:

810-603-9100
to set an appointment.•

 

 

 

 

 

The Sunscreen Song

The Sunscreen Song

by Gary Fisher

It was known as ‘The Sunscreen Song’. A hit song in 1999. by Baz Luhrman , it offered sage advice to the ‘Class of 1999’. The tune went to #10 in the states, and was #1 in the UK. To this day it stands as one of the most unusually catchy songs of a generation. The lyrics are the key, and they present a dramatic, yet understated line of thinking for the last class of the 20th century.

As I move through my 50th year on earth, and work with clients yet to know the joys of hitting the half century mark, and many who have long since passed that point, I am reminded of the song and it’s advice, and how spot on it was. In fact, I recently ran across a similarly conceived set of instructions purportedly written by 60 year olds. The comments essentially dovetail with the Sunscreen song which I found to be rather intriguing.

Quality advice can be particularly valuable when it comes to envisioning a life that includes business and personal success, raising a family, taking care of ailing parents, fluffy kitties, happy dogs, yourself, your spouse, and then planning for something called ‘retirement’ which might span 20, 30, and even 40 years.

So if you are near a computer, or you have the song on your ipod load it up and take a listen. You may find it moving, or fun, but its hard to imagine it won’t resonate.

Among the gems of advice are:

  • Don’t worry about the future. Or worry, but know that worry is as effective as trying to solve an algebra problem by chewing gum.
  • Don’t be reckless with other people’s hearts, and don’t put up with people who are reckless with yours.
  • Don’t waste time on jealously. Sometimes you’re ahead, sometimes you’re behind. The race is long, and in the end it’s only with yourself.
  • Floss.
  • Stretch.
  • Don’t feel guilty if you don’t’ know what you want to do with your life. The most interesting people I know, didn’t know what they wanted to do at 22, and some of the most interesting 40 year olds I know still don’t.
  • Be kind to your knees. You’ll miss those when they’re gone.
  • Whatever you do, don’t congratulate yourself too much, or berate yourself either. Your choices are half chance, and so are everybody else’s.
  • Get to know your parents. You never know when they’ll be gone for good.
  • The older you get the more you need the people who knew you when you were young.
  • Travel.
  • Don’t expect anyone else to support you. Maybe you have a trust fund or a wealthy spouse, but you never know when either will run out.
  • And of course….wear sunscreen!

And…in my opinion…here are some recommendations from the ‘Over 60’ crowd:

  • Eat and exercise like a diabetic heart patient with a stroke, and you’ll never actually become one.
  • Pay your bills and ‘stay the hell’ out of debt.
  • The joints you damage today will get their revenge later.
  • Stuff is just stuff. Don’t hold on to material objects. Hold on to time and relationships.
  • The most important person in your life is the one who agreed to share their life with you. Treat them as such.
  • No matter how long or how short you live, you’ll wish you took better care of your body when you were young.
  • A true friend will come running at 2am. Everyone else are just acquaintances.
  • Don’t take life so seriously. Even if things seem dark and hopeless, try to laugh at how ridiculous life is.

When it comes time for you to wrap up one phase of your life, and move in to the retirement phase you’ll find that this advice will be particularly resonant.

The formula for my Happy Retirement “Sunscreen” is based on countless studies, personal observation of nearly a quarter of a century in practice working with clients, and the words of those same clients it seems clear that your happiness in this phase of life will include four critical components:

  1. How healthy you are physically and mentally.
  2. The fun you have with your hobbies and most importantly, your passions.
  3. The depth and quality of your personal relationships.
  4. The level of contribution to others you are able and willing to make.
  5. The monthly income you have that facilitates the previous four points.

Interestingly the advice to the graduating class of ‘99, the wisdom of the 60 + crowd, all blend in to one neat package that serves as a nifty guide to what we should all focus on as we make our plans for the BEST of our life. Heed it well!

 

Finding Your Beach

The Journey Starts with That Important First Step

by Gary L. Fisher

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‘Find Your Beach’ is a metaphor that I use liberally to define both the journey and the destination to what we call ‘retirement’. It’s not about stopping your life and remaining in stasis. Rather, it’s about transitioning your life from one state of mind and being, to another. It’s about new beginnings, not endings. It’s about new challenges, not the ending of all challenges. It’s about conquering new goals, exploring new frontiers, and seeking adventure and fulfillment.

The destination can be an actual beach, or whatever you picture yourself doing in retirement, whether it’s spending all of your time with your grandchildren, fishing off a dock in Northern Michigan, or seeing the world. So the first step is setting a goal: getting clear about what you want to achieve. Most important of all is knowing about why you want it. Then you need a path that is designed to lead you there.

Think about it: No ship sets sail without a plotted course, no jet takes off without filing a flight plan, no football team takes the field without a game plan, and no family or business should contemplate a successful journey without some sort of focused, holistic, and comprehensive strategy. My role is to help people create such a plan and then help guide them through the realization of that plan, year after year, until you find YOUR beach. I approach all of my client relationships with the idea that we are in it together…and we’re in it for the long haul.

People can be confused, intimidated, or even annoyed by trying to figure out just what exactly it means to work with a Financial Advisor and address such a broad topic as ‘your financial life’. After all…it sounds like a big job…and it is, but that shouldn’t scare you. In fact, I hope it inspires you! Conceptually, it’s pretty easy to visualize, and in the end, the results can be orders of magnitude more valuable than the effort and energy that went in to it’s creation.

Creating a road map for your financial game plan can be one of the most exciting, and empowering things you’ll ever do. Some of our clients say it provides them with a sense of accomplishment second to none. It’s no wonder…how would you feel if you no longer were alone in planning for your retirement, long term care, or managing your investments on a day-to-day basis?

The process starts with a simple and complimentary consultation where we determine if you need help, if we should work together, and if so, at which level of service. Then, we start plotting your course. At subsequent meetings, we formally implement your plan, and thereafter, we meet to review and make course corrections as needed.

It’s simple, and it’s easy to get started. Ancient wisdom says that ‘the journey of a thousand miles starts with but a single step’. When you, or someone you care about are ready to take that first step I’ll be ready to lend a hand.

If you are ready to take that important first step, please give me a call! 810.603.9100

Book Review: While America Aged

 by Gary L. Fisher

while-america-aged-imageRalph Nader coined the phrase ‘unsafe at any speed’ in his scathing indictment of the Corvair. If he had written a book about the General Motors business model of the time, he might have called it ‘Unsustainable at Any Speed’. The Ron Lowenstein’s book “While America Aged’, in my view, is one of those rare gems that not only explains a controversial subject in a terrific storytelling format, and in my opinion, it also happens to have the weight of being prescient and accurate.

I first read this book back in 2008, and it made an incredible impact on my thinking in how I viewed the trajectory of our nation at the time. In conjunction with other personal research, I made significant changes in my client’s portfolios, and my own personal financial life, that turned out to be extremely valuable.

Growing up in the birthplace of General Motors, and living nestled between the automotive enclaves of Flint and Detroit as I do now, the fate of the auto industry has always been a top-of- mind issue for me, as it impacts my life daily. In fact, 100 years of my family story has involved General Motors. Dating back to my Great-Grandfather John Pyne, who worked at the original Buick Motor Division and GM plant, under founder Billy Durant, and Buick leader ,Walter Chrysler, through my grandfathers, grandmothers, dad, and even my mom, who worked for a firm whose #1 client was GM.

Lowenstein’s book isn’t all, or even mostly about the auto industry. Rather, it is broken into three parts, exploring the impact of legacy costs on the public and private sectors. It’s a chilling tale of greed, selfishness, and outright stupidity that has, and will likely continue to impact all Americans for generations to come. It’s a book that predicts, in 2007, events that were to happen all to soon in 2009, and prognosticating the realities of over-promising and under-delivering on pension and health care legacies. These are issues that are now becoming frequent headlines as it becomes clear that the foolish and short-sighted decisions of the past predicted to likely undermine the innocent recipients of that legacy in the future.

There really isn’t one villain in this story, and even fewer heroes. Rather, as Lee Iacocca said in a Chrysler boardroom during the 80’s Chrysler bailout, blame lays on “the three of us”, meaning corporations, unions, and government. In my opinion, the book very clearly explains this in an extraordinarily balanced and fair manner. It essentially confirms my own beliefs as to how we got into this mess, and it goes a long way to explaining what it will likely take to extract ourselves going forward.

Lowenstein reinforces the reality that when it comes to retirement in the 21st century, there is simply no substitute for self-sufficiency, holistic retirement income, and financial planning. Hoping for bailouts, government intervention, and paternalistic unions and corporations to come to the rescue just might be a bigger fantasy story than the latest Star Wars installment. One sure take-away from “While America Aged” is that taking control of your own financial future has never been smarter, more urgent, or more crucial in pursuit of a sustainable and prosperous retirement.

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Securities offered through LPL Financial ember FINRA/SIPC. Investment advice offered through Oak Point Financial Group, a registered investment advisor. Oak Point Financial Group and My Retirement Mentor are separate entities from LPL Financial.

A Conversation with Art Laffer

President Reagan’s Chief Economic Advisor

by Gary L. Fisher

Art Laffer.jpgArthur B. Laffer’s economic acumen and influence in triggering a world-wide taxcutting movement in the 1980s have earned him the distinction in many publications as “The Father of Supply-Side Economics.” The Laffer Curve is one of the main theoretical constructs of supply-side economics, illustrating the tradeoff between tax rates and actual tax revenues.

Dr. Laffer was a member of President Reagan’s Economic Policy Advisory Board for both of his two terms (1981-1989). He was a member of the Executive Committee of the Reagan/ Bush Finance Committee in 1984 and was a founding member of the Reagan Executive Advisory Committee for the presidential race of 1980. He also advised Prime Minister Margaret Thatcher on fiscal policy in the U.K. during the 1980s.

A 1999 Time Magazine cover story “The Century’s Greatest Minds” deemed the Laffer Curve one of “a few advances that powered this extraordinary century.”

Taken from a conversation in 2015.  

I had the opportunity to spend some time in Las Vegas with one of the giants of the economics field, Dr. Art Laffer. Initially I expected to maybe ask Dr. Laffer a few quick questions but after learning that I was a University of Michigan graduate he took the opportunity to razz me about Ohio State’s recent dominance of my alma mater’s football team (Laffer is an Ohio native). This led to a much longer conversation, and during it we talked about President Obama’s agenda, the similarities between Laffer’s hometown of Youngstown, Ohio and mine of Flint, Michigan.

Laffer feels strongly that the nation’s tax policy is both part of the problem and fixing it could be a signifcant step towards a real recovery. Dr. Laffer said “The principle of levying the lowest possible tax rate on the broadest possible tax base is the way to improve the incentives to work, save and produce—which are necessary to reinvigorate the American economy and cope with the nation’s fiscal problems.” When I asked him how we could take concrete steps to repair the national economy he said “We know how to fix it, by the way, a low rate at tax, spending restraint, sound money, free trade.”

“Have you ever heard of a poor man spending himself into prosperity? It`s just dumb on the outset. Government spending, as [economist] Milton Friedman always said, is taxation,” he continued. “Government doesn`t create resources, it redistributes resources. And this government spending stuff is why we had the Great Recession.”

Laffer declined to lay all the blame on President Barack Obama, noting that former President George W. Bush started the spending binge, which he said led to the so-called “Great Recession” beginning in 2008. (President George W. Bush) did just as bad a job as did Obama [President Barack Obama], but Obama has continued that bad job for four straight years. And this is the result,” he added.

Laffer stressed the importance of a low tax policy, one less onerous, in helping to stimulate the economy while increasing government revenues at the same time.

Recalling his years as one of President Reagan’s top economic advisers, Laffer said Reagan actually cut the highest tax rates. He said “we made a mistake” by phasing in the cuts, which he said caused the 1981-82 recession. But he said the economy took off in 1983 when the cuts went into full effect.

“This place just went like a rocket ship,” he said. “I think we had 7.5 percent growth in 1983 and 5.5 growth in 1984, just this boom that lasted for years and years.”

“We have the highest corporate tax rates in the world and one of the lowest corporate tax revenues as a share of GDP in the world. Go figure. It’s just you`re taxing them out of business.”

Laffer said the economy last year grew by about 2.1 percent, a poor performance that he described as “the worst single recovery in the history of the U.S.”

When I asked Dr. Laffer about the prospects for turning around rust belt cities like Flint, Detroit, and his own hometown of Youngstown he said , “It’s amazing, isn`t it? We spent $5.8 trillion in the last couple of years, and this is what we get for it? It’s tragic.”

 

The opinions voiced in this material are for general info only and are not intended to provide specific advice or recommendations for any individual.

Retirement Reality Check

Let’s Take a Look at the Costs of a “Bare Bones” Retirement

by Gary L. Fisher

Golden Piggy.jpgAmong the myriad of considerations we have to examine when it comes to planning for a sound and happy retirement are the basics. Things like health care, prescription drugs, long-term care, food, clothing and shelter. That sounds like a tall order, and it is. Certainly those are things that range from stuff we’d rather not think about, all the way to stuff we take for granted.

The most elemental of these factors is food. Gotta eat to live right? You cut that out of the budget and you won’t have to worry about a long retirement! So what does the potential for food expenses look like during your retirement? Let’s take a look:

If you and your spouse live to your life expectancy of age 83, and if you retire at 65, you’ll eat 39,430 meals in retirement. That’s breakfast, lunch and dinner, 365 days a year over 18 years for two folks. If each of these meals costs a mere $5 you’re looking at a budget of $197,100 on food. If you want to eat something other than Ramen noodles and Chef Boyardee in retirement, let’s make it $10 per meal. Now our budget is nearly $400,000! 

What are your odds of living long enough to spend that kind of dough on food? Well, according to the Social Security Administration, one out of four 65-year-olds will live past the age of 90.  One out of ten will live past the age of 98.  So that’s a lot of Early Bird specials at Denny’s to plan for.

How about “working until you drop”, as I’ve heard some proclaim that they will do? Sounds good…well actually it sounds pretty awful…but it’s probably not something that most could do even if they wanted to. In truth, 41% of Americans retired earlier than they planned for various reasons. Health issues are usually the culprit. This situation is exacerbated greatly when people either have no long-term disability insurance through work, or privately purchased. Or they have it, but it’s inadequate. Of course, sometimes people have just had enough of work, and believe it or not, age discrimination is a real thing. Bottom line?  Planning on being the 85 year old guy at the office isn’t really much of a plan.

Like food, the out-of-pocket costs for medical expenses can be astronomical, as well. According to Fidelity, $220,000 is the amount of money a couple can expect to pay for health care in retirement. 

Lastly is the reality of long-term care. I could write a book about this one, and maybe I should. Since this is a topic most people enjoy as much as a funeral, I’ll be brief. The facts are: 7 out of 10 people over the age of 65 will need some form of long-term care at some point in their lives. Medicare does not pay for long-term care insurance.  According to the most recent Genworth Cost of Care Report, the cost of a semi-private room in a long term care facility is $90,703. The average cost for Assisted Living facilities is $43,200 per year. At a 4% increase per year rate (which Genworth say’s it is currently in Michigan) these costs will double in 18 years.  That’s a cost that few are prepared to handle without a plan.  (Source 2015 Genworth Cost of Care Survey @ https://www.genworth.com/…/cost-of-care.html)

I don’t know a lot of people who love to buy insurance….okay I don’t know anyone (myself included) who actually enjoys paying premiums. However, when compared to the costs of being unprepared there’s really not much to think about if you have the health and wherewithal to take action. Similarly, when it comes to planning for retirement income. The roadblocks are clear: Health considerations, living longer/longevity risk, inflation, and taxes all play a part. We could also toss in common issues like providing ongoing financial support for children, divorce costs and expenses, paying for aging parents, and unpredictable government intervention and geopolitical events. In truth, no one sane plans to fail, but countless people fail to plan. It’s really human nature. None of us want to confront our own mortality. But to do so can become a liberating, and life–affirming move. Mitigating our risks of living longer than our money can be a smart move in uncertain times.•

Financial Education

The Case for Adding Financial Literacy Readiness to the Curriculum of Every Student

by Gary L. Fisher

Mortarboard CC.pngAmong one of my passions has always been teaching, mentoring, and coaching. This is one of the primary reasons I chose the financial planning profession as a place to ply my trade. It offers that rare opportunity to make a difference and have fun, all while working.

For me it’s been a great ride, but as a practitioner of financial planning it’s always somewhat surprising how little of the basics of finance are taught in the primary education system. I think a class called ‘Financial Planning’ should be a requirement in Junior High/ Middle School, and a part of the core curriculum in all high schools.

That said, it’s particularly shocking when you learn (and remember) that it isn’t even part of most university curriculums, regardless of how lofty the degree might be.

I know for me it was not.

I managed to get a Bachelors Degree from the University of Michigan and a Masters of Science in Business Administration from Central Michigan University without even touching on anything that looked like Financial Planning.

That’s one of the reasons why I agreed to become a member of the Olivet College Adjunct Faculty in the Department of Business and Economics over 20 years ago. I thought it was great that a college was taking all of this financial education stuff seriously, and offering a degree curriculum. I wanted to be a part of it. Lately that role has evolved in to teaching a class or two each semester in the Financial Planning degree curriculum. It’s been a tremendous experience, and one that has proven to be incredibly rewarding both personally and professionally.

One of the projects I assigned to each class was that they go out and interview someone ‘over 40’ about either their estate planning situation, or their overall financial planning. The results were enlightening as almost all learned that the person they interviewed (typically parents or grandparents) were particularly lacking in preparedness, knowledge, and in some cases even interest in either area. This caused a high degree of consternation among the students to the extent that they were learning how important all of the facets of financial readiness happen to be. One student said, “How will my parents ever retire if they don’t take this serious now?” How indeed! 

One of the projects we covered in the aftermath of this project was to ask each student to identify three things: 1) what age they intended to retire (a fun question to ask ‘20 somethings’), 2) how much money they would need to have accumulated, and 3) how much they could withdraw from that sum so that it would be highly likely (better than a 95% chance) of lasting at least 30 years or more. The answers varied from a low of $500,000 to a high of 5 million. The interesting thing about this project was that the Millennials answers varied little from the quality of responses I typically get in a workshop filled with Baby Boomers! In fact, these particular Millenials will graduate from Olivet’s Financial Planning curriculum light years ahead in financial planning knowledge than that of previous generations of  of  Baby Boomers, or Gen X and Gen Y’ers ever did at the same ages.

I am a strong proponent of keeping the arts and athletics front and center in an educational setting. However, financial education is arguably far more important.  If you doubt it, just consider the vast number of professional athletes, entertainers, and rock bands that have squandered fortunes with poor money management and lack of financial acumen. It’s hard to play your way out of a hole you didn’t even know you were digging. Olivet remains one of the few colleges in the country offering a financial planning degree program. It’s hardly surprising that very nearly 100% of the college’s program graduates are offered excellent jobs upon graduation. In truth, that kind of foundational knowledge can only help in the future regardless of what industry the graduate chooses to pursue. For me, it’s an honor and a privilege to be called a Professor of Financial Planning, because I can’t imagine too many more important callings, or a better way I could use the knowledge I’ve taken nearly a quarter of a century to learn. If the children are our future, than we would all benefit by them being very astute financial mangers.•