Financial makeovers/improvements

[shootingstar]

In the Canadian national news, each wk. there is a featured financial makeover for a person or couple or family, where a reader provides to financial journalist, their current income, assets and debt info. situation for a published recommended improved personal financial makeover for future. Usually a financial planner gives the overall strategy/plan.

So latest profile, was of a couple with..$5 million in assets....probably $500,00.00+ in debt. With 2 teenage children.  It makes one wonder with this total $$ value why bother even featuring a profile that is rare unreality for the ordinary person.  

On the other hand, some profiles are just amusing to read. A few wks. ago, 1 guy in his 60's who is supposedly single, hopes to have annual living style of $100,000 in retirement. His assets didn't quite support his vision but yes, he was hoping to vacation somewhere for part of year in Carribbean.

[petitepedal ★]

I find a lot of those kinds of shows or programs are not practical for the average person or couple...I got tired of watching "This Old House" because people would have purchase a house for $500,000 dollars and putting another $500,000 into renovating it...  What about the person who maybe has a house (and mortgage) and has a remodel budget of $5,000...or $10,000....

Lets be realistic...

[shootingstar]

8 minutes ago, petitepedal said:

I find a lot of those kinds of shows or programs are not practical for the average person or couple...I got tired of watching "This Old House" because people would have purchase a house for $500,000 dollars and putting another $500,000 into renovating it...  What about the person who maybe has a house (and mortgage) and has a remodel budget of $5,000...or $10,000....

Lets be realistic...

I haven't seen the Old House reno series. 

THe only show I find interesting...is one where the renos are done in Vancouver since we can recognize some of the views/neighbourhoods. It is purely familiarity.  Vancouver has its own challenges for any home reno...... make sure your house doesn't leak with all the rainfall we get, controlling mould  growth in home, when there is higher humidity. Boy that beautiful reno bathroom that's all white, requires diligent cleaning/air circulation, etc. Totally different situation in Alberta where the air is drier. Alot less problem with indoor home mould!

I know many U.S. forumites live in areas where a 3 bedroom house might be $250,000 (?) in 2021,  but in Canada would really need to live a small town or rural area for that price tag...and of course, probably have a car since transit in smaller areas doesn't run as often/not as extensive.

[Bikeguy]

22 minutes ago, petitepedal said:

I find a lot of those kinds of shows or programs are not practical for the average person or couple...I got tired of watching "This Old House" because people would have purchase a house for $500,000 dollars and putting another $500,000 into renovating it...  What about the person who maybe has a house (and mortgage) and has a remodel budget of $5,000...or $10,000....

Lets be realistic...

Then I'd guess you never watched Insane Pools.  They would spend $500,000 on a pool landscaping, etc...

https://lucaslagoons.com/insane-pools-tv-series/

Or how about Mega Decks.  A $800,000 deck in one show. 

https://www.diynetwork.com/shows/mega-decks/episodes

 

[shootingstar]

13 minutes ago, Bikeguy said:

Then I'd guess you never watched Insane Pools.  They would spend $500,000 on a pool landscaping, etc...

https://lucaslagoons.com/insane-pools-tv-series/

Or how about Mega Decks.  A $800,000 deck in one show. 

https://www.diynetwork.com/shows/mega-decks/episodes

 

  How wierd.  We don't subscribe to those channels.  We're kinda boring....home renos in the Mississippi without the pool. (To us, a dilapidated house in need of love, under $100,000 is not quite possible in Vancovuer or Toronto.)

[Further]

My retirement was looking borderline comfortable, the way dollars are flowing now, and what the effect will be on the cost of living, I'm afraid it may include a Walmart or Lowes job.

[MickinMD ★]

I've read a lot of financial articles about people with huge nest eggs or incomes by both spouses in the $400K+ range.

Some of them have been in idiotic, "Yes, you can retire by age 40" articles.

Others have been in articles arguing the avg. person should be saving 33% of his/her income.

I get pissed off when most of the articles say, "You really need to hire a financial advisor."  Studies have shown that that's a losing proposition for most middle class people with relatively simple finances who have a reasonable idea of how to save and invest,

[Kirby]

I always loved those financial makeover articles. although I haven't seen one in awhile.  If they do an article every week, I guess they will eventually get to some people with a lot of resources.

[shootingstar]

1 hour ago, Kirby said:

I always loved those financial makeover articles. although I haven't seen one in awhile.  If they do an article every week, I guess they will eventually get to some people with a lot of resources.

Those articles do give a window into other people's lifestyles or point-in-time life priorities concerning money, some of their values which what makes some of them interesting reading.  A friend and I were laughing when she and I realized that for years we never even cared about proper financial planning/investing. Not saying bad investments were done, just not a "plan" except save money, live within reasonable/sustainable costs/ means and pay off a mortgage.  I never thought much about investments, especially outside of fixed instruments for many years. Like being on a hamster wheel but not thinking about anything broader. Then I realized, I have some partial/tiny knowledge of some industry sectors/practices gained from where I've worked, which MIGHT occasionally help make choices. 

Perhaps financial makeovers may be of value for those who might feel guilty for knowing they are not managing their finances properly but have been in conscious self-denial and gradually/soon want some ideas to mull over to "fix" their problem.  Enlightment for self-help can take a long time.  It did for me. However some people don't know how to choose credible information  sources on the 'Net / don't trust basic info. from banks, etc.  Having complicated tax laws or at least tax law to read up/stay updated can be too much for some folks..even when tax authorities have really improved alot of their educational materials online for non-complicated personal income tax.

I was raised in a family where parents were united in approaches managing money and quite frugal. It probably has influenced me alot without me even realizing my own habits /attitude about money.

[Scrapr ★]

7 hours ago, shootingstar said:

On the other hand, some profiles are just amusing to read. A few wks. ago, 1 guy in his 60's who is supposedly single, hopes to have annual living style of $100,000 in retirement. His assets didn't quite support his vision but yes, he was hoping to vacation somewhere for part of year in Carribbean.

I am certain that many of these shows & financial columns are making up the circumstances to make a "good" story. 

however...I resemble the chap mentioned above. *without the 5 million though

[Bikeguy]

1 hour ago, MickinMD said:

I get pissed off when most of the articles say, "You really need to hire a financial advisor."  Studies have shown that that's a losing proposition for most middle class people with relatively simple finances who have a reasonable idea of how to save and invest,

I'd suggest that many people don't don't know how to save (live below their means).  There are 25 states that have some personal financial class requirements for high schools. That still doesn't mean the students actually learned anything that will help them.   I hope they do....

The lack of savings for an 'average' person is sad.  And this was before the virus.  It's probably worse now.

 

Then there are shows like Mega Decks, or the news in Canada about finance, etc...    Even the Hallmark Channel's Christmas movies...   that portray an 'event planner' (not that there is anything wrong with that)  but... they live in a home that would be VERY expensive.  Yeah, they are TV 'shows' for a good story (that's debatable too), with no connection to 'reality'.  But that is what some people decide they 'need'.

 

 

 

[Tizeye]

I know a local family that was featured on "The Nanny". It was so far from reality it wasn't funny. The kids were actually coached to act out, be unruly, and throw temper tantrums so they had good video footage to entertain the TV audience. After the filming, of course the parents had no preview or say in the cuts, but worse had to stop their kids from continuing the acting out that the scripting taught them.

[BR46]

7 hours ago, Bikeguy said:

I'd suggest that many people don't don't know how to save (live below their means).  There are 25 states that have some personal financial class requirements for high schools. That still doesn't mean the students actually learned anything that will help them.   I hope they do....

The lack of savings for an 'average' person is sad.  And this was before the virus.  It's probably worse now.

 

 

My sister is 58 years old and just started thinking about retirement. She told me that she had $3,800 in a IRA for retirement and $500 in a savings account. 

 

[Razors Edge ★]

17 hours ago, shootingstar said:

In the Canadian national news, each wk. there is a featured financial makeover for a person or couple or family, where a reader provides to financial journalist, their current income, assets and debt info. situation for a published recommended improved personal financial makeover for future. Usually a financial planner gives the overall strategy/plan.

So latest profile, was of a couple with..$5 million in assets....probably $500,00.00+ in debt. With 2 teenage children.  It makes one wonder with this total $$ value why bother even featuring a profile that is rare unreality for the ordinary person.  

On the other hand, some profiles are just amusing to read. A few wks. ago, 1 guy in his 60's who is supposedly single, hopes to have annual living style of $100,000 in retirement. His assets didn't quite support his vision but yes, he was hoping to vacation somewhere for part of year in Carribbean.

1/52 = 1.9%.  I'd say that squarely fits within the $5 million in assets in what we call in the US a 5%-er? Not a 1%er, but close to the top, so I can see it being reasonable for the paper to run a few of that type of person/couple's scenarios per year. 

If I had 52 weeks of "makeovers" to create, it would be far less interesting to me and the public if almost every one was similar to the general population - few savings, moderate incomes, and unpleasant debt loads.  I'd push for more articles on that 2nd guy, more articles on balancing current costs vs future needs, more on saving for kids' schooling vs retirement, lowering debt while raising savings, etc.. 

[Dirtyhip]

1 hour ago, BR46 said:

My sister is 58 years old and just started thinking about retirement. She told me that she had $3,800 in a IRA for retirement and $500 in a savings account. 

 

Yikes.  

[Razors Edge ★]

2 minutes ago, Dirtyhip said:

Yikes.  

She's AHEAD of the game! 

I gotta say, not knowing how good/bad it really is, that Social Security, Medicare (and Medicaid), other social safety nets, and local/state programs prop up a lot of folks with either zero savings or negative balances. 

Folks can live on those programs pretty reasonably???  I'd say the biggest question mark would be if that's also true for the folks who got to retirement broke in the first place - ie. they weren't proactive about their $$$ in the good years, how will they be good with it in the lean years?

[Kirby]

It's funny ,I think I've been saving/investing most of my life, but if I look back, I really didn't start investing in mutual funds until later in life.  My first IRA's were all invested in bank cds - of course they were paying more back then.  I think my family has done a good job of helping my niece and nephew learn the basics of low cost, diversified investing including helping them start an IRA when they got their first jobs.  But they're young and have just moved into their own apartments, so I think they're currently more focused on paying their bills than saving a lot.

[BR46]

7 minutes ago, Kirby said:

It's funny ,I think I've been saving/investing most of my life, but if I look back, I really didn't start investing in mutual funds until later in life.  My first IRA's were all invested in bank cds - of course they were paying more back then.  I think my family has done a good job of helping my niece and nephew learn the basics of low cost, diversified investing including helping them start an IRA when they got their first jobs.  But they're young and have just moved into their own apartments, so I think they're currently more focused on paying their bills than saving a lot.

I like to show people this little tool. People think that you need to make a lot of money in order to save but you don't. 

https://www.bankrate.com/retirement/calculators/traditional-ira-plan-calculator/

It's amazing on what you can save on just $8 a day. 

[Razors Edge ★]

This was an interesting "summary" of gauging one's retirement needs.  I think there are always a lot of nuance to a person's needs in retirement, but there are some general guidelines that might help folks plan for a comfortable retirement rather than a subsistence one. 

I find the general gist of the advice below as good, but I always scratch my head and wonder if the author of the article or the "experts" are the ones who miss some glaring (to me) initial "givens".  For example, they throw out "earn $100k/year, you need $80k" (which is fine) but I immediately think, "If I earn $100k/yr, I am IMMEDIATELY putting $32,500 of that into a 401k and Roth", so is my "new" requirement to only need to replace 80% of my actual income - ie $100k - $32k = $68k so ~$55k????"  That's a HUGE difference - 80k vs 55k - and it seems pretty important to me.  Likewise, timing retirement to home mortgage paid off, would have to be huge - likely $10k - $25k saved in mortgage/yr.  Maybe no mortgage offsets personal health insurance? Then, obviously, you have dual income couples, and as I see currently, two together can live for far less than two separately. How does that factor in???

A general rule of thumb is that you’ll need to replace 70% to 80% of your pre-retirement income to have a similar standard of living when you retire. So if you earn $100,000 a year, you’ll need roughly $80,000 in annual income. Some of that will come from Social Security (once you reach retirement age) and a pension, if you get one, so perhaps your portfolio will need to produce $50,000 to $60,000 of that income.

You’ll probably need less than your pre-retirement income because you’re no longer socking away a big chunk of your salary for retirement—and if you are aiming to retire early, you should be maxing out all your savings options and more. Your income taxes will likely be lower and many of the costs associated with working, such as commuting and eating lunch out, will disappear.

If you work till the traditional retirement age of 65, you should have 12 times your annual household income saved, says Farrell. For someone earning $100,000 a year, that’s $1.2 million (his figures take Social Security benefits into account). But if you want to quit work at age 55 and replace 75% of your income, you’ll need 18 times your annual income or $1.8 million. That assumes a 4% annual withdrawal rate, adjusted for inflation. “Not only does your money have to last longer but as you draw down your nest egg, your savings has less time to grow,” says Farrell.

If you’re not on track, it’s not too late. As you hit your peak earning years and big expenses fall away, such as college tuition for your kids, you may be able to power save, putting away much bigger chunks of money. Or you can adjust your goal. “Maybe 60 or 62 is more realistic than 55 or you can get by on less than you think,” says Farrell.

If you push back retirement to age 62, you’ll need 16 times your annual salary saved. If you really want to quit work at 55 and you’re willing to live on 60% of your pre-retirement income, you’ll need 15 times your annual income. Or if you can get by on 50% of your household income—say you pay off your mortgage or you significantly downsize your home to cut your post-retirement expenses—a nest egg of 12 times your final income may be enough.

[Bikeguy]

41 minutes ago, Razors Edge said:

She's AHEAD of the game! 

I gotta say, not knowing how good/bad it really is, that Social Security, Medicare (and Medicaid), other social safety nets, and local/state programs prop up a lot of folks with either zero savings or negative balances. 

Folks can live on those programs pretty reasonably???  I'd say the biggest question mark would be if that's also true for the folks who got to retirement broke in the first place - ie. they weren't proactive about their $$$ in the good years, how will they be good with it in the lean years?

And then there are the projections about how SS and Medicare, etc.. are underfunded so in a few years when there are cutbacks, that will be interesting.   The lean years will get leaner for many.

 

[shootingstar]

2 hours ago, Razors Edge said:

1/52 = 1.9%.  I'd say that squarely fits within the $5 million in assets in what we call in the US a 5%-er? Not a 1%er, but close to the top, so I can see it being reasonable for the paper to run a few of that type of person/couple's scenarios per year. 

If I had 52 weeks of "makeovers" to create, it would be far less interesting to me and the public if almost every one was similar to the general population - few savings, moderate incomes, and unpleasant debt loads.  I'd push for more articles on that 2nd guy, more articles on balancing current costs vs future needs, more on saving for kids' schooling vs retirement, lowering debt while raising savings, etc.. 

Well, I didn't think of that-- makeovers that are interesting to read.  And the rest of us are dull.    The weekly makeovers in the 2 national newspapers (this is not tv) tend to have people in lower-middle class and up incomes. Yes, many featured seem to have people who want to retire a bit earlier but aren't sure. Much of the details aren't too wierd..some with adult children living with them, some owning rental property(ies), etc. Or divorced with 1-2 children. 

As for TV "reality" shows produced in Canada -- we hardly have any that try to show super dysfunctional behaviour.  We're pretty dull. 

1 hour ago, Bikeguy said:

And then there are the projections about how SS and Medicare, etc.. are underfunded so in a few years when there are cutbacks, that will be interesting.   The lean years will get leaner for many.

Yes, now that national budgets are cratered due to pandemic support payments, etc. For the influenza pandemic in early 1900's, none of the govn'ts provided financial assistance to their citizens. So that's why their economies recovered a bit better/more easily (before WWII). 

People in the financial services industry are wondering post-pandemic, if this will mean tax increases.

 

[Razors Edge ★]

19 hours ago, petitepedal said:

I find a lot of those kinds of shows or programs are not practical for the average person or couple...I got tired of watching "This Old House" because people would have purchase a house for $500,000 dollars and putting another $500,000 into renovating it...  What about the person who maybe has a house (and mortgage) and has a remodel budget of $5,000...or $10,000....

Lets be realistic...

  You're more a "Ask This Old House" than a "This Old House" type - as most of us are.  Yeah, that show, while fun to watch, is not really aimed at the small renovation crowd. It would be nice if they had a spin-off more geared toward a single room redo - like a kitchen or bathroom gut and renovation.  But likely it will just be more of the same.  Even the rebuilding of the California homes from the horrible wildfires - while interesting - weren't very relatable to most of us.  

[Bikeguy]

2 hours ago, Razors Edge said:

bathroom gut and renovation

Been there, done that, at my old home.  We had a 1 1/2 bathrooms in the home, and "the" bathroom needed to be renovated.  The old green (so... 70s) single piece fiberglass tub/shower started to crack in the floor of the tub.  The kitchen was below the bathroom.  I didn't want to learn how to replace a ceiling too. 

I removed the old vinyl floor and installed tile, installed a new tall oval toilet.  I got to use my sawzall and cut out the old single piece tub/shower.  Then install a new 3 piece tub/shower, new vanity, new linen cabinets,  new wood trim, light fixtures, etc...  just about everything was replaced.  Most of the area near the tub had all of the wall board removed.  Removed the wall paper.. that was horrible, they must have used the wrong glue.  It probably would have been quicker just to rip out all of the wall board.

 A friend had a miter saw for cutting the new wood trim, and he had a tile saw.   I now have a tile saw.... no miter saw yet.

I learned a lot...  and I turned out great.  We only lost the use of the tub/shower for 1 day.   It took a few weeks for me to get everything back to normal.  Working on the bathroom after working my real job all day, made for a long day.

The best thing I learned...  I can pay someone to do that work the next time.