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#286: "Equity" and Women on Wall Street

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It's official: "Equity" is a now my new favorite movie about Wall Street. Sure, "Trading Places" was a classic, but there has never been a film about Wall Street where not only are women the main characters, but they also populate every role behind the camera. Guest Alysia Reiner (she plays Fig on "Orange is the New Black" and starred in the movie "Sideways") is the co-star and co-producer (with Sarah Megan Thomas) of "Equity" and explained why the movie felt so real: they spoke to REAL women who worked on Wall Street, some of whom became investors in the film.

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"Equity," which takes place in the post-financial crisis era, explores both gender and generational roles in finance in an entertaining and provocative way. As the financial thriller unfolds, we see ambitious women trying to walk the tightrope between being too nice or being accused of "having sharp elbows" or "rubbing people the wrong way."

There is also an interesting take on mentorship, which can be tricky in a male dominated field. Naomi, the main character played by Anna Gunn of "Breaking Bad" fame, advises young professional women, "Don't let money be a dirty word" -- a sentiment that we wholeheartedly embrace on this show!

Women also adapt by using what they have to their advantage. Alysia plays "Sam," the assistant US attorney who is a college acquaintance of Naomi. Sam uses her sexuality to her advantage as she investigates Naomi's firm for insider trading. Meanwhile, Naomi's associate Erin (played by Sarah Megan Thomas), who is juggling her husband and recent pregnancy with the desire to advance her career, finds herself asked to treat a twenty-something tech entrepreneur "very, very gently."

I don't want to give too much away--just listen to the interview and GO SEE THE MOVIE!

Here are some of the articles that I mentioned earlier in the show:

Thanks to everyone who participated this week, especially Mark, the Best Producer/Music Curator in the World. Here's how to contact us:

  • Call 855-411-JILL and we'll schedule time to get you on the show LIVE 
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Why You Should Work Longer

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I have been called a “Buzz Kill” advocating that people should work longer. The reason I cling to this advice, is that in my years as a financial planner, I found that those who worked longer tended to have fewer financial problems and seemed more content as they aged. But I also know that many people really don’t like what they do, are burned out or simply can’t physically continue performing the tasks required for their jobs. But even many who could continue to work, used to choose not to do so. According to a study from the NIH’s National Institute on Aging, between the 1950s and the mid-1980s, “participation of older men in the labor force declined at a notable rate as more and more men opted for retirement before the standard age of 65.” The decline leveled off after the mid- to late-1980s. For women, the numbers are different, reflecting their entry into the work force. Proportionally more women of all ages are now working, including those over age 60.

But two boom and bust cycles (the Internet and housing bubbles) over the past decade and a half have prompted a greater share of older Americans to reconsider their previous dreams of early retirement. According to Pew Research, nearly 9 million people over the age of 65 reported working either full or part time -- that’s 18.8 percent of the total number of older Americans. In the year 2000, the share stood at just 12.8 percent.

You might think that most of these people are working because they have to earn money, and you would be right. A survey from Transamerica found that only less than half of retirees say that they have either fully financially recovered or were not impacted by the Great Recession. As a result, 60 percent of retirees said making money or earning benefits was at least one reason they kept working. 36 percent said they work mainly because they enjoy their jobs or want to stay involved.

That later group may be on to something, because many have found that retirement isn’t all it’s cracked up to be. According to a study by the Employee Benefit Research Institute, more than half of respondents reported retirement was just “moderately satisfying” or “not at all satisfying”. Perhaps working longer is the key to boosting satisfaction late in life. If you’re not convinced, there is another great benefit to staying on the job: it may actually help you live a longer life.

According to a study from Oregon State University, “working past age 65 could lead to longer life, while retiring early may be a risk factor for dying earlier.” Before you send me the terrible notes about people who retire and then immediately become ill, here are the numbers: healthy adults who retired one year past age 65 had an 11 percent lower risk of death from all causes, even when taking into account demographic, lifestyle and health issues. And even those who describe themselves as unhealthy were also likely to live longer if they kept working.

There is some belief that staying active and engaged at work may help fight the natural decline in physical and cognitive functioning, but don’t fret if you aren’t working. There is plenty of research that shows membership in social groups, such as book clubs or religious organizations, after retirement is also linked to a longer life. The key is to remain engaged in some way, whether through work, group membership or even hobbies, like playing cards or bridge.

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Yellen's Jackson Hole Speech May Move Markets

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The first eight months of the year have been dominated by one question: When will the Fed raise rates next? The answer may come from a surprising place: Jackson Hole, WY. Since 1982, the Federal Reserve Bank of Kansas City has hosted a late summer economic policy symposium in Jackson Hole. The event brings together central bankers, private market participants, academics, policymakers and others to discuss the issues and challenges in a public but informal setting. While this may sound like a bunch of boring people in a beautiful location, in recent years, some central bankers have made big news from Jackson. In 2010, Fed Chair Ben Bernanke discussed the pros and cons of several policy options, including buying “longer-term securities,” which was the premise of the second round of quantitative easing or QE2. Two years later, Bernanke used his Jackson Hole remarks to introduce the possibility of a third round of asset purchases known as QE3, when he said: “The Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.”

Four years later, the central bank is no longer buying assets to prompt economic growth, but so far, it has only increased its benchmark interest rate one time-last December. While some Fed officials have recently been leaning towards an interest rate increase sooner rather than later, others are concerned that the economy remains too fragile to risk higher rates. Further evidence of the division between the two camps was evident in minutes from the last policy meeting.

That’s why at this year’s Jackson Hole confab, traders and economists will listen closely to current Fed Chair Janet Yellen’s speech, “The Federal Reserve’s Monetary Policy Toolkit” to see if there is either an implicit or explicit clue about when the next rate hike will occur. While she is not likely to say, “September is baked in the cake,” she may discuss the factors that would lead to an increase in September, like another strong employment report along with firming inflation. Right now, the market is predicting just a 20 percent chance of a September move and 50 percent likelihood at the December meeting. A September surprise could knock stocks down from their peaks and usher in what could be a bumpy autumn.

MARKETS: Summertime and the living is easy….in what was a typical August week, stocks bounced around all-time highs, but closed mostly unchanged amid light volume.

  • DJIA: 18,552, down 0.1% on week, up 6.5% YTD
  • S&P 500: 2183, down 0.01% on week, up 6.8% YTD
  • NASDAQ: 5238, up 0.1% on week, up 4.6% YTD
  • Russell 2000: 1236, up 0.5% on week, up 8.9% YTD
  • 10-Year Treasury yield: 1.58%
  • British Pound/USD: $1.3078
  • September Crude: $48.52, up more than 20% since falling below $40 in early Aug
  • August Gold:  at $1,340.40
  • AAA Nat'l avg. for gallon of reg. gas: $2.16 (from $2.13 wk ago, $2.63 a year ago)

THE WEEK AHEAD:

Mon 8/22:

8:30 Chicago Fed National Activity Index

Tues 8/23:

10:00 New Home Sales

10:00 Richmond Fed Manufacturing Index

Weds 8/24:

9:00 AM FHFA House Price Index

9:45 PMI Manufacturing Index Flash

10:00 Existing Home Sales

Thursday 8/25:

First day of Kansas City Fed Econ Symposium in Jackson Hole, WY

8:30 Durable Goods Orders

11:00 Kansas City Fed Manufacturing Index

Friday 8/26:

8:30 GDP

8:30 International Trade in Goods

8:30 Corporate Profits

10:00 Janet Yellen’s speech from Jackson Hole

10:00 Consumer Sentiment

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#285 Teaching Kids to Spend, Save, Give and Invest

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Inspired by her own kids, investment advisor Rachel Gottlieb, CFP has written a new book "Zac's Dollar Dilemma," which can help you teach your kids about money. The book is aimed at preschool and elementary school children and helps parents introduce the topic of managing money in a fun and engaging way that kids can understand. Rachel also discussed how she became involved in financial services instead of pursuing a future in musical theater!

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Thanks to everyone who participated this week, especially Mark, the Best Producer/Music Curator in the World. Here's how to contact us:

  • Call 855-411-JILL and we'll schedule time to get you on the show LIVE 
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Bad Trade: College for Retirement

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“Sometimes self-interested is the most generous thing you can be.” - Tony Kushner This quote came to mind after fielding a question about using retirement funds to pay for tuition. For most people, tapping retirement accounts or funding college education before retirement, is a bad trade. These parents, who want to help their kids, could be jeopardizing their own futures with these decisions.

Before thinking about putting money toward your kid’s education, you need to make sure that you have covered “The Big Three”: (1) Paying down consumer debt (2) Establishing an emergency reserve fund (3) Funding retirement. If any one of these items is outstanding, you need to put education funding on the back burner.

Before you say, “But I have to make sure my kid gets a college education and I don’t want him/her to be burdened by student loans,” let me remind you that there is no reason that you can’t help your children both earn a degree and do so without mounds of debt. To do so, you need to be more careful about how you choose which school to attend. Perhaps a community college, combined with a state school or attending the school that will provide the most money or best financial aid package, but the idea of raiding your retirement account to allow your child to attend ANY school she wants, should not be an option.

The problem is that many parents are reluctant to have difficult conversations with their children early enough to prepare the kids to make different choices. According to T. Rowe Price's 2016 Parents, Kids & Money Survey, 62 percent of kids 8 to 14 years old expect their parents to cover the cost of “whatever college I want to go to.” A near equal percentage of parents (65 percent) will only be able to contribute some to the cost of college. There is clearly a disconnect between expectations and reality here.

You can’t really blame the kids, if the parents are not raising the issue. One main reason parents are reluctant to do so is that they feel bad about not being able to give their kids what they want. The survey found that 63 percent of parents agreed with the statement “I feel guilty that I won't be able to pay more for their college” and a 42 percent said they are losing sleep worrying about college costs.

These deep emotions are luring parents into dangerous territory. In addition to pulling money from retirement accounts or shortchanging plan contributions, they are going to hock. The survey found that more than half of parents (57 percent) are willing to take on $25,000 or more in debt to pay for their kids’ college education, with 19 percent willing to borrow $100,000 or more.

How are these people ever going to retire, if they are servicing these huge debt loads? 76 percent of them say that they will delay their retirement and 68 percent said that they would be willing to get a second or part-time job to pay for college education. Sounds like a great plan, except that how can they ensure that they will be able to hold on to their job or find another to fund the gap?

I worry that in an effort to provide the golden opportunity of college, many parents are actually creating a future burden for their kids. After all, if you are struggling to meet your retirement needs, your children will likely be on the hook for you. That’s why “Sometimes self-interested is the most generous thing you can be.”

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Social Security Refresher

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I like to write about Social Security around its anniversary date (President Franklin D. Roosevelt signed The Social Security Act into law on August 14, 1935). I have written a considerable amount about Social Security, some of which I used to compose this annual refresher. Social Security is a pay as you go system, which is funded by payroll taxes (the FICA line item you see on your pay stub). Every employee (and employer) pays a 6.2 percent tax on earnings up to a limit, which changes each year with changes in the national average wage index. This year, the Social Security wage base is $118,500. If you are self-employed, you have to pay as both the employer and the employee, for a total of 12.4 percent.

In 1977, Congress enacted a change in Social Security, whereby a planned 2011 rate hike became effective in 1990. As a result of the change, the government received more money from taxes than was necessary to fund the Social Security obligations, creating a surplus. According to The 2016 Annual Report of the Board of the SS Trustees, over the program's 80-year history, it has collected roughly $19 trillion and paid out $16.1 trillion, leaving asset reserves of more than $2.8 trillion at the end of 2015 for the Old-Age and Survivors and Disability Insurance trust funds.

With thousands of Baby Boomers retiring every day, the combined surpluses are now shrinking and are scheduled to be exhausted in 2034, the same year projected in last year's report. When the Trustees separate the two programs, they project the old-age fund (OASI) will be exhausted by 2035, after which it would be able to pay just 77 percent of benefits, while the disability fund (DI) is likely to be spent down in less than a decade--in 2023, at which point it could only pay out 89 percent of promised benefits.

The Trustees note that there are plenty of options available that would reduce or eliminate the long-term financing shortfalls in Social Security and Medicare. “Lawmakers should address these financial challenges as soon as possible. Taking action sooner rather than later will permit consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.”

Some of the options include increasing the Social Security wage base or the amount of payroll tax; means-testing benefits (tough to enforce); cutting benefits (highly unpopular); and slowly increasing full retirement age. This would likely phase in for younger Americans and it would occur over a long time horizon.

As politicians grapple with those tough choices, there is something retirees can do to help bolster their future income: wait as long as possible to claim Social Security retirement benefits. Although you can claim benefits as early as age 62, if you do so, your benefit will be permanently lower - for some as much as 25 percent less. This may not only be bad news for you, but if your spouse plans to claim one-half of your benefit, he or she also will face a lifetime of lower benefits. For those who need income, claiming early is not a choice, it is essential for monthly cash flow, but if possible it is so much better to wait.

If the system penalizes you for claiming early, it rewards you for waiting to claim benefits beyond your FRA. For every month you delay, you are entitled to Delayed Retirement Credits, which are worth 0.66 percent per month, for a total of 8 percent per year, until age 70.

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#284 Career, Investing and Life Advice from an NBA Alum

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Former NY Knick/Toronto Raptor John Wallace joins the show to discuss his amazing career, what it takes to succeed as a pro athlete and why he hates investment risk. After playing in the pros in the nineties, John now works for the Knicks, does public and motivational speaking, but his true love is philanthropy. John works with Winning Because I Tried, a youth mentoring program. A big thanks to James Altucher for connecting us to John!

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Thanks to everyone who participated this week, especially Mark, the Best Producer/Music Curator in the World. Here's how to contact us:

  • Call 855-411-JILL and we'll schedule time to get you on the show LIVE 
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#283 The Purpose and Passion of Work

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We all need to earn a living, but some are fortunate enough to find purpose and passion in our work. You don't need to be saving lives to find those qualities, says our guest Dave Isay, the founder and president of the nonprofit StoryCorps, an organization devoted to recording and archiving humanity’s wisdom through facilitated interviews. I serve on the Board of Directors of StoryCorps, which is how I have come to know Dave.

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You may have heard StoryCorp stories on National Public Radio, which airs a slimmed down version of the forty-minute interviews on Fridays. The mission of the organization is to preserve and share humanity’s stories in order to build connections between people and create a more just and compassionate world. (Check out Dave's TED talk here)

I invited Dave on the show to discuss his new book, “Callings: The Purpose and Passion of Work”, which presents stories that celebrate the passion, determination, and courage it takes to pursue the work we feel called to do. As I read the book, I thought back to the opening of the 1990 book "Flow: The Psychology of Optimal Experience," by Mihaly Csikszentmihalyi: "Despite the fact that even the least affluent among us are surrounded by material luxuries undreamed of even a few decades ago…people often end up feeling that their lives have been wasted, that instead of being filled with happiness their years were spent in anxiety and boredom." In the stories that Dave recounts, we meet people from an array of occupations who are anything but bored.

If you want to hear more StoryCorps stories, check out the podcast and if you want to record your own story, download the StoryCorps app!

Thanks to everyone who participated this week, especially Mark, the Best Producer/Music Curator in the World. Here's how to contact us:

  • Call 855-411-JILL and we'll schedule time to get you on the show LIVE 
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Preventing Senior Fraud

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In honor of the recent World Elder Abuse Awareness Day and the fact that senior fraud is practically an epidemic, here’s a sobering fact: It's estimated that fraud costs Americans over $50 billion a year and those 65 and older are often the targets. The reason is as true today as it was for legendary bank robber Willie Sutton: criminals go "where the money is"—and that means targeting older Americans who are nearing or already in retirement. Additionally, the bad folks have also latched to something that many have long suspected: as we age, we tend to make more emotional decisions. Researchers at the Stanford Center on Longevity, in collaboration with the Financial Industry Regulatory Authority (FINRA) and AARP, recently released a study that found older investors are more susceptible to fraud than younger ones, due to the emotional states — both positive (excited) or negative (angry)—they were experiencing.

According Doug Shadel, one of the authors of this new research, "Whether the con artist tries to get you caught up in the excitement of potential riches or angry at the thought of past and future losses, the research shows their central tactic is the same and just as effective…Cons are skilled at getting their victims in to a heightened emotional state where you suspend rational thinking and willingly hand over your hard earned money to a crook.”

To protect yourself or an older friend or family member, try not to act when you feel yourself in a heightened emotional state. If you are on the other side of a high-pressure sales tactic like, “Act Now”, “Time is running out!” or “This is a onetime offer”, run the other way. The same goes for any pitch where you are being asked to pay upfront fees, told that won a contest that you didn’t enter or receive unsolicited mail, emails, or phone calls for services that you were not seeking. Practice saying “No” or “I'm not interested. Thank you.”

The preceding approaches may seem obvious, but even some seemingly legitimate investment ideas may be unnecessary and expensive or at worst, fraudulent. According to the Boston University Center for Retirement Research, here are some red flags for shady investment pitches:

  • Look too good to be true.
  • Offer a very high or “guaranteed” return at “no risk” to the investor.
  • Suggest recipients do not tell family members or friends about the offer.
  • Lure prospective investors with a “free lunch.”
  • Cannot be questioned, inspected or checked out further.
  • Are so complex that they are difficult or impossible to understand.

In order to protect yourself or your relatives, the Consumer Financial Protection Bureau, FINRA and the SEC offer these tips:

  1. Sign up for the Do Not Call Registry at https://www.donotcall.gov.
  2. Shred junk mail, old bills, bank statements and any other documents that have personal identifying information.
  3. Don’t give out personal information over the phone unless you originated the call and you know with whom you are talking. Particularly safeguard your social security number.
  4. Be rude. At the slightest hint of pressure, feel free to hang up the phone or close the door.
  5. Never sign something that you don’t understand. Have a trusted and unbiased professional assist you when enter contracts or signing legal documents.
  6. If you hire someone for personal assistance services, in home care services, etc. ensure that they have been properly screened with criminal background checks completed.

Family members should encourage their older relatives to discuss any unsolicited offers before writing a check. If you suspect fraud or a questionable practice, call FINRA's toll-free Securities Helpline for Seniors (844-57-HELPS) or go to http://www.finra.org/investors/finra-securities-helpline-seniors.

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#282 Credit Report Reform Update

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Have you ever tried to correct an error on your credit report? If so, there is good news: the credit reporting industry is about to change dramatically. Earlier this year, the three main credit reporting agencies -- Equifax, Experian and Transunion -- agreed to a multi-phase settlement with the New York Attorney General. This fall, the agencies begin phase one of being more proactive in resolving disputes and changing the way they report on unpaid medical bills. To help untangle the new reform measures, we asked nationally-recognized credit expert John Ulzheimer to come back on the show to tell us what's going on.

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Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert who actually comes from the credit industry. He has served as a credit expert witness in more than 230 cases and has been qualified to testify in both Federal and State court on the topic of consumer credit.

As a reminder, the three main agencies report your information to the scoring companies. According to FICO, the company behind the most widely used credit score, the most important factors are:

  • 35% Payment History
  • 30% Total debt outstanding, which takes into account how many accounts you have and how close you are to your credit limit
  • 15% Credit history
  • 10% Credit Mix
  • 10% Number of inquiries—specifically those generated when you are seeking to increase your borrowing, perhaps because you’re shopping for a mortgage, car loan, or student loan.

John also reminds us that identity theft is the NUMBER ONE white collar crime. Criminals are looking for your name, address, date of birth and social security number. With that information, they can wreak havoc on your financial life. To help defend yourself, John recommends the following steps:

  1. Minimize broadcasting your personal information online
  2. Check your credit report monthly
  3. Sign up for free credit monitoring

Thanks to everyone who participated this week, especially Mark, the Best Producer/Music Curator in the World. Here's how to contact us:

  • Call 855-411-JILL and we'll schedule time to get you on the show LIVE