Category Archives: How to save for retirement


How would you like to automatically spend less and protect your identity just by using cash in place of plastic cards. Two things most of us are concerned about especially during this new age of hacking. Many of us enjoy some level of fraud protection when using credit cards. If our card number is stolen, we can file a complaint and not be responsible for the charge. This wonderful benefit is why I use credit cards.

However, I met a vendor on vacation recently who told me he got rid of his cards forever. When I asked why, he said that his identity was stolen in the Target hack a few months ago. He claimed he never wanted to go through that again, so he only uses cash now. Beside identity safety, the very use of cash changes how we view our spending. The purpose of a card is obviously for ease of use. But, it has become so easy, it is a distraction to our perception of spending. Since we do not deliberate over our spending, we do not experience the “pain of payment” according to some studies. When we perceive this pain, we spend less.

We also value our purchase differently depending on how we buy it. “Across four experiments(1), we demonstrate that consumers perceive and evaluate the same products differently when primed with credit cards as opposed to cash. Specifically, when credit concepts are activated, people attend more to benefit aspects of a product whereas when cash concepts are activated, people attend more to cost aspects of the product being considered (i.e., the costs associated with product acquisition and use).” In other words, using cards takes our attention off the price and onto the product. Using cash reverses this perception.

Besides spending less and protecting your identity, I’ve noticed that using cash lowers the price of retail items. I bought some art from the above vendor who has a retail price of $60, but only $50 for cash without tax. I did not have the cash at that time and ended up paying $65 with tax. That is a 15% premium I could have saved. I recently had surgery, but since I don’t have health insurance, the cash price they gave me was 50% of the normal price. Remember, vendors have processing fees with cards that eat into their profit. So, they prefer cash too.

The above article also mentions a study that found using cards can be bad for our health. Using credit cards deludes us into making over-indulgent purchases that are not good for us. Weather it is eating or drinking to much, it appears that most purchases with cards can cost us in more than one way. So, lets trick ourselves into saving money starting right now.

In conclusion, using the simple method of cash payment:

1. Helps us spend less

2. Helps protect our identity

3. Helps get a better retail price

4. May even be better for our health

From: L. Johnson

(1)Chatterjee, P., Rose, R. “Do Payment Mechanisms Change the Way Consumers Perceive Products?” 11-13-2011. Chicago Journals, Univ. of Chicago Press. Retrieved on 6-23-2015 from:–article.pdf

How to Save for Retirement

How to save for retirement is a simple question that often begets a simple answer, save more and spend less. This is certainly a case of easier said than done. Just like loosing weight, all you have to do is just move more and eat less. I wish it was that simple. However, it’s always harder to do because it involves changing our behavior.

More specifically, I’m talking about habitual behavior that we all rely upon. All of us have our own patterns of behavior at work, home, with friends, family, and even in money management. These behaviors allow us to rely on prior adjustments to maintain a sense of control over our environment. Its human nature to want consistence, reliability, and even predictability in life. Otherwise, life seems chaotic and we feel out of control. This can lead to stress and anxiety.
We can all agree that habitual behaviors help make life easier, but what if some of these same behaviors are counter productive? A common example is someone who makes a good wage, but doesn’t save. We don’t want to alter the habitual behavior of earning a good wage, but we want to change our behavior to be a saver.

Our saving habits most likely started in childhood. Our parents were our role models, but our socioeconomic status matters too. Many of those from a lower income family are very cost conscious even as they move into the middle class. They often keep frugal habits despite earning more. These patterns from childhood can become deeply ingrained. Occasionally, the news reports a homeless man who has a million in the bank. He lives that way due to these deeply ingrained frugal habits from childhood.

If you were raised middle class or higher, you are likely to have less anxiety about money. But, you may end up saving less and spending more due to this complacency. I’m not saying you need to feel anxiety to save, but you do need a plan. It seems that the middle class, most of America, has fallen into this pattern of not saving enough for retirement.

By the time you are near retirement, your behavior patterns are well developed as a result of the many years of use. Changing these long term patterns is very difficult and often fails. It’s natural to return to behaviors we are comfortable with. So, if we involve automatic savings before we receive the money, we don’t have the nagging pressure of saving.

I like automatic savings because you often forget about it. There is no requirement to monitor or change your behavior as the amount to save is pre-arranged. The best automatic savings are the many retirement plans that invest your money pre-taxed, IRA, SEP-IRA, 401k, 403b, etc. You must maximize these plans weather there is matching or not. However, it’s a mistake to stop there since we are still not saving enough even with these plans.

Because saving does not come naturally, we must have an after-tax plan like a Roth IRA or an investment account as well. Since this is after tax, you’ll need to set up an automatic deposit yourself. The best method for all our savings is pre-arranged because we don’t have to consciously decide to save each payday, we don’t feel stressed or deprived, and are more likely to continue the saving program as a result. After all, Social Security is pre-arranged and its been successfully paying out benefits for a long time. We’re just extending this model.

How much to save for retirement? Of course, this answer is different for each person. Some say 10% or 15% is good, but they are not retired. I’m retired and I can certainly tell you the more you save, the better. I forget percentages and save as much as I can. I notice that people adjust their lifestyle to accommodate whatever their income tends to be. Getting used to living modestly is a good prelude to retirement sustainability.

Many writers claim you’ll need a huge nest egg of millions to last 30+ years in retirement. I see this as a scare tactic to get you to buy their product. The truth is that income streams are the foundation of retirement for most of us, not a huge savings. Social Security, annuities, dividends and interest, and any work income are distributed to us over time. So, it’s a continual income stream that provides us with security and sustainability in retirement. In other words, don’t panic if your savings are low, just work on maximizing the income streams.

A great method for reducing day to day spending is to use cash. When we pay with plastic cards, we become detached to the amount spent. Counting out the amount with cash heightens our awareness and reduces our spending (1). There are certain times when credit card protection is needed, but for day to day spending, cash can help balance your budget.
A realistic attitude is also needed to accept some economizing in retirement. We know we have to spend less, but we don’t want to feel deprived. So, our retirement identity is a successful person who creatively manages their money and lifestyle to adapt to the ever changing economic conditions of our time.

Recommendations to save for retirement:

1. Maximize your contributions to your pretax retirement plan

2. Set up additional automatic contribution to an after-tax retirement plan

3. Contribute as much as possible in the above plans

4. Use cash instead of plastic cards for daily purchases

5. Learn to economize and view yourself as someone who successfully adapts to the ever changing economic conditions

6. Read the chapters on Money Makes the World Go Around and Creative Income

1. Chatterjee, P., Rose, R.L.(Vol. 38;2012) “Do payment mechanisms change the way consumers perceive products”;; Retrieved on 2-5-2014 from:
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Do Women Need a Female Financial Advisor?

Do Women Need a Female Financial Advisor?

Would it surprise you if I told you that women are better money managers than men? It starts with a different relationship with money. Women do not view money as the ultimate goal, tend not to flaunt it with objects that are symbolic of success, and don’t involve it in their identity to the extent as men. Becoming a millionaire is usually not the final accomplishment and stopping point for women. Instead, money is a tool that enables women to enjoy the benefits and freedoms of life.

As a stockbroker, it became clear to me that women are more careful and thoughtful about risking their money. They are not trying to hit a home run in the market, but look for stability and safety in an investment. “How safe is this,” was the most common question and should be asked at every turn. So, most women tend to have a similar relationship with money.

Since men just view money differently, their risker mind-set interferes with the core money relationship women have. But, what bothered me the most about being a stockbroker, is that women were treated differently and even inferior by other men. It was not uncommon to see a male broker talk to only the man when a couple came in for advice. I understand that it is a male dominated field, but there is no excuse for this behavior.

In retirement, low risk investing is not only practical, its essential because you don’t have time to start over. A study(1) found that female hedge fund managers out-preformed men by 6% over a nine-month period in 2012. A hedge fund, originally named to hedge against market losses, has evolved. Now it is a managed fund(not indexed) that is less regulated in terms of using leverage. Using leverage dramatically increases investor risk.

This study points out four primary differences. 1. Women are less competitive and less preoccupied with beating an index. 2. Women take fewer risks in the market as with other areas of life. 3. Women do more homework and stay in investments longer. 4. Women realize they are not in control. Realizing you are not in control of all factors gives women the perspective to not panic. Level heads will prevail.

So, women need a female financial advisor because:

1. Your relationship or how you view money is similar on an emotional level.
2. Safety and sustainability of your money is the priority, especially in retirement.
3. Female advisors tend to establish a more personal relationship with clients.
4. Women, with the same experience as men, are better investors on average.
5. There is a deeper sense of trust with another woman.

More at:

(1) Sightings, T. (1-7-14) “4 ways women make better investors” Retrieved on 2-28-14 from: