Finding the right retirement income sources

What about the government?  Will Social Security income go away?  Hard to say.  Social Security income is a huge political football that no one wants to drop or be accused of ending.  As workers (a large electorate), we pay into the system and would like to see money out of the system.  Yet, the Social Security statement itself discloses that it predicts to pay on 78% of benefits in 2037 (http://www.ssa.gov/mystatement/currentstatement.pdf).  Even my clients in their late 50s don’t think they’ll get a dime of Social Security.  Here’s my take:  If it’s there, I want my clients to get their share and have that share be taxed as little as possible.  That takes some planning now.

What about employers?  Will employer pensions ever come back into vogue?  Unlikely.  They’re expensive and complicated to manage.  Employers faced with rising costs (medical insurance being high on that list) are looking to give retirement income benefits as cheaply as possible.  In years past that has meant the 401k, which for most highly compensated employees and business owners is inadequate.  The 401k was never intended to be the sole retirement benefit. It was designed to supplement the pension offered.  Even if my clients fund a 401k, we have to find alternate investment vehicles.

What about personal savings?  No one feels they’re saving enough.  That might be true.  Only to make it worse, no one feels like they made any money with their investments in the last 10 years.  There are many solutions here besides winning the lottery (and, by the way, if this is your solution, remember that you have to play to win – it’s always about the follow-through).  One of the tricks, I believe, is to find retirement income sources that provide tax-free income.  No, not the Roth IRA which most Bay Area families don’t quality to fund, and even if they did, they’d only be able to put away $5K.  Business owners (especially of C corporations), in particular, have potentially one of the best strategies to make this happen.  The other trick is to find non-stock market related investments.

The government might create a universal retirement funding plan.  You might win the lottery.  Or, you might just explore some of your personal savings options.

The following statements are not true

The mortgage business is a highly commoditized, highly competitive place.  I have no illusions about that.  I did however get lulled back into an illusion that every mortgage salesperson has the same level of advice, expertise, and service that Scott and I do.  That illusion has been blown, once again.  There’s nothing better than a respectable competitor to learn from.  There’s nothing worse than dealing with a “peer” that you’d be afraid to be seen eating lunch with.

I would never hire the person on the other end of the phone based on personality, but I’ll leave the personal out of this.  This poor sot probably has to deal with 20-50 calls like mine every day because he was well practiced, down to the verbal tics, in handling all my questions and objections.  However, I would never advise anyone to do business with him or his company because his sales tactics included the following paraphrased sentences, none of which was true:

     * You’re getting the best rate and preferred treatment because you were
        referred by your existing lender. (May grace befall upon the borrowers
        who are not preferred.)

     * You’re getting the best rate because we’re not a middleman and we go
        direct to Fannie Mae and Freddie Mac to get the best rate for you.

     * You’re getting the best rate because you qualify for special government
        programs, and we’re one of few companies that can offer these
        programs.

     * I can guarantee that we’re providing you the best rate.

     * I’ve closed over 1000 loans, and therefore I have the experience to tell
        you that this new loan is in your best decision you could make.

     * Why do you need to waste your time confirming with someone else who 
        doesn’t have experience in the business that I’m offering the best rate? 
        You’re a busy person.  Why don’t we just go ahead and wrap this up.

     * I’m a busy person. I was working on several other applications when
        you called.  I didn’t expect this call from you today.  I’m going to be
        busy tomorrow.  Can we set up a time when you’ll be around so I can be
        sure to reach you to follow up?

No sensitivity to the fact that my friend is sick.  Apparently not enough experience to notice the fact that my friend is in her upper-60s and might be receiving Social Security Income to quality.  And clearly not confident that he was offering the best deal because he was pushing for the commitment so hard it finally repulsed me.  It wasn’t even my loan, and I have pretty thick skin.

The lesson? If you have seniors in your life, make sure they get help with their financial affairs. The world moves very quickly, they often make decisions much more slowly, and they require more time to digest information and comprehend it.  Our culture wants speedy decisions, not quality ones.  The second lesson:  Don’t believe everything you hear from your own lender.