March 31, 2017 • By Dennis Beaver
“Mr. Beaver, we have a very unique, messed up family situation, desperately needing some guidance,” the phone call from “Jimmy” began. The longer we spoke, what he described was anything but unique as many families confront similar challenges.
“My parents are in their late 70s, own their small home, are financially secure with no debt, but recently dad has begun attending free steak dinner seminars and investing in all kinds of things, losing money. When I talk with him about this, he gets defensive and tells me, ‘I know what I’m doing – I don’t want to out-live our money.’
“Even though everyone in the family gets along well, he is talking about moving to a retirement community, two thousand miles from us!
“Next,” Jimmy continued, “two of our three adult sons are total failures – lazy, irresponsible goof-offs. One is a 30 year-old momma’s boy from my first marriage. She gives him an allowance, pays his rent, car payment, cell phone, and he works part-time at a medical marijuana dispensary.
“The other is 21 and until we gave him a 30 day notice to move out, he did nothing except for playing video games. He has no ambition, is lazy with a capital L and financially irresponsible, like his older brother. Yet, we love them and worry about their future.”
And Jimmy’s concerns?
“How do I deal with my dad and address his worries of outliving his money so he doesn’t lose any more or moving away from their support system, our family. Is there a way we can provide our sons an income source that will keep a roof over their heads for the rest of their lives, but which they could not cash out and blow? Is there some book you can recommend we read?
“What to do when I get stupid”
“What To Do When I Get Stupid,” by Professor Lewis Mandell is the answer to Jimmy’s prayers. The former Dean of Business at the State University of New York at Buffalo has thoughtfully – and clearly – prepared a financial road map for the elderly, their children, and families with kids who will likely remain life-long failures, needing to be protected from their own financial incompetence.
Mandell is a founder of the field of Financial Literacy, and the book’s sub-title is, “A Radically Safe Approach to a Difficult Financial Era.” The opening chapters are what my reader and his father must read.
“After 60,” Mandel points out, “our ability of making sound financial decisions begins to decline.
Unfortunately, confidence in financial decision-making abilities, particularly in the areas of investment and insurance, actually increases with age as ability declines, leading to the likelihood of disastrous outcomes.”
I read Jimmy that paragraph the January day California emerged from its drought.
“That’s my dad!” he shouted. He would repeat that after hearing:
“Of far greater importance is the fact that as we age, we become more susceptible to sales pitches and pressure from those who target older people with assets…[at] free luncheons or dinners offered with sales seminars. We should resolve to not hurt the ones we love while we still have the mental capacity to do so.”
Why move? Aging in place
Introducing the concept of “Aging in Place,” you can almost hear Mandell asking readers: “If your house is the right size for just the two of you – and is paid for – then why move away from family and friends?”
“Living safely and comfortably in accessible homes as we get older, often to the very end of our lives,” that’s aging in place and requires, “accepting the fact that mobility decreases with age….ideally this means the safety of a single story,”
An income stream you can’t outlive
Who wouldn’t like to have a guaranteed monthly income for the rest of your life, regardless of how long you live or what dumb mistakes you might end up making along the way? “This is what an annuity can do for you,” Mandell tells us, and observes that, “Social Security or a defined benefit pension are forms of annuities, paying lifetime income.”
Benefits the elderly and Jimmy’s sons
Mandell is not selling annuities, rather, he strongly believes in this method of securing a guaranteed income stream which cannot be outlived. His book tells you which types to avoid, and looks at ways to make it impossible to cash it in early, thereby remaining clear of temptation – or being swindled.
In our discussion, he referred us to www.stantheannuityman.com, which is a highly informative annuity website. And, yes, there is a “Stan,” whom we spoke with, finding him a knowledgeable source of accurate information.
Regardless of your age, “What to do When I get Stupid” is an eye-opener, a great read.
Dennis Beaver practices law in Bakersfield and enjoys hearing from his readers. Contact Dennis Beaver.