Financial Opinion and Insights

Boomers On The Bench

Jim Lorenzen, CFP®

Jim Lorenzen, CFP®

A recent poll conducted by MetLife included 500 Baby Boomers with $200,000 or more in investable assets.  What’s interesting is that they know why they’re paying a high price for keeping money in liquid investments because they see themselves in a vulnerable position – unable to maintain their lifestyle should unexpected expenses arise.

49% say they couldn’t cut spending by more than 10% without a dramatic change in lifestyle.  52% have had at least one unexpected expense in the past year that cost them $2,000 or more.  26% need money to help a friend or family member.  45% are using money from emergency savings to pay expenses.  22% used a credit card or other revolving debt; 9% took out a home equity loan and 4% borrowed from a retirement plan to pay bills.

Some simply become too conservative too quickly, often without understanding their true situation.  I recently had a client contact me saying his company may be relocating outside California – there’s a surprise – and, even though he’s a senior executive with a strong track-record, he wasn’t totally sure his position would be safe and wondered if he should reallocate about $100,000 of his equity holdings into short-term fixed income.   I must admit, my `gut’ reactions was the same as his.  I told him, “That sounds like a good idea, but let’s update your plan just to be sure.”

After going through the entire planning process using a `worst-case scenario’, the analysis of his current holdings revealed he had a much more secure position in place than he’d realized and that no changes were required at all!   This kept him from making what may have been a huge mistake – the kind that comes back to haunt you ten or fifteen years later, not to mention the current tax ramifications.

It pays to have a plan.


Jim Lorenzen is a CERTIFIED FINANCIAL PLANNER™ and in his 20th year of private practice as Founding Principal of The Independent Financial Group, a fee-only registered investment advisor with clients located in New York, Florida, and California.  He’s been a headline speaker at conventions throughout the United States, Canada, and the U.K. and has appeared in `The Journal of Compensation and Benefits’, as well as in The Profit Sharing Council of America’s `Insights’.    Jim has also appeared on American Airlines’ `Sky Radio’, heard on more than 19,000 flights.  IFG does not sell products, earn commissions, or accept any third-party compensation or incentives of any description.  Nothing contained herein should be regarded as tax or legal advice and the reader is urged to seek competent counsel to address those issues.   The above represents the author’s opinion and should not be regarded as investment advice which is provided only to IFG clients upon completion of a formal financial and investment plan.   For questions or comments, you can reach Jim at 805.265.5416 or through the IFG website, www.indfin.com.