CHAPTER 1
Getting the Nest Egg Ready to Hatch
I’d like to live as a poor man with lots of money.
—Pablo Picasso
Like so many of my clients, Sharon came to me because she was worried sick about her money. A 67-year-old retiree, Sharon was so convinced she would outlast her savings that she’d begun depriving herself of the basic comforts of life, canceling her cable and turning the heat down in the winter. Most ominously, she’d started taking unnecessary risks. On the advice of her stockbroker, who was more concerned with maximizing returns than determining her real needs, she had invested in aggressive growth mutual funds to supplement what she saw as an insufficient nest egg.
While Sharon’s stockbroker encouraged her to make risky investments, I took a different approach: I sat her down and comprehensively assessed every aspect of her financial situation. I looked at all her holdings—her pension, her retirement accounts, her 401(k), her Social Security—and the post-retirement income she’d been drawing from these resources. Next, we went over her monthly lifestyle expenses to determine what she needed to live comfortably through her golden years.
What I found was that Sharon’s worries were largely unfounded, and that reallocating her money into a number of low-risk investments would provide a comfortable and sustained income for years to come. Had she kept her money in high-risk stocks, she likely would have lost up to half her nest egg in the recent economic collapse. Instead, ...
