Wealthinking by Paula Hogan

When the financial headlines gather attention with either positive or negative news, all of us tend to wonder what that might mean for our personal portfolios.  It is not uncommon for clients to ask their financial advisor about adjusting their portfolio in light of, for example, headlines about unrest overseas, what the Fed just said, or in response to a new release of economic data. 

Financial life transitions are not an individual matter, and they are also not always only about money. 

When someone close to you graduates, marries, gives birth, dies, confronts a serious health issue or encounters any other financial life transition, it does not only affect them. You also close one door and open another. Being affected secondarily by the financial life transition of a family member is a common situation, but not always well recognized or well addressed.

In college, although I majored in Economics, my roommates were for the most part English majors and they read some awesome books.  Now, later in my life, I am circling back to read some of those books myself including currently Dante's Divine Comedy. 

Last week we explored how to frame the decision of whether or not to convert a portion of your portfolio into lifetime income. This week, in the last of a 3-part series on income annuities, we take a closer look at how to shop for retirement income products. 

In last week's post we opened up the topic of the annuity puzzle. This is the perplexing situation that even though it can make a lot of sense to gradually convert a portion of one's portfolio into inflation-protected lifetime income in retirement, few people actually do so. In fact, there appears to be a fairly low rate of annuitization. Life annuities are not widely popular.  

At an interdisciplinary professional conference this week there was yet more vibrant and helpful discussion about public policy and financial planning for retirement.  It was a pleasure and an honor to be one of the presenters at the 11th annual Employee Benefits Symposium hosted by the John Marshall Law School Center for Tax Law and Employee Benefits on Monday. The topic this year was America's Retirement Crisis: What Can Be Done? 

Imagine walking into the house of someone close to you, perhaps a dear friend. She’s just had a stroke and will be incapacitated for several months, perhaps permanently. You've offered to keep her daily finances afloat while she is unable to do so for herself. In her legal papers, you are her named agent. Where would you start?

A recent post detailed the complexity and nuances of personal spending decisions. This week let's take a closer look at some cash management strategies that actually work.

1. Structure is your friend; poor man's bookkeeping works.

If all of your income comes into one account and then is dispersed helter skelter to various planned and unplanned spending, it's hard to keep track – much less manage – overall spending.

A central challenge of financial planning is resolving the awkwardness that comes from the fact that income and expenses don't flow through your checkbook in the same rhythm. Compounding the issue is that most of us think of income and expenses in different units. If you ask someone, "What is your income?" the answer will likely be an annual amount. But if you ask, "How much do you spend?" the answer is almost always a monthly amount. Good luck managing that disconnect!

Here is a fun chart – a map of the world with countries scaled to reflect the size of their stock market (view a full-size PDF of the 2013 World Market Capitalization chart). Notable features include the fact that the global market is now $37.5 trillion as of December 31, 2012, up 18% from the prior year-end. But how might this map inform our thinking about international diversification and investing in the global stock market?