By Tim Maurer
Giving Tuesday might officially be behind us, but let’s face it—we’re just getting started. The giving season is underway, with the holidays and year-end bearing down on us. So how can we transform one of the more stressful, and sometimes guilt-ridden, elements of the season into something more life-giving?
Whether you’re giving to a family member, a friend or a cause, please consider the following four directives as a guide to happy giving:
1) Give out of impulsion, not compulsion. Compulsion to give can arise from the mountain of expectations, perceived or otherwise, heaped upon us at this time of year. (Those expectations are more often self-imposed, by the way.) Impulsion, on the other hand, comes from within. Give because you want to, not because you have to. And don’t give if you don’t want to.
2) Plan your giving. Just because you’re giving from impulsion doesn’t require that you wait for an epiphany to direct you. Sit down and decide who or what organizations are on this year’s list, and how much you plan to spend. This will help ensure that you are not going to suffer in 2015 for your over-zealous, underfunded generosity in 2014. Stick to your budget.
3) Give creatively. What you give someone and how you give it tells him or her more than the mere fact that you gave. You could give your Goth-inspired nephew a Visa gift card that he can spend on anything. Or, you could target his love of music with an iTunes gift card. Or, you could give him Jack White’s latest “Ultra LP” on vinyl—it plays from the inside out and has a locked groove on side A. And it also shows that you were paying attention enough to know that he has a record player and would probably like that kind of music. Creativity increases the value of your gift.
4) Give participatively. Yes, I know “participatively” isn’t a word, but perhaps it should be. I encourage you to actively participate in your giving, physically as well as fiscally. Especially when it comes to charitable giving. You can write a check, have a positive impact and feel good about it. But you can also get involved, personally interacting with those receiving your financial gifts. These acts of giving can be life-changing, for the giver and the recipient, and this isn’t simply anecdotal advice. Studies back it up, too: “[S]ocial connection helps turn generous behavior into positive feelings on the part of the donor.”
That ever-popular song says this is the most wonderful time of the year. And while it can be, it’s also one of the most stressful times for far too many. Reframing how we view and practice giving can help transform this central element of the holidays from a burden into a blessing.
This commentary originally appeared December 5 on Forbes.com
I’m a speaker, author and director of personal finance for the BAM Alliance. If you enjoyed this post, let me know on Twitter or Google+, and click here to receive my weekly post via email.
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© 2014, The BAM ALLIANCE
By Jim Whiddon
So states Chris Farrell in his thought-provoking new book, Unretirement. He goes on, writing that “the last third of life is being both reimagined and reinvented into ‘unretirement.’ If the popular images of retirement are the golf course and the RV, the defining institutions of unretirement are the workplace and the entrepreneurial start-up.”
If Farrell is right, this could be a game-changer for many retirees, and our nation, in two key areas. First of all – perhaps not intuitively – it means that the seeds for a more vibrant economy are within our grasp as older workers come back into, or remain in, the workforce longer. Secondly, it could mean a substantial increase in our national collective intelligence because knowledge earned over multi-decade careers will stick around the workplace longer, helping train the next generation of employees. This could have significant implications regarding how people save for retirement, in the near-term and in the long-term, and both before and after beginning to wind-down (or in some cases wind-up) their careers.
Farrell believes that seniors can and will recharge the nation’s entrepreneurial energy. He makes a compelling case that the economic payoff of tapping into the abilities and wisdom of people in their 60s and 70s is enormous. He argues that the economy will expand, household finances will improve and concern over an impoverished retirement will fade away as living standards climb and the feared fiscal strain from entitlement spending will ease. “Shared interests between the generations in a job centric economy will take center stage,” he concludes.
Consider these thoughts:
Farrell maintains that older workers have competitive advantages, such as greater experience, developed networks of business contacts and established credibility. Technology has lowered start-up costs. Older entrepreneurs tend to have greater financial resources to draw on, and self-employment offers greater flexibility and control.
The field of opportunities seems ripe for seniors because the generation that follows the baby boomers (Generation X) is only about half its size. And while it may appear counterintuitive to some, the outcome of collectively longer work lives, Farrell argues, is a wealthier United States.
A widely accepted fallacy is that older workers staying on the job longer means fewer employment opportunities available for younger workers. Economist Art Rolnick is quoted on this subject: “They aren’t taking jobs from younger workers. They may be creating jobs for them.” In other words, in the same way that the economy is not a fixed pie or zero-sum game for our society at large, neither is the job market.
Additionally, Farrell maintains that we can “bury the conventional wisdom that younger workers and older workers are vastly different in their ability to create and innovate. Good employers typically value older workers for their experience, the knowledge they’ve built up over the years, and their proven ability to solve problems. Stumped colleagues will turn to someone with gray hair for advice.”
After all, Sophocles completed his Oedipus trilogy at age 90. Titian painted the magnificent Christ of Pity at 99. At 70, Ben Franklin began the task of winning French allegiance in our struggle for independence. Longfellow wrote a poem for the 50th anniversary of the class of 1825 at Bowdoin College. Cato learned Greek at 80, Chaucer penned The Canterbury Tales at 60, and Goethe finished Faust, also at 80.
Innovators gradually build their skills over a lifetime – calling on those experiences for inspiration and know-how. Baby boomer employees, for example, are known for lower absenteeism and greater interpersonal (“soft”) skills.
One key idea I gleaned from Unretirement came from understanding more about employment history in the United States. Farrell writes:
“The elderly in an agrarian society were valued members of the community, treated with respect. Longevity only added to their moral stature and burnished a reputation for hard-earned wisdom. In fact, Americans considered it foolish for the elderly to quit their jobs merely on account of age.
Employers in the emerging industrial society considered the elderly a spent force. Their accumulated knowledge and experience – much appreciated in agrarian times – were worthless in Smokestack America.
The efficiency gurus and their clients associated speed and efficiency with youth. A young worker would be better able to keep up with the demanding pace of the assembly line. Medical research reinforced the belief that by middle age creativity was essentially exhausted and, by old age, people were basically worthless, at least from an economic and business point of view.”
After reading this, a thought occurred to me: Some, if not many, employers in America view their workers as though we are still in the middle of the industrial age, not the Information Age. This hold-over attitude is a huge mistake. Why would I say that? Farrell continues:
“In 1930, out of 224 American factories investigated, 71, or almost a third, had fixed maximum hiring age limits; in 4 plants the limit was under 40; in 41 it was under 46. In the other 153 plants there were no fixed limits, but in practice few were hired if they were over 50 years of age. Little wonder with layoffs commonplace in so many businesses that the fear of impoverishment in old age ran deep.”
During the Industrial Revolution, a worker’s strong back was the key to business success – so younger workers were obviously needed. But in the Information Age, a worker’s brain is the key – and more mature and more experienced employees have the edge there. And the facts of the market are bearing this out as workers 55 and older are projected to account for 25 percent of the labor force in 2020, up from 12 percent in 1990. And 94 percent of surveyed employers said it was important to keep older workers on the job longer because of their talent and skills.
All of this leads to one inescapable conclusion. Senior entrepreneurship and employment is now a movement– a revolution in the making, if you will. As Farrell explains, “Management will realize that older workers are productive, creative employees as negative stereotypes fall by the wayside. The employer conversation about older workers will increasingly shift toward redesigning corporate benefits to help keep talent on the payroll longer.”
The ageing boomers are looking not just for an income, but also a community (many get bored quickly with traditional retirement) and, most importantly, a mission. That mission is to transfer wisdom to the next generation, whether it’s for 40, 30 or 20 hours per week.
“The grassroots unretirement movement is a major counterforce against the headwinds of aging, fiscal pressures, and educational letdowns…. The drive to lead productive lives well into the latter stages of life can generate economic dynamism and social creativity and, at the same time, reduce the nation’s fiscal burdens.”
It doesn’t matter if you are looking for an employment or an entrepreneurial opportunity. Or if you want to get involved again just to pass along your wisdom voluntarily. Either way boomers – it’s time to get to work!
Copyright © 2014, The BAM ALLIANCE. This material and any opinions contained are derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. The content of this publication is for general information only and is not intended to serve as specific financial, accounting or tax advice. To be distributed only by a Registered Investment Advisor firm. Information regarding references to third-party sites: Referenced third-party sites are not under our control, and we are not responsible for the contents of any linked site or any link contained in a linked site, or any changes or updates to such sites. Any link provided to you is only as a convenience, and the inclusion of any link does not imply our endorsement of the site.
Q:What are municipal bonds?
A:Municipal bonds are debt instruments issued by municipalities in any of the 50 states by the following entities: 1) territories, subdivisions, counties, cities, towns and villages of the state, 2) school districts, 3) agencies such as authorities and special districts created by a state and 4) certain federally sponsored agencies, such as local housing authorities. Historically, the interest paid on these bonds has been exempt from federal income taxes and is generally exempt from state and local taxes in the state of issuance.
Types of municipal bonds
The two primary municipal types are general obligation and revenue bonds. General obligation bonds are secured by the full faith and credit of the issuer and are generally paid through ad valorem (assessed value) property taxes. Revenue bonds are not backed by the full faith and credit of a municipality; instead, they are backed by a specific revenue stream such as water and sewer revenue or highway tolls.
Considerations when evaluating a municipal bond
It’s important to evaluate the credit rating and the sector of the bond. A bond’s credit rating provides information about the anticipated credit risk, which refers to the issuer’s ability to repay bondholders. The highest-quality bonds have a credit rating of at least Aa3/AA–. As far as evaluating the sector, numerous default studies have shown that certain bond sectors have historically had higher default rates than others. This is demonstrated in the chart below. It’s prudent to avoid higher-default sectors such as housing and health care and focus on safer sectors such as general obligation and essential-service revenues bonds, such as water and sewer or infrastructure projects. If a bond clears these first two screening hurdles, the next step is to review the financials of that municipality to see if there are any negative financial trends or underfunded pension issues that might not be reflected in the rating but could cause fiscal stress in the future. A final consideration is to evaluate where a bond is trading compared with its peers. If the bond is trading at a much higher yield than its similarly rated peers, that will send a signal that the market is pricing in additional risk that might not be seen on the surface.
Municipal Default by Sector, 1970–2012 (Source: Moody’s)
|
SECTOR |
# of Defaults |
% |
SECTOR |
# of Defaults |
% |
| Housing |
29 |
39.7% |
Water and Sewer |
2 |
2.7% |
| Hospitals/Health Providers |
22 |
30.1% |
Counties |
2 |
2.7% |
| Infrastructure |
4 |
5.5% |
Special Districts |
0 |
0.0% |
| Education |
3 |
4.1% |
State Governments |
0 |
0.0% |
| Cities |
3 |
4.1% |
Pool Financings |
0 |
0.0% |
| Utilities |
2 |
2.7% |
Other |
1 |
1.4% |
Copyright © 2014, The BAM ALLIANCE. This material and any opinions contained are derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. The content of this publication is for general information only and is not intended to serve as specific financial, accounting or tax advice. To be distributed only by a Registered Investment Advisor firm. Information regarding references to third-party sites: Referenced third-party sites are not under our control, and we are not responsible for the contents of any linked site or any link contained in a linked site, or any changes or updates to such sites. Any link provided to you is only as a convenience, and the inclusion of any link does not imply our endorsement of the site.