Let me ask you: What do you owe your mama?
Or your daddy? Or your brother and sister?
What would you leave your relatives in your will?
If you left them nothing, do they have a right to cry and complain?
These are the questions I pondered reading Amy Shipley's interesting story of Donna Junor, the mother of Sean Taylor, the Washington Redskins player who was gunned down in his Miami home in 2007.
In Two Years After Sean Taylor's Death, His Mother Faces a Wall of Hardship (Sept. 30), Shipley writes how Taylor's mother was left with nothing because the young player didn't have a will. Without one, the majority of his 45.8 nillion estate went to his 3-year-old daughter (and by extension the girl's mother, to whom Taylor was not married.)
His father, Pedro Taylor, got $328,000 from a joint account he shared with his son. Taylor's eldest sister, Monika Martin, received $650,000 from a life insurance policy.
Junor is crying the blues, saying she may face foreclosure. Except some things don't add up. It appears she only owes property taxes of about $6,000 and homeowner association dues of $1,400. These make up the entirety of the expenses she claims are putting her home in jeopardy.
Pardon me, but she's living in the home with a 22-year-old daughter. Between these two adults, they can't earn $7,400 a year to keep the townhouse Sean Taylor bought?
"I'm not looking for a handout, but I just don't think when you have a son in the NFL who was so progressive, his mother should end up this way," Junor told Shipley.
End up what way? With a house and a Mercedes-Benz?
Junor is looking for a handout. She is a prime example of someone living with a sense of entitlement. She's not an 80-year-old woman without the ability to earn a living. She's 49.
Some may see this story as a lesson in having a will. True, Sean Taylor should have had a will, especially if he had wanted his mother to have something from his estate. But to me the tragedy of this story is grown folks who won't take care of themselves because they expect to be rescued by others. I firmly believe you should help your relatives, but that doesn't mean giving them handouts, and it doesn't mean enabling them to continue to mismanage their (and your) money.
John C. Bogle, author of "Enough" and founder of Vanguard was unable to chat with us last week due to illness. Frances Kinniry from Vanguard graciously stepped in to take his place. Kinniry is principal of Vanguard and a senior member of Vanguard Investment Strategy Group. Here are his responses to a couple of leftover questions:
Q: What percentage of a 60-year-old retiree's portfolio should be in international stock, and what percentage should be in TIPs or other inflation defensive positions?
Kinniry: While your asset allocation would be based on many factors specific to you, generally we'd recommend that a retiree hold about 40 percent in US equities, 10 percent in international equities, 10 percent in TIPS, and 40 percent in nominal bonds. This provides continued growth during retirement - which can be a very long period of time - as well as real income.
Q: As my portfolio continues to deplete, is there a way I can re-evaluate it so I don't lose so much? I'm 26, so I know I have time for the market to bounce back. However, I planned to retire in 25 years, and to see it dwindle is so disheartening. I cut back retirement contributions from 8 percent to 3 percent with my employer match. Are there long-term areas that I should be looking at outside of investing in tech and international as I do now?
Kinniry: Time is on your side, and it is in some ways beneficial that you've been through this experience early in your life. It's good learning that you can apply over the next 25 years. The turmoil of 2008 is part of a normal market cycle-- in fact, equities have had a negative return one out of every four years, and the returns in 2008, while painful, were not beyond our expectation of what could happen. You simply can't expect stocks to outperform other asset classes, like bonds, without years in which the risk and volatility associated with stocks takes its toll. That's the risk-reward tradeoff. That said, over the long-term, we do think stocks will continue to outperform bonds as they have done historically.
I recommend increasing the amount you save towards retirement when you feel you are able. Generally, we believe most Americans need to save around 15 percent of their income for retirement; and that is based on a traditional retirement age of 65, rather than your earlier goal. It's even more critical in these early years, because compounding over a long period of time will work in your favor. We'd recommend that you broaden your exposure to the markets through a more diversified portfolio, like a total market index mutual fund. We believe that it's important to include international equities as a portion of an investment portfolio, but it typically would represent around 20 percent of your overall equity position.
This week's Color of Money Question drew a flurry of responses. The question: Is it worth going into decades of debt to attend college?
In the Corner of "Not Worth It:"
"No it's not worth it to go into decades of debt to attend college," wrote Mike French of Seneca, S.C. "When deciding on what college to go to and what to major in, a person should consider, 'Will I be able to pay this debt back with the average job with this degree?'" "It doesn't take decades of debt to attend college" says David Cooksey of San Antonio, Tex. "Those decades of debt were standards of living not tuition, books, a roof over your head and ramen noodles and bologna."
And the other side:
Kelle Gosa of Chicago, Ill. returned to graduate school after working for four years. "The price of education is devastating. You take the loans out and you live like a poor person until you pay them off always hoping that you don't have to move into someone's basement. It's not the best way to live but you have to sacrifice for what you want most in life, right?"
"As someone who borrowed $25,000 to go to college, with a wife who borrowed $40,000, we will be paying our student loans until we are well into our 40's," Karl Lundy of Des Moines, Iowa wrote. "However, I feel it was absolutely worth doing it, both for the additional income we have gotten because of our education and perhaps more for the education and experience itself."
DaRel Barksdale of Hyattsville, Md., says, "One reader suggested community college because it may be cheaper. If I'm looking to hire someone and one candidate went to Yale and the other went to community college and a state school, which candidate do you think I will hire?"
I would hope you hire the best candidate without judging their abilities based only on what college he or she attended.
I went to a state school and I'm doing just fine!
Charity Brown contributed to this e-letter.
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