Making money, not inheriting it, creates more financial security

by Thomas Kostigen

Most wealthy people earn their money, and because they earned it they feel more secure about keeping it. That's what a new survey reveals about wealth and values.

PNC Wealth Management conducted the survey of people with more than $500,000 of investable assets. The Wealth and Values Survey showed that 69% of "wealthy" Americans accumulated most of their money through work, business ownership or investments; 6% percent received money through inheritance; and 25% gained wealth through a combination of inheritance and earnings.
"An overwhelming number of affluent Americans earned their wealth and are more likely to feel secure during challenging economic times compared to peers who inherited their money," according to PNC.
These findings mirror most other studies of the wealthy and how they got rich. Indeed, take a look at the Forbes list of the world's richest people and you won't find many at the top spots who inherited their riches. This value set speaks volumes about making money, as well as about the prospects of losing it.
A couple of things separate the earners from the inheritors: First, earners were in control of making their money, and therefore feel more confident about preserving it or making even more. Second, earners likely took large risks to achieve wealth. As we all know, as risk increases, so does return. Accordingly, earners are likely more comfortable with the concept of risk.

Keep What You Make

Earners are more likely to be concerned about an economic recession, and more confident they can manage through a downturn. When asked about a recession, 36% of earners said it was a concern, yet 77% agreed with the statement "I feel I have a lot of control over my financial future."
Meanwhile, 27% of heirs expressed concern about recession, but 67% expressed confidence about control of their financial futures, PNC found.
Driving the point of risk tolerance home, the report says earners also have a higher risk tolerance than heirs: 39% of earners rate themselves as moderate to risky investors compared with 21% of heirs.
"There is a strong correlation between those who earned their wealth, their willingness to take risks and confidence that they can recover from a major negative financial event," says Thomas Melcher, executive vice president and managing director of Hawthorn, PNC Wealth Management's division that services ultra-wealthy clients.
"Those who inherited their wealth often view themselves as stewards for future generations," he adds. "As a result, they tend to be more conservative in their approach to investing."

Other Survey Findings Include:

Happiness is relative: Three-quarters of earners agree with the statement: "My financial success lets me feel less stress and worry," versus 50% of heirs. Meanwhile, 51% of earners agree with the statement: "As I have accumulated more money in my life I have become happier," compared to 33% of heirs.
More is not necessarily merrier: Heirs are more than twice as likely to say "Having a lot of money brings about more problems than it solves."
As luck would have it: More people who have earned their wealth (37%) agree with the statement: "The money I have made so far has come from being in the right place at the right time" compared with 25% of heirs.
Passing it on: Far more of earners agree with the statement: "Every generation should be responsible for creating its own wealth." And more earners believe that "It is more important for children to learn the value of money through hard work."
Which also seems to be a good lesson for adults.

One Minute Golf Lesson

Should I Stay Or Should I Go

Tahoe Trip

Plantar Fasciitis

Do your first few steps out of bed in the morning cause severe pain in your heel? Or does your heel hurt after jogging or playing tennis?

Most commonly, heel pain is caused by inflammation of the plantar fascia — the tissue along the bottom of your foot that connects your heel bone to your toes. The condition is called plantar fasciitis (PLAN-tur fas-e-I-tis).

Plantar fasciitis causes stabbing or burning pain that's usually worse in the morning because the fascia tightens (contracts) overnight. Once your foot limbers up, the pain of plantar fasciitis normally decreases, but it may return after long periods of standing or after getting up from a seated position.

Plantar fasciitis usually develops gradually, but it can come on suddenly and be severe. And although it can affect both feet, it more often occurs in only one foot at a time. Watch for:

• Sharp pain in the inside part of the bottom of your heel, which may feel like a knife sticking in the bottom of your foot
• Heel pain that tends to be worse with the first few steps after awakening, when climbing stairs or when standing on tiptoe
• Heel pain after long periods of standing or after getting up from a seated position
• Heel pain after, but not usually during, exercise
• Mild swelling in your heel

Conservative treatment

For most people, the condition improves within a year of beginning conservative treatment. Nonsurgical treatments that may promote healing include:

• Night splints. Your doctor may recommend wearing a splint fitted to your calf and foot while you sleep. This holds the plantar fascia and Achilles tendon in a lengthened position overnight so that they can be stretched more effectively.
• Orthotics. Your doctor may prescribe off-the-shelf or custom-fitted arch supports (orthotics) to help distribute pressure to your feet more evenly.
• Physical therapy. A physical therapist can instruct you in a series of exercises to stretch the plantar fascia and Achilles tendon and to strengthen lower leg muscles, which stabilize your ankle and heel. A therapist may also teach you to apply athletic taping to support the bottom of your foot.
  

Medications and procedures

If conservative treatment doesn't provide relief, you might consider:

• Corticosteroids. When other treatments don't work, your doctor may suggest one or two injections of corticosteroid medication into the region of the plantar fascia attachment at the heel for temporary relief. Multiple injections aren't recommended because they can weaken your plantar fascia and possibly cause it to rupture, as well as shrink the fat pad covering your heel bone. Another method for delivering corticosteroid medication is a technique known as iontophoresis (i-on-to-fuh-RE-sis), which uses gentle electric current to draw the medicine into the area of discomfort.
• Extracorporeal shock wave therapy. In this procedure, sound waves are directed at the area of heel pain to stimulate healing. It's usually used for chronic plantar fasciitis that hasn't responded to more conservative treatments. Early studies on this procedure reported positive results, but some recent studies have had limited success in treating plantar fasciitis. More research may determine if extracorporeal shock wave therapy is an effective treatment for heel pain, and if so, what kind of machine and treatment regimen seems to work best.
  Complications of this procedure may include bruising of your skin, swelling, pain, numbness or tingling, and rupture of the plantar fascia. This therapy isn't used for children, pregnant women or people with a history of bleeding problems.
• Surgery. Only a small percentage of people need surgery to detach the plantar fascia from the heel bone (plantar fasciotomy). It's generally an option only when the pain is severe and all else fails. Side effects include a weakening of the arch in your foot.

Frozen Grand Central

6 Blunders That Ruin Retirement Plans

By Katy Marquardt

Regular contributions to an IRA or 401(k) are a good start, but accumulating money is only part of the retirement-planning equation. Securing a comfortable retirement is a tricky process that requires careful planning; a few bad moves can cost you dearly in the long run. Here are six common missteps:
1. Not having a plan: A third of adults have no financial plan for retirement, according to a recent survey conducted for TD Ameritrade. Of the remainder of those surveyed, 46 percent said they have a written retirement plan, and 20 percent said they have a plan in their head. "So many people who have undersaved choose to ignore the issue rather than sit down and create a plan," says Joe Heider, president of Dawson Wealth Management in Cleveland. "It's almost like a fear of going to the doctor."
Retirement calculators are a start. Free counsel might be available through your employer's investment-advice program; otherwise, an investment adviser can help you plot your financial moves. Services range from a one-time financial checkup to a comprehensive plan that includes asset allocation and estate planning.
2. Underestimating life expectancy: Retirees are living longer these days, thanks to more healthful lifestyles, medical breakthroughs, and healthcare reforms. In 1955, Americans lived to be an average of 69.6 years old. The average life expectancy rose to 75.8 years by 1995 and to 77.9 years by 2005, according to the National Center for Health Statistics. Keep in mind that life expectancies are averages; many of today's retirees will live well into their 80s and beyond. Rosanne Grande of R. W. Rogé & Co. on New York's Long Island says her firm's plans run to age 100. "We invest for the long term, not the short term, now that people are living 30 and 40 years into retirement," Grande says.
One side note: As retirees' expectations about longevity increase, so does the role of the financial adviser. Grande is one of a growing number of registered financial gerontologists, who specialize in serving older clients.
3. Low-balling your spending: Would-be retirees tend to be too conservative when projecting their annual expenses in retirement, Heider says. "Chances are, a couple retiring in their early to mid-60s is going to spend almost as much in retirement as they did during their working career," he says. Spending in some categories, like travel, may increase. "For most people, spending on discretionary items and travel actually goes up in the early years of retirement," Heider adds.
4. Failing to plan for unexpected extras: Many people have a basic retirement plan in their head, with a general idea of their assets, monthly expenses, pension income, or Social Security income, Grande says. "But what they fail to factor in is extraordinary cash-flow needs, such as boomerang children living at home or extended care for aging parents," she says. A leaky roof or termite infestation could also put a dent in your budget. For such surprise expenses, Grande recommends building a little extra padding into your plan. Think of it as an extended emergency fund.
5. Overlooking rising healthcare costs: A 65-year-old couple retiring this year will need about $225,000 just to cover medical costs in retirement, according to Fidelity Investments. This figure, which assumes retirees don't have employer-sponsored healthcare coverage, represents a 5 percent increase over 2007 and a whopping 41 percent jump from 2002. Meanwhile, the number of large employers offering retiree health benefits is falling.
Employers are also increasingly shifting more costs to retirees through higher premium contributions and cost-sharing requirements. "It's scary, and it's very hard for most people to realize that the cost of the medical plan is going to go up 8 to 12 percent each year," says Ellen Jordan, senior vice president with Bryn Mawr Trust Wealth Management in Bryn Mawr, Pa.
6. Ignoring inflation: Don't underestimate the impact inflation will have on your retirement plan. If you're 65 today, an expense that currently costs $100 will cost $180 by the time you're 80, assuming an inflation rate of 4 percent. Plan your retirement with the assumption that the cost of living in your later years will considerably outpace that of your earlier years. Grande uses a 4 percent inflation estimate in her clients' plans.