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Money December 2013

Financial Fortitude

Sharing for Savings

By Karen Telleen-Lawton

In the case of the home exchange, much of the work is in developing the trust necessary to hand over the keys to a foreigner who may live halfway around the world. Would your home sustain damage or be burglarized by a nefarious exchanger? For sure, call your homeowners insurance agent to see what restrictions apply.

Dear Karen:

My wife and I are in our mid 60s – just retiring and slowly realizing our dream retirement may have been just a dream. We love travel, and we have done quite a bit of traveling, but to keep it up through the next couple of decades, we're going to have to get creative.

I'm looking at online photos of an apartment in Istanbul, right in the heart of town. It looks comfortable, if not luxurious, and the cost is, well, somewhere between practically free and prohibitively expensive. That's my attitude, anyway, after checking out a home exchange website. In exchange for housing in Istanbul, we would deliver to the apartment's owner equal time (more or less) at our home.

Now that I look around the Internet, I see we can trade lots of things. I'm tempted more than my wife. So, is this a good idea, or are we just asking for trouble? ~ Wary

Dear Wary:

The sharing economy has made a comeback. Trading labor and goods was common in early American days, when ranchers and farmers helped their neighbors raise barns, brand cattle, and harvest crops in exchange for labor on their own properties. In the last century we transitioned to a society of store-bought goods, a house for "every" family, 2.28 cars per household, and more televisions than people. But sharing's popularity has returned, largely due to the Internet.

Nevertheless, the Internet couldn't make sharing succeed if people weren't so inclined. In our slower, more sustainable-growth economy, sharing makes good use of people's slack resources. It's efficient. It allows consumers to try out several options before buying.

I just returned from my second use of AirBNB, reducing the cost of attending my college reunion by a good chunk. The accommodations were clean, if not elegant. In-home overnight bedroom rentals won't squelch the Four Seasons, but it can be a nice way to meet people, as ours proved to be.

There are definitely tradeoffs for the provider and the user. In the case of the home exchange, much of the work is in developing the trust necessary to hand over the keys to a foreigner who may live halfway around the world. Would your home sustain damage or be burglarized by a nefarious exchanger? For sure, call your homeowners insurance agent to see what restrictions apply.

Becoming a free agent has advantages like setting your own hours and working conditions. As retirees, you're not concerned about the lack of retirement and health insurance benefits, and you're not seeking a steady paycheck. But to make it work on your end on a regular basis, it involves quite a bit of hustling and marketing to make sure your place shows well.

 

Dear Karen:

I don't want to admit, but my husband has handled the finances all these years. I don't know a thing about it. It always seemed like a good deal: I take care of the spending side, both in good times and bad, and he pays the bills. Only now, his memory isn't what it used to be, and he forgets to pay bills and roll over maturing CDs. I don't want to be taken advantage of by someone if he gets senile or I'm widowed. What shall I do? ~ Anxious

Dear Anxious:

First of all, congratulate yourself (and your husband) for having taken care of your financial house all these years. And give yourself credit for managing the expense end -- that's no easy task. It also means you do understand finance, at least a chunk of it.

You're right to want to take the next step, for two reasons. One is that, statistically speaking, you likely will be the surviving spouse. Secondly, if you really have no idea about your income –  pensions, portfolio, and so forth –  you don't know what your spending level should be.

Given that your husband has taken care all this time, I should think he would want you to be prepared for the next stage. So the tricky part is presenting a plan in a way that honors all that he's done and prepares for the future without making him feel defensive or worthless. Start by asking friends for the name of a fee-only financial advisor –  one who does not sell any product except her or his advice. Meet with several and find one with whom you are comfortable. Then ask your husband to give you this as a gift. If he won't, then you should make this investment for the two of you.

 

Karen Telleen-Lawton, CFP®, is grateful to serve seniors  and pre-seniors as the Principal of Decisive Path Fee-Only Financial Advisory in Santa Barbara, California (http://www.DecisivePath.com). You can reach her with your financial planning questions or Gratitudes comments at  This email address is being protected from spambots. You need JavaScript enabled to view it. .

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