Ever notice how hard it is to say, “Okay Einstein…” without sounding sarcastic? So I’m no Einstein, but I am thinking about my own theory of relativity. Spoiler: don’t let the project of accumulation blur the enjoyment out of life.
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It’s a new school year for so many of our children, grandchildren, and neighbors. Maybe you’ve enjoyed the flood of perennial back-to-school photos. Some families have their children hold up chalkboard signs, to record the details—their new teacher’s name, their favorite color right now, and even what they’d like to be when they grow up.
I can’t help but imagine what surprises are in store for some of these little ones! Who among us could’ve known exactly what form of work would find us in the future? Bike courier, hotel manager, a director of photography who specializes in making food look good in commercials—did any of these folks call their shot as kindergarteners?
It’s an interesting question, and maybe we should keep asking it. What do I want to be when I… reach my next birthday? Or the one five or ten years hence?
What do I want to have in the next chapter of my life?
What doors would I like to keep open?
These might sound like daydreams, but even the hazy hunches of children can be revealing, if not instructive. Sometimes new clients visit our office with apologies ready: they don’t exactly know what their goals are, they don’t know what to ask for, or they can’t begin to imagine what will be possible down the road.
And that’s okay. Just like the question on those little chalkboards, a hunch is good enough. Memoirist Katrina Kenison wonders, “Who knows, really, where dreams begin?” Maybe we’ve been on a certain winding path since we were children. Maybe we discover what we’re about later in life. Maybe our circumstances change, and we get dealt a hand we didn’t imagine we’d ever be playing.
A friend of mine used to tell their children, “This is the plan… until it isn’t.” And that’s life, right?
It’s okay to settle on a general direction, even in your financial life. Growth, an eye on sustainability: these are worthy plans all by themselves. You don’t have to know the destination of every penny. Such a privilege means that you’re buying your future self some options. Resources bring flexibility.
You can always invest wisely, now; the “spend well” part can wait. And what a journey that will be! We’re glad to be here with you.
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Maybe you’ve heard the phrase “kiddie IRA”: it’s not a technical term. It refers instead to the use of a Roth IRA to help a young person start their investing career. Never too young?
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It seems that life used to be plainly segmented. First we got educated, then we worked, then we retired.
Financial plans followed suit: first we accumulated during our working years, then we spent in retirement – hopefully, not running out of money before we died.
Increasingly in the 21st century, life is sliced and diced. Periods of education may happen at any age. People remake themselves to meet the needs of the marketplace, or their own preferences. Stretches of leisure may be mixed in with periodic bouts of consulting or other work in the golden years.
Some people choose to retire to volunteering or a new business venture or employment in a more enjoyable field, or seasonally, or part-time. There are a lot of ways to live life these days.
In addition to changing lifestyle patterns, people are living longer than ever before.
In this new environment, financial plans and planning need to be more flexible, and serve different purposes. The key theme: flexibility.
1. Investment products that tie your money up for years are less appropriate than before, as changing circumstances could mean an unforeseen need for liquidity.
2. The accumulation of funds in traditional retirement accounts still makes sense. Adequate funds make work optional in later years, or enable volunteer work or even a business start-up.
3. It may pay to pay more attention to tax brackets, as shifting circumstances could change tax status from year to year. Techniques to take advantage of low-bracket years may reduce lifetime total income taxes.
The key, of course, is not what the trends are or what many people are doing, but what YOU want to do. Clients, if you would like to talk about this or anything else, please email us or call.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.
All investing involves risk including loss of principal. No strategy assures success or protects against loss.
All seven billion of us have the same job. Whether we are among the poorest or wealthiest, sickest or healthiest, a single task unites us: wake up every day and make the most of it.
Taking that one step farther, we each can increase our ability to do things, to be better, to be stronger. Beginning each day a little better, a little stronger than the day before, that helps us make the most of it.
I won’t pretend to know or prescribe what you should eat or drink, how you should live, whether to exercise, or give you health tips. My professional expertise is devoted strictly to striving to grow your buckets, for use in your real life.
When you entrust me to help you with your wealth, I owe you the effort to make the most of it. Wouldn’t it be better for you if my brain was a little bigger? After all, thinking is how I do my job. The Harvard Health Blog recently cited studies that show exercise boosts the size of parts of the brain involved in memory and learning.
So exercise may be helping me make the most of it, in ways that help you, too.
This is a win-win choice: I have other, selfish reasons for exercise that have nothing to do with you. But if Harvard is correct, you get an advisor with a bigger brain out of the deal.
This essay began with a focus on the day to day, making the most of it. Oddly, my longest-range goal brings me to the same choice about exercise. It will help me serve you until I am 92 years old.
This congruence between my fondest ambitions and my daily life is good for you, too. Win-win.
Clients, if you would like to talk about this or anything else, please email us or call.
When I was a young man, my father told me that the mortality rate is 100 percent. I apologize for speaking so plainly, but sooner or later there is a funeral in store for every one of us.
This sad fact weighs on many of the financial decisions we make later in our lives. The issue is that we never get to know ahead of time when our funeral is going to be. A new retiree might live another forty years, or they might not live to see their next birthday. Plans that make sense for one scenario may not make sense for the other, and we do not get to know which scenario we will face.
When possible, we prefer to invest for retirement on a sustainable endowment-style basis, aiming to generate portfolio income to live on rather than spending down principal: “owning the orchard for the fruit crop.” The longer you can maintain your principal, the less likely it is that you will outlive your money. This approach also has the advantage of leaving a legacy intact to pass down to your heirs, if that is a priority for you.
But not all of us are fortunate enough to be able to comfortably retire on portfolio income alone. And not everyone is content to lock away a lifetime of earnings without getting the enjoyment of spending it themselves. Spending your principal is also an option if you want to live more luxuriously, although this increases the risk of outliving your money—you may wind up merely trading future comfort for present pleasures. The decision you make at 65 may haunt you at 85.
None of us knows the future, life has a way of getting in the way of our best laid plans. Our preference is to plan for a long, healthy life: we believe it is better to have money and not get to spend it than it is to need money and no longer have it. But ultimately, the choices you make about retirement are a matter of which risks you’re comfortable with. Figuring out your priorities is your job. Once you know what you want to do, talk to us and we’ll see if we can help you try to do it.
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