retirement

What Did Don McLean Mean?

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The song American Pie is one of the most iconic pieces of pop culture of the last century. Don McLean used its poetic imagery to evoke events and trends both from the world of rock and roll and American society. The narrative he wove caught the imagination of millions.

Some of its references seem clear, while others have multiple interpretations. It seems like thousands of people took a crack at decoding the entire, long, song. From then until now, each listener constructs their own meaning from it.

McLean himself was loathe to interfere with the meanings that people drew. For decades he refused to say anything about the commentary of others or describe in greater detail his own thoughts about any of the references.

The single thing he did say has obvious applications to the things we collaborate on with you. In concerts and interviews, he would share what it meant to him: “It means I don’t ever have to work again if I don’t want to.”

Isn’t that what many of us strive to do with our working years? We use our skills and talents and effort so that someday we can say, “I don’t ever have to work again if I don’t want to.” Few of us produce an epic work at a young age that sets us up for life. But many of us, like McLean, depend on the fruits of our labor to achieve financial independence.

There is a process that turns your skills and talents and effort into wealth that may get you closer to your goals. It’s why we are in business.

Clients, if you would like to talk about this or anything else, please email us or call.


The opinions voiced in this material are for general information only and are 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.

 

The Worst State to Retire In

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It seems like everywhere you turn, there are opinions about retirement. We have not seen this particular bit of advice, so here goes.

After thought and study, we conclude that the worst possible state for retirement is… the state of confusion. Confusion may seriously impair the retirement experience.

• If we don’t understand the income potential of our lump sum balances, we may either be unnecessarily tight with our budget, or run the risk of winding up broke.

• Running out of money is a common and natural fear. Arithmetic guided by experience and knowledge may ease that concern.

• Decisions about Social Security benefits and pension payouts may have a large impact on financial security. The advice one gets at coffee break or at the water cooler may not be the best.

• Health care transforms for most people in retirement. Putting all the pieces together can be confusing. Medicare Part A, Part B, Part D, and supplemental insurance all enter into it. Personal health and financial factors play roles, too.

We advocate thoughtful approaches to major life decisions. A framework of solid information and the right arithmetic may help reduce confusion.

All in all, the state of confidence is a far better place to retire than the state of confusion. Clients, if you would like to discuss this or anything else, please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Have You Heard About Unretirement?

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Retirement is a fascinating topic. New ideas about it seem to pop up regularly.

For nearly all of human history, we worked while we could and stopped only when we couldn’t. The average person had no reasonable chance to accumulate capital on which to live.

But by the middle of the 20th century, things began to change. With Social Security and greater amounts of private savings, most people retired from work at some point. A new lifestyle was born.

Now, anecdotal evidence suggests that some people plan to work as long as they are able—at one thing or another. One client tells us of her plans to do something she enjoys. Another likes working at the state park. Consulting offers some a way to stay engaged, but on a less-active basis, either part-time or seasonal.

We also know people who simply never left their primary occupation after they reached normal retirement age. They enjoy the work and their coworkers, and could not see the point in quitting.

Obviously, this form of “unretirement” is not for everyone. Some go back to school, pick up new or old hobbies, volunteer for causes in which they believe, or spend time helping with family. Travel, reading… the list of things one might do in retirement is limited only by one’s imagination.

Although we each have our own ideas about what retirement means, we all have one thing in common. Our choices will be richer, more varied, and better if we have money. The option to continue working is a better situation than not having a choice because of financial necessity.

Clients, if you want an assessment about the money end of your retirement, please email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Made It! Age 62, Eligible for Social Security

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Yes, at age 62 I could claim Social Security benefits. But I won’t.

After talking with you for decades about your Social Security benefits and the tactics you might use in claiming benefits, I’m looking at my own situation. There may be lessons in it for others, so we’ll talk about it here.

Suppose my benefit at age 62 would be $1,500. That’s $18,000 a year! Why wouldn’t I claim it?

1. If I wait until later, my benefit will be larger. That’s $2,128 monthly at full retirement age (66 and 4 months) or $2,856 at age 70.

2. If I claim now, since I want to keep on working, my benefits would be reduced by 50 cents for every dollar I earn over about $17,000.

3. My benefits would be partly taxable because I would have other income of over $23,000 for the year, basically. (It’s complicated—consult your own tax advisor.)

4. Flexibility: A decision to defer claiming Social Security can be changed at any time in the future, if circumstances change.

Since I want to work to age 92, my guess is that I won’t claim until age 70. But that’s just me. Under what circumstances would it make sense to claim at age 62?

A. If your spouse qualifies for benefits twice as large as yours, check into claiming on your record at age 62 and changing to a claim on your spouse’s record at full retirement age. This gives you some benefit from your earnings record, which might otherwise go unused.

B. If you have an impaired life expectancy, an earlier claim might make more sense. A person who plans to claim at age 70 but dies at 68 ends up collecting nothing.

Clients, this is intended to illustrate some of the basic considerations about Social Security strategy. You can learn more at www.SocialSecurity.gov, where you may sign up for a personal account and obtain personal benefit estimates at any time.

Please email us or call if you would like to discuss this at greater length.


Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.

This is a hypothetical example and is not representative of any specific investment. Your results may vary.

Working Like a Dog

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I am happy as a clam, working like a dog. Where did those sayings come from?

Who knows whether clams are happy or not? “Working like a dog” does not actually seem to be too taxing. (My dog Bailey mainly sleeps, eats, goes on walks and plays—he spends very little time coaching effective investing behavior, his only real job.)

I am obsessed with my work. It gets a lot of my energy but in turn energizes me. My long-held goal of working to age 92 shapes my habits—I can’t work to age 92 unless I live to age 92. This has an impact on what I eat, physical activity, sleep habits, and everything else that bears on health and wellbeing.

This may have a key benefit for clients. At an age when some people are coasting toward retirement, we are striving to build for the decades ahead, focused on the future. Our widely recognized new media presence at http://www.228Main.com and related social media venues are examples of that focus.

Two key things over the past decade have forged our enterprise into what it is today. In the interest of sustainability (working to age 92), Cathy and I adopted a snowbird schedule in 2010—spending parts of the winter in a warmer place. A few years after that, family health issues began to impact my travel schedule.

The snowbirding led to a conscious process of figuring out our most important activities and paring back the extraneous. Talking to you, researching investments, and managing portfolios are those key activities.

The schedule challenges made a necessity of learning to delegate. An entrepreneur cannot build a reliable organization unless she or he is willing to find good people and entrust them with vital aspects of the business. This is difficult for many—but I had no choice.

Together, these factors enabled us to build a focused, effective organization to serve you and other wonderful people. By striving to invest only with those who are a good fit philosophically, we have the same story for everyone. The efficiencies of having everybody on the same page are enormous.

So yes, I am working like a dog. And swimming most days, walking every day, eating healthy, enjoying family (now including grandkids!), appreciating my surroundings, loving Beautiful Downtown Louisville, and of course, grateful to be trusted by you to help with your plans and planning.

Clients, if you would like to discuss this or any other topic, please email us or call.

Related reading:
1. About challenges making us stronger: https://228main.com/2016/12/12/kiln-fired-personalities
2. About focus: https://228main.com/2017/10/02/focus-people
3. About the investment philosophy we share: https://228main.com/2016/05/25/niche-market-of-the-mind


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Case Study: The Life of Mr. S, and Working to 92

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Long ago, I met a man in his late forties. He had just resigned one position and accepted another. Needing a place for a 401(k) rollover, he agreed to do business with me. Our methods and access to investments were quite limited then (I was still in my twenties!), but I did the best I could.

Through the years his life evolved and changed; like all of us, he had his share of joy and pain. His wife began to suffer a chronic illness. His industry consolidated which caused some moves from town to town. But his children all ended up in successful marriages and careers, and grandchildren came. I advised him on wealth management throughout, helping him manage challenges from family health expenses and other things.

At sixty-six he retired, fearing he had not saved enough. The size of the fruit crop he needed each year seemed too large for the orchard he had grown, so to speak. We devised a plan that gave him a chance for things to work, although without any guarantees.

Of course, through these years, our knowledge and experience and confidence and capabilities flourished. We grew together.

Mr. S is pushing eighty-one years old now; poor Mrs. S had her disease go from chronic to acute and she succumbed a short while back. Mr. S stays busy helping with grandchildren and keeping up his home.

His retirement finances have worked out well, although this is not evidence of anything to anyone else. Good fortune played a role, past performance is no guarantee of future results, and all that. But I still want to tell you what happened so far.

Over fifteen years, Mr. S has withdrawn more than he retired with—and he also still has a current account balance that is larger than when he started. He tells us it is like the endless coffee refills they have at the café.

I call Mr. S when I need a pick-me-up; his gratitude is boundless. This, friends, is why I want to work to age 92.

That gives us a little more than thirty years to help many more of you get to eighty with more confidence than you ever thought possible. If you are fifty or older now, we will do our best between now and then to earn your gratitude when you turn age eighty. Clients, if you would like to talk about this or anything else, please email or call us.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

This is a hypothetical example and is not representative of any specific investment. Your results may vary.

The Melting Pot Matures

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A few weeks ago the Nobel Prize Committee announced the latest round of Nobel laureates for 2016. Seven Americans were named to this high honor—and six of the seven were immigrants, born outside of this country.

Immigration is frequently a hot topic during an election year, this one perhaps more than most. On the one side, we are told that immigration is costing us jobs, lowering our wages, and causing more crime. On the other side we are given a moral argument, that we are a nation of immigrants who should welcome others into our melting-pot culture as we have welcomed those who came before.

We set aside the moral side of this debate; while we occasionally dip into moral philosophy, this blog concerns itself chiefly with practical matters of economics. And as a practical matter, there are very good reasons why we should appreciate the value that immigrants bring to our country, above and beyond whatever Nobel prizes they may win.

As a country we are facing a demographic crisis. Since the 1970s, we have been having noticeably fewer children per family than we did previously. As our generation reaches retirement age, record numbers of Americans are leaving the workforce. I still plan on working until I’m 92—but many of my contemporaries have other plans. As we leave, there are more openings left behind than we have children and grandchildren to fill.

This demographic wall creates a major drag on the economy: we want to grow our economy faster, but we simply don’t have enough workers to do it. For the past year we’ve seen the unemployment rate hovering at 5% and below. Even as the economy recovers and we start to add jobs, there’s going to be a very real question as to who will be filling them. The workers simply aren’t there. To some extent this is a regional issue—some of our employment woes could be fixed by having job-seekers move from economically depressed areas to thriving areas where jobs are being created too quickly to fill. But not everyone can uproot their lives for work, and where people cannot or will not relocate, the only alternative is to import workers from elsewhere.

Ours is not the only country facing this demographic crisis. We need only look at Japan, Europe, and other parts of the developed world to see what happens when an aging population is not replaced. Many first world countries have a lower birth rate and lower immigration rate—and, not coincidentally, lower GDP growth. We would do well to learn from their example what not to do.

This is not to say that we endorse open borders or encourage illegal immigration. We are a nation of law. We should have sensible laws that are enforced in a fair and even-handed manner. But to suggest that we should slam the door shut on immigrants is to ignore the economic reality we face. One of the best and surest ways to expand our economy is to add new people to it—and we will need to, if we wish to continue growing at a reasonable rate.


The opinions voiced in this material are for general information only.

Fruition, What a Wonderful Word!

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We’re inspired by recent conversations with clients and friends whose plans, as they say, have come to fruition. Fruition—the realization or fulfillment of a plan or project—scarcely begins to describe the satisfaction and joy we’ve seen.

The recent retirees after downsizing to a maintenance-free home, going to art festivals instead of pulling weeds, having more dinners with their descendants, seeing more ball games… people going on that Alaska cruise or the tour of Italy… hobbies becoming true avocations. These are some of the plans we’ve seen come to fruition for people we are close to.

A wise person once said that a plan is a dream put into writing. We are in the business of trying to make the arithmetic work for people who would like to try to make their dreams come true. We’ve written before about the best way to retire and the point is, dreams are personal. What are you trying to do? Where do you want to wind up?

One of the privileges of long experience in our work is seeing the realization or fulfillment of plans made long ago. But life sometimes throws curve balls. So we’ve also seen adaptations and adjustments made by people who would have preferred to avoid the need for adjustments. Not everyone we love lives as long as we wished, health may be fleeting, and circumstances often present a mixed bag. The point is, sound plans usually put us in better shape to deal with the unanticipated.

Money is not the most important thing in the world. But it is also true that resources give us options we might otherwise not have. Wealth may free up our time, and time is what life is made of. Dreams and arithmetic working together may make the best things more likely. If you would like to discuss your dreams and plans in greater detail, please write or call.

A Lesson From An Old Friend

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Surveys indicate that many Americans dislike their jobs. If you are among them, I hope you are not irritated by the enthusiasm I have for my work.

“Job” is the key distinction, however. One individual who had a formative influence on my life did not have a job—he had an enterprise. Dean Sack founded the York State Bank in the World War II years, among many other endeavors, and ran it to the age of 92. If you have ever wondered how I arrived at the goal of working to age 92, this is it. I met Dean when he was 76, eleven years after he retired—a retirement that only lasted six weeks!

Ironically, much of our work is devoted to helping people fund and find fulfilling retirement lifestyles. Most do not have control over their working conditions to the degree that I enjoy. So retirement is a worthwhile and laudable goal for most, if not for me.

When the Depression hit in 1929, Dean was an adult, at work. He fascinated me, a student of history—and face it, not many want to hear an old man’s stories. So we grew close. Among the qualities that Dean showed: a hunger for new ideas, and to learn; consistency and honesty and integrity, no pretense and no bull; a tight focus on the things he could control. He and others of his generation did much to build their communities and the world.

I was fortunate to observe so much wisdom at an early stage in my career. Thirty years ago, nobody talked about ‘work-life balance,’ but Dean was the model for an integrated life: being the same person at work and play, with friends and customers, day and night.

We stand on the shoulders of those who have gone before, as they say. Vast wisdom resides in those generations. The lessons we may learn cost nothing, but can be valuable beyond price. Here’s to our mentors and teachers and wise elders!

Feelings, Numbers, and Big Decisions

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Life comes with many questions, infinite in variety. Should I buy a different home, live somewhere else, go back to school, retire in the sun, spend time differently, have more children, get a dog, buy a second home, invest in solar panels, change careers, take Social Security now?

Feelings are vital to making good decisions about your life and plans. So are numbers. But using one in place of the other may lead to terrible outcomes.

“Know yourself.” Some wise person advised this back in the dawn of history, and it is the foundation of great decision-making. What do you want? Where are you going? Where do you want to wake up every day? What are you trying to accomplish in life?

Notice that numbers do not really enter into these things: this is the next step, when we do all the arithmetic there is to do. If we quantify everything that can be put into numbers, we will have a much easier time in actually making choices and decisions.

For example, one might have feelings about whether to start Social Security earlier or later. You may believe that if you claim benefits at the earliest age, you will be better off because you will ultimately collect a greater number of monthly payments. On the other hand, you may think that if you defer until later, you will be better off because each payment will be higher. These are feelings.

But when we do the arithmetic, we might discover that there is a break-even point out there that applies to you at a certain age. If you live longer, the numbers say deferring benefits is a better option. If you pass away sooner, you would have come out best by taking benefits early. Figuring out which option works best at what age is arithmetic.

Here’s an interesting thing about this decision: nobody knows the date that is going on their death certificate, so numbers cannot PROVE which choice is better. We won’t know until we find out. But obviously, numbers do help us better understand the meaning and consequences of our feelings.
We figure out what we want with our feelings. We learn everything we can learn from the numbers. We use both to arrive at a thoughtful, knowledgeable decision.

When people make decisions without any numbers or with nothing but numbers, sometimes it does not work out. “We deserve a large new home, so we are buying one,” or “Our taxes would be lower if we moved to another state in retirement, so we are moving.” Sure, you bet—but in each case, do the numbers work with all of your other goals and priorities and feelings?

We do our best to understand your feelings, your goals, your objectives, what you are trying to do in life. And we add all the pertinent numbers, in terms you can work with, so that you can make good decisions. Feelings and numbers: both are vital. Call or email us if we can help you sort things out.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.