Ideas About Retirement Planning

Retirement has a way of sneaking up on you. I retired in 2009 after working more than 50 years. Many of my friends and contemporaries have preceded or followed my ride into the sunset. Not all have done a good job of planning their finances. A few have had the wind-luck behind their sails; most have had to fight off the opposing wind.

The Espoused Theory vs. the Theory in Practice

Financial analysts tell us that there are three distinct phases to achieving our financial goals: (1) making money, (2) saving a good portion, and (3) making what we save grow.

Easily said, but not so easily done.

Most people are good at making a decent living. Those with higher skills or better education tend to do better than those who have no special skills or education. Those with entrepreneurial abilities often outperform those who are more content with working for others. If a family has two earners, that family will do better than the household with a lone earner.

Except for the lower 25^th percentile, Americans enjoy one of the better standards of living in the world. Unlike some other countries, we do not have a mandated national pension system, just a meager social security system.

Keeping or saving a good portion of our earnings is where you find the biggest trap. We live in a materialistic society. We are encouraged to spend. We are also encouraged to keep up with our neighbors. Mortgages, leases, credit cards, and other debt instruments lure us to spend most of what we earn, and sometime more.

It is a well-documented fact that the worst investment people can make with any surplus is to do one of the three things: buy a second home or time share, buy a boat, or buy an RV. Why? First, they rapidly depreciate in value, and second, they incur taxes and significant upkeep costs.

Soon the government, banks, and insurance companies claim most, if not all, of what you earn, leaving you in the red or with a paltry surplus. Social security is the main savings outlet for most. A few will make sure they also put something aside in the 401(k) or IRA. Public employees probably can have the most generous t retirement nest egg.

Some employees in fast growing sectors of the economy can earn stock options that can morph into sizable nest eggs. Of course, not all stock options turn into blockbuster winners. In fact many lose their value once the company falters.

Growing your hard earned savings is challenging. If you did not save enough to begin, you are not going to be growing much. If you do not have a solid investment portfolio, you risk having your savings shaved off by inflation. If the equity in your home is your primary asset, you can only grow by the percentage appreciation of real estate in your geographic area.

Most of us are not financial wizards. Therefore, it is wise to have a reputable wealth manager advise us as to our options, risks, growth potential and tax consequence. What has worked for me is the following:

·      Invest a portion in tax-free high yield municipals.

·      Invest a good portion in stocks that pay qualified dividends (taxed at lower rate).

·      Invest a portion in high growth stocks.

·      Diversify the portfolio so that risk is spread across industries.

Upon retirement what really counts in my view is that your income stream be as high as it was when you were working and with fewer obligations. In other words, make sure you earn more than you did while actively employed.

Downsizing

I dislike the term. To me downsizing is not a strategy, anymore than outsourcing was during my working years. In fact, the need to downsize is the realization or admission that we did not plan ahead well and that we might have dissipated some of our resources.

Many upon retirement are forced to cut back on their standard of living, housing, leisure options, and move out of their home. So, in the golden years, they are encouraged to move to low cost areas, domestically or internationally, so that they can stretch their retirement income.

I can live with downsizing as a result of health issues. Moving to assisted living is certainly good for those who are in need of ambulatory and/or care assistance. Now that we live longer, this option is a must for some.

Rightsizing

I am all in on resizing our situation without sacrificing the level of comfort we became accustomed during our glory earning years. New rules must be put in place to make the transition work.

1.    Articulate your priorities. For me, it boiled down to a level of comfort I felt I had achieved during my career.

2.    Payoff your mortgages. Eliminate any cash outflows that include interest payments.

3.    Payoff your credit cards. You do not charge what you cannot pay off at the end of each month. Credit card interest is obscene.

4.    Buy out any leases you might have for a car, boat, or RV. You keep these toys because you enjoy them and you use them, not because they are good investments.

5.    Establish a pro-forma budget. I don’t like to fly blind. I want to know where my money goes, and whether I can afford to let it go there.

Retirement should be the culmination of a life well earned financially. You should be able to do what you always wanted to do and in the style to which you are accustomed. It is not a time to tighten your belt. It is a time to be comfortable.  After all, you cannot take your money with you. Give the excess to charities or to help others in need. Encourage your heirs to earn theirs. Give freely of your time to others who need to be mentored, coached, encouraged, and supported. Many might have done so to help you.

Remember, for you, the future is now, not next week, next year, or later. It is now! Don’t postpone your life. 

Empty as much as you can your bucket list!

Table Manners

Have you observed how people eat? Have you noticed their individual idiosyncrasies? Have you paid attention to your own manners? I suggest that there are lessons we can learn by doing so.

Let’s examine the following styles:

Fast eaters – they rush through the meal. For them time is of the essence. They want to finish first. Who knows, they might have been raised in a large family where slow eaters don’t get much to eat. They don’t seem to savor the food as much in their eagerness to fill their stomachs. Many fast eaters are also big eaters. Most of these types rely on outside supplements to digest their food, e.g., anti-acids.

Slow eaters – they are the opposite; they take it slow all the way savoring every bite and making sure that they have chewed the food correctly. Who knows, they might have been raised in a small family, perhaps they were the only children. They do not seem to be hungry but somehow they manage to polish off their meals. They methodically go about their business and avoid rushing through afraid of getting indigestion. Some psychologists suggest that some of these characters were not weaned properly.

Intermittent eaters – these folks are basically pickers. They pick at their food. They examine it, they taste it, they settle on those items they find tasty or better looking. Who knows, they might have been raised in a well to do family where food was abundant and folks used to eat multiple meals but in smaller portions. A great example is the Spaniards. They eat 5-6 times per day and never seem to gain any weight.

Perfect eaters – they take their time and they savor each bite. They try everything in the plate settling for the most desirable morsels. They are into leisure dining. They treat meal times with respect … a time with family or friends, a break in an otherwise turbulent outside world. They love all kinds of food and do not mind trying new or exotic dishes. They do not seem to worry about their weight or calories intake.

I will skip commenting too deeply about Compulsive Eaters out of fear to offend friends and relatives. Many become obese and spend most of their lives searching for weight loss programs or cures. Even though they might shed pounds, they revert compulsively to earlier habits and put the weight back on. They satisfy their hunger with quantity not necessarily quality. Psychologists suggest that these people have unmet oral needs. I don't envy them at all. I feel sorry for them instead.

Now lets shift our journey in a different direction. Let’s look at tactics. This element might perhaps reveal a part of their personality:

Salting – Some folks salt their food prior to tasting it. They assume from the start that their food is not salty enough. The problem is that once you salt your food you cannot un-salt it. The only apparent remedy seems to be to drink more fluids. I associate this behavior with an impulsive personality. They seem to act before they think. I could be wrong on this one. It could probably be a learned behavior.

Salads – Europeans like to have their salad after the main meal as a way to fill up any empty spots in their belly. Americans, on the other hand, like to start their meal with a large salad as a way of stimulating their appetite. Internationalists might choose to skip salads all together eager to try an appetizer or two. I don’t know about you, I like salads as a starter in lieu of appetizers.

Dessert – this is the tell-all variable. Some folks do not consider their meal complete unless they have had some sugar. For the health conscious, fruit is a great substitute. For some the decision is not theirs, but their spouses. How many times have you seen a lady tell her husband to order a dessert so that she might taste it? Weight conscious people see pounds rather than slices or cups. They are terrified by the prospect. A few will smile and rub their hands when the treat arrives. These are my people!

Cheese – our French cousins will often by-pass dessert for a table full of exotic cheeses. Few other nationalities can keep up with the French. At last count, the French have over 225 different kinds of cheese. Italians and Spaniards like to mix things up. They will marry cheese with thick marmalades and call them Romeo and Juliet. I have observed this method in use in Brazil as well.

Aperitifs – some like to start things off with a Cinzano or a fruity wine. Others will choose instead a mixed drink such as martini, daiquiri, old fashion, a gin and tonic and so forth. This is territory for the sophisticates, connoisseurs and gourmands. Folks who live outside this territory don’t even know what an aperitif is.

Digestivo – as the name implies, this is a drink to help you digest your meal. It is the frosting on the meal. Again, this is sophistication and cosmopolitan territory. Folks living outside this territory do not seem to need help with their digestion. I envy these people! Life is much simpler that way.

By now you must be thinking that you have heard enough. Nothing new! The subject might even bore you.  I want to take you in a different direction now. Life itself.

Do you rush through life without stopping to smell the proverbial roses? Perhaps, this piece will suggest that you should slow down and enjoy the journey.

Are you a person of habit? In everything you do, you have a checklist that you feel you have to complete in order to make the trip worthwhile?

Are you a butterfly? Are you going from flower to flower catching and dispensing the pollen without stopping and feasting on a particular gift or relationship? You are not alone. Many people inhabit this territory.

Do you jump to conclusions too quickly and salt your view beyond what is necessary or even useful? Too much salt may get in the way of bonding with other people. It might even become a deterrent. It is also bad for your health e.g.; high blood pressure.

Are you investing the proper time and energy in things that matter to you? Your family? Your job? Your church? Your hobbies? Your health?

I hope to have stimulated in you the need to take a critical assessment of your life and to isolate the things that matter most to you.  There are no right or wrong answers to these and other questions. You are the ultimate arbiter as well as the ultimate beneficiary.

Have a roadmap on how to live a better life! It will help you stay on course without losing your God-given spontaneity. 

Good luck along your learning curve.

The Risky Business of Foretelling the Future

Predicting the future is a risky business, but one that gives us respite from the tedious everyday.  It is a trip into speculation and “I told you so” territory.

I start my journey with the following assumption. 

In a democracy, we often choose winners to counterweight their predecessors alleged lack of results or in opposition to them.  It has been suggested that the reason Trump won was Obama’s dismal performance. We elected Obama because we opposed vehemently Bush II’s performance. We selected Bush II to contravene Bill Clinton’s personal excesses. I could continue the list all the way back to FDR.

My point is that politics is a game of action-reaction. The pendulum has a way of swinging widely based on voters' reaction to actions taken by the incumbent administration. The larger the swing, the more likely we are to oscillate from one extreme to the other.

It looks to me that elections are guided by what has been called lagging indicators (rear view mirror) from the economy, war and peace, jobs, and so on. In a sense we look back at mistakes and choose someone who we anticipate might fix them. We rarely choose someone because of his or her views on issues affecting future generations. We prefer politicians who are good plumbers, you know, good at fixing leaks.  I recall two occasions when a president energized us about the future. JFK told us that we could go to the Moon in ten years, and we did. Wilson told us that the formation of the League of Nations would prevent future wars, but it did not. Maybe there have been others, but I don’t recall.

Scenario

It is 2033! 

The prior year (2032) we held the presidential elections. The Democrats won handily. For the first time we elected a woman as our president, and a woman of color to boot. Voters had enough of 16 years of Republican rule. It was time to change. The voters chose a progressive and liberal agenda over a conservative one. Voters also gave the new president’s party control of both houses of Congress.

Reflecting the mood of the country, the president’s cabinet is composed exclusively of women, LGBT, brown or black, most under the age of 45. Lower level positions will be assigned in such a way as to reduce, and eventually eliminate, perceived white privilege.

The new president has been in her job for about a year. Much turmoil and instability have marked her first year in office. Pent-up resentment and a sense of urgency have resulted in new laws and initiatives. The reaction from the right has been strident.   

New Laws

Congress has passed a flurry of laws to satisfy the progressives'  hunger. Here are the most significant laws passed during the first year:

·      Gun Legislation – all guns have been outlawed. Citizens are urged to turn them in voluntarily or face confiscation. Violators could be imprisoned for up to five years, Citizens can rent and still use guns at shooting ranges.

·      Immigration – all illegal immigrants have been given amnesty. The country has opted for open borders. Anyone can come to the U.S. to live if they do not have a criminal record.  Immigrants will be entitled to vote after one-year residency.

·      Healthcare – Congress has voted for a single payer system. No one will go without coverage. High earners will pay for the lower earners. No one shall be without insurance coverage. Immigrants will receive coverage upon arrival.

·      Energy – the use of coal and drilling for oil is outlawed starting 2020. All new cars will be electric starting 2040. All buildings and residences are required to install solar panels or face large fines by 2040. In Chicago and other windy cities, all residents will be required to take advantage of the wind by installing wind-propelled energy generation systems.

·      College Loans – Congress has forgiven all such loans. The outstanding debt will be repaid by increased corporate and high earners' taxes. New college loans will be made available upon demand without obligation to repay them.

·      Inheritance Tax – Congress has passed a law designed to tax estates valued at more than $ 15 million dollars at 75% rate. This law will singlehandedly reduce the number of super rich Americans.

·      Living Wage – Americans will be entitled to earn a minimum wage that enables them to live in the State in which they reside. The Bureau of Labor Statistics (BLS) will compute the actual rates semi-annually for each State. In 2035 California, for example,  the minimum wage rate will jump to $ 50 per hour while in Mississippi it will grow to $ 15 per hour.

Unfinished Business

The agenda for the remaining three years is an ambitious one. The intent is to radically transform America to an all-inclusive, diverse, and egalitarian society where society’s needs supersede the individual’s.  In particular, new laws will be enacted in the remaining years of the legislature to:

·      Reduce the size of the military so that funds can be redirected toward social programs

·      Disarm the police and implement a quota system for arrests in order to prevent profiling and police shootings

·      Punish non-PC language that offends anyone with jail time  

·      Legalize drugs starting with pot immediately

·      Expunge drug convictions and allow ex-convicts to vote

·      Establish price controls on drug companies

·      Require all employers with 50 or more employees to establish works councils so that union members can participate in the running of a company

·      Depopulate our prison system of  low level offenders

·      Establish clear boundaries around the role and practice of religion  

·      Expand the Supreme Court from 9 to 15 to break the conservative majority of 7 to 2 after the retirement of  liberal justices Ginsburg and Breyer, and the replacement of Thomas and Kennedy with young conservative judges

Reactions by Republicans

The reactions have been predictable and vehement. Fear that these changes will forever change their way of life, many have embarked on resisting at all cost.

·      Demonstrations have bubbled up in the heartland and throughout the south. The auto industry and the many satellite vendors and suppliers have notified their workers of pending layoffs.

·      35 attorney generals have sued the federal government on the grounds that constitutional rights are being thwarted: freedom of speech, right to own guns, and violation of collective bargaining laws.

·      The same states have deployed their national guard to prevent immigrants from entering their state without prior approval by the host state. The federal government is suing these states claiming that they do not have the right to prevent free movement of goods and people.

·      Fox News has revealed that the president, while in college, smoked marijuana and drank excessively. Several men have come forth to describe trysts they had with the President in college.

·      CNN debunked reports that the President had an affair with her driver while going to Camp David. The driver has not been identified. CNN attacked the revelation as fake news.

·      Conservative students at the University of California prevented Barak Obama from speaking. One professor unleashed a foul-mouthed rejoice upon hearing of Bill Clinton’s death.

·      Ex-partner of the president accuses her of infidelity and chicanery during their seven-year relationship. He broke up with her after learning of her relationship with another woman.

·      Clubs have been organized nation-wide to resist, resist, and resist any and all actions undertaken by this administration as un-American and in violation of the constitution.

·      Fox News is pillorying the administration’s every move and criticizing each and everyone as being incompetent, corrupt, and lacking the high moral standards they demanded of their adversaries.

·      Lurid videos on the Internet question the president’s personal character and scandal-ridden background. President labels these stories as fake news.

·      Thousands of Republicans have left coastal states unable to accept what they perceive as a totalitarian shift toward Marxism.

·      The economy is not doing well. Unemployment is up and the national deficit is growing. The stock market has been tanking out of fear for the survival of the free enterprise system.

·      Ford and General Motors have sought bankruptcy protection as they shift production to electric cars and trucks. Chrysler-Fiat is shifting all car and truck production south of the border. About 250,000 auto workers are affected.

Reactions by Democrats

The response from the Democrats has been vehement as well.  They see the Republican tactics as obstruction and resistance to the orderly transfer of power. Many are calling for action:

·      All dissenters and troublemakers should be jailed after a quick summary court appearance.

·      Grass root efforts should be encouraged to take over the governorship in enough states to permit the elimination of the Electoral College in favor of national elections for President and Vice President.

·      All Democrats are encouraged to watch at least one of the two cable networks and three main media channels: CNN, MSNBC, ABC, CBS, and NBC to prevent them from folding due to major drop in their viewership.

·      Counter demonstrations should be organized to offset the nightly spectacle of Republicans demonstrating against the incumbent administration.

·      In keeping with community organizing principles, the administration should increase recruitment of immigrants from Black or Brown countries in order to gain a voting advantage. Immigration from Europe, Australia, and other predominant white countries should be halted indefinitely.

·      Intellectuals continue to highlight the merits of a classless, more equal and just society. They remain unconvinced that those who perform more or better should receive more of the rewards. Their philosophy remains "to each according to his/her need, not his/her accomplishments."

Reality Testing

Unreal? Perhaps! Imagination has few boundaries. We are all free to imagine whatever suits our adventuresome mind. But I bet that most, if not all, of these "predictions" might come to pass.

Questions still remain. 

Will we be better off as a country or will be overwhelmed by our internal schism. 

The electorate is split and the two major parts are quickly moving into extreme territory. Each clings to its own view of America … perhaps without likelihood of reconciliation.