Me: So now let me get to the heart of the matter as it applies to this example aka: retirement. (Remember I’m talking and using simple math, examples, and constructs to get a point across. As I stated before: I am not a financial adviser.)
Let me start off with a question that proposes a hypothetical yet at the same time makes a very salient point many never contemplate.
If you live to be relatively healthy to the age of let’s say 85 or 90 (and this is now more than norm today than just 20 years ago) and you are able to be productive in an endeavor regardless of what it may be. And, it was something you liked doing, while at the same time generated a sufficient enough income to cover all your expenses. How much, or rather, to use a Wall Street advertising term, “What would be your number?” i.e., how large would your bank account balance need to be all things being equal?
I won’t ask or make you ponder too long for its rhetorical. Basically the answer is Zero.
Now I know, it sounds like heresy at first blush. However, think about it for a moment. Anything over and above the example I gave as in “covered your living expenses” is extra, or a cushion, or safety net. In regards to what it takes to “live on?” As I proposed in the question “you’re still actively earning enough to cover all your expenses” so again, your “number” in the bank is whatever you deem it to be, but is not being used to “live on.” It just sits there idle. Does this construct make sense for now? (participants acknowledge in the affirmative) Great, so let me set up the next example.
So let’s use the age everyone basically uses as a touchstone: 65. Yet, let’s also use a little of the previous example to compliment and put things even more into perspective. If you, as I said earlier, will live a relatively healthy life going out to about 85 or 90 but we change just one thing: You do not engage in any activities that generate income that cover living expenses. You do just what you’ve been sold or told by Madison Ave. and Wall Street. In other words you’ re going to lay on the beach, play golf, and whatever else 7 days a week for the next 20 to 25 years after age 65. Now what’s your “number?” as in how much money you need to do it? $1 million? Far from it. $5MM? Not if you’re going to house it in “safe” harbors. You’ll eat through it far before you reach half say to the expected age of just 75. And that’s considering no turmoil, no set backs, no additional raising of taxes.
Let’s make it $10MM. Sounds like a good number right? And a lot of entrepreneurs see that as attainable. Unless you’re in Silicon Valley where comfort doesn’t set in until after $100MM. Remember, “everyone’s number is different” but its importance remains the same. i.e., “How much you believe you must have.”
I’m not going to ask how many here have any of the above “numbers” currently. That’s a personal matter and none of my nor anyone else’s business. Nonetheless I am going to ask this: Of the two examples I just laid out, which sounds more attainable? Zero in the bank yet – being productive throughout your later years covering your living expenses? Or – having to now double, maybe triple, maybe even exponentially grow what you now have – before your 65?
For some of you that needs to be done within the next few years. As I alluded in the earlier example, let that contemplation really play out in your own mind’s eye. Also, are you secretly or maybe not understanding fully the stresses and pressures you’re putting on yourself, as well as your family in worrying about just that? Some might be internalizing this as an exercise in futility.
I hope you understand what I’m trying to get at here. We allow ourselves to be brainwashed thinking we need or should be striving for one thing, but in the end, we just might be striving for something not worth the paper it’s written on. i.e., Some goal seek-ed Madison Ave., or Wall Street inspired bank balance. Rather, than thinking everything through based on real circumstances or alternatives we can understand deep down within our gut.
Instead of putting on strategies, or thinking through alternative scenarios that are truly relevant to our own individual lives; we head off in one direction told or sold to us, when quite possibly, that direction may be in fact – leading us down the absolute wrong path.
Everyone’s case is different but the general premise is not. Meaning: What is “retirement?” And I don’t mean the Madison Ave,, Wall Street styled version. I mean: Too – you!
Now I’ve covered a lot here and I know some are very skeptical of all this as you should be. But there’s a real reason why I’m so adamant and vociferous on this topic.
Unlike others – I was the poster child of the Madison Ave., Wall Street, version where “Easy St.” was no longer a dream but a reality. Then 2008 happened. And not only did it change the world, but it changed me and my thinking in ways I’m still developing, honing, and putting into real-time use.
I remember vividly just how frustrating, as well as “alone” I felt when trying to figure out not only what to do, but what the heck was going on during the melt down. I can’t begin to tell you how mad I was when speaking or listening to so-called “experts” that I could infer had absolutely no clue of what was happening, let alone what one or I should do.
I also knew others who were by all previous measurements “better off” than I was – frozen with fear. That’s another reason why I say the “number” as in “how much” in your retirement kitty may just be irrelevant. Because if you don’t know yourself what to do, and how you are to go about doing it. $100MM can go to zero almost, if not quicker, than $1MM can depending on just how you have it allocated.
So in an effort to try to figure out this predicament I now found myself in being “retired” during the worst financial crisis since the Great Depression. I concluded; the greatest safety measure one (as in I) could take, as well as one could have too help insure retirement on Easy St. doesn’t turn into homeless on Main St.: is too not think outside the box as to retirement planning. i.e., asset allocation, dividends, etc., etc., But too in fact strategize from the standpoint of “for retirement” there is no box. Or in other words – there is no so-called “retirement” and should never be. And if I thought and strategized from that viewpoint: real workable solutions that made both sense, as well as helped alleviate fear and confusion came rushing in.
So let me know go into what I mean by all this in real life examples…
Too me, the embodiment of this can be summed up in one of my favorite comedians who has since passed: Joan Rivers.
Ms. Rivers is the quintessential example of what I’m trying to get across. Let me ask you this and see if you can answer. When did she retire?
Some might say never. I would argue she retired decades ago. She retired when she decided no one else was going to call the shots or place the direction on what she would ever do going forward. Remember, she was one of the first women hosts in talk shows and was thrown aside in typical Hollywood fashion behind her back as she’s detailed many times. It affected her career as a comedian and much more for years.Then she decided to take control of her own life and run Joan Rivers “the business” according to her rules.
What she did was what I’m also trying to convey – she did things and ran her life doing things that were of interest to her. And, remained not only productive in life, but also, productive in earnings power.
She consistently reinvented herself taking no prisoners or asking anyone for permission. I would argue she was more of a force in both earnings power as well as relevancy in her 80’s than she was in her 50’s. What would it have mattered if she had $50MM in the bank when she was 50? She actively earned far more (as in through her jewelery business, shows, live appearances, etc.) than what $50MM in some “funds” could generate today in “safe” investments. I’d also argue the “returns” (“safe” means just that as in “cash” equivalent) at today’s rates wouldn’t have covered her current lifestyle. She continually earned year after year far more I’ll venture.
She’s far from the only one. Think of how many people when they decide “retirement” is just some number and eschew it go on for not just years, but for some decades if not right up until the actual day doing what they like or love. Being both productive as well as continuing to earn.
How about a Doctor? A lawyer? A self-employed business owner? ______________(fill in the blank) if retirement isn’t “mandated” many never do.
This whole “retirement” thing as I’ve come to now see it is nothing more than some form of a sham. And the “age” thing even more so.
Retirement as I see it should be more of a reinvention period of one’s self. Not an end, but a new beginning. Regardless of age. And I mean just that – any age.
Let me throw out a few more examples to get you thinking…
An example might be you’re a clerk, or general office staff nearing a mandatory retirement age of 65. Maybe you’re now 57 or what ever. What if you really like working with numbers? Maybe what would be better than trying to bank an additional $4 or $5MM in your 401K over the next 6 or 7 years (yes, I mean to be facetious yet that number may be closer to factual) you start taking classes at night, weekends, whatever – and obtain whatever credentials needed to become a certified accountant and start your own practice? Maybe getting a head start offering services after working hours and going full-time in your own practice at 65?
How about that you’re currently an entrepreneur and want to sell your current enterprise for what ever the reasons. Maybe you’ve just grown disinterested in it for whatever the reasons. But, it won’t generate the “number” Madison Ave. says you need to “retire.” So what! Sell it, get what you feel is equitable and maybe invest in another venture as a limited or working partner or, another business all together from the ground up?
Maybe you own a dirt piling business that has worn on your back and you can’t physically do it any longer because of age or whatever the reason. Maybe you need to start a “dirt consulting” styled business where your expertise is needed, wanted, and can return an income that suits.
I don’t know, but I hope you’re beginning to see my point. You only lock yourself into the proverbial “box” when you keep seeking solutions that deal with the “box” as a construct to begin with. Screw the “box” type thinking and let your imagination soar backed with real pragmatic actions and strategies – and the world of opportunities opens far wider and broader than any lid trying to be pried off on the whole “box” thing to begin with.
That’s where everyone else is focusing and in my way of thinking – losing the battle entirely before they’ve even begun.
This also does one other thing which I believe is a such a crucial aspect to all the above, it may be in itself worth more than all the rest. And it’s this: It puts one squarely in the game of life, at all times, to effectively deal with as well as possibly having advance insights to any oncoming problems others may not see, as to adjust what ever it is you are doing, and not only weather a storm; but also to possibly take advantage of situations that present opportunities that others are frozen in fear to contemplate – let alone act on.
Too me, that’s retirement I can live with. As for the box?
You can have it.
© 2015 Mark St.Cyr