WHEN I DECIDED to retire, I kept asking myself, “Do I have enough money?” If I’m lucky enough to live a long life, my savings might have to last 35 years.
My coworkers, however, had a different question. “Hey Dennis, what are you going to do with all your free time?” I was asked that question so many times it became annoying. I soon realized they had doubts about how they would stay busy during retirement.
IN SUMMER 2011, a rural Illinois man named Wayne Sabaj was in his backyard picking broccoli, when something caught his eye. Half buried in the dirt, he found a sealed nylon bag. Inside was $150,000 in cash. For Sabaj, who was unemployed and had, in his words, “spent my last $10 on cigarettes,” this was a godsend.
Though it remains a mystery who had buried this particular stash of money, these sorts of finds are not uncommon.
SOCRATIC DIALOGUE, anyone? Today, we’re tackling three questions. Almost all HumbleDollar readers will, I suspect, readily answer ”yes” to the first two questions—and balk at the third.
1. Are markets efficient? We can debate just how efficient the market is. But most readers, I suspect, will agree that the financial markets are sufficiently efficient that there’s no easy way to score market-beating gains—especially once we factor in the investment costs involved.
TWENTY-FIVE YEARS ago, I found myself quite unexpectedly spending a night in Reno, Nevada. Gambling was the obvious form of evening entertainment, but money was tight back then. A friend convinced me to splurge and spend $20 playing a slot machine. My measly 25- and 50-cent wagers kept me entertained for nearly an hour, but when I was down to my last few quarters, I bet them all on one final play.
The machine immediately lit up with a colorful array of flashing lights and I waited patiently for my winnings to start spilling out.
IT’S HARD TO IMAGINE, when your child is five pounds and 19 inches long, that one day he will be a responsible adult with friends, a college education, a job, strong opinions—and a credit score.
Getting to that point is part of the adventure of parenting.
Where to start? After getting our son’s birth certificate finalized and receiving his Social Security number, one of the first things we did was set up a 529 college savings account.
A FEW YEARS BACK, I was conducting a retirement planning seminar. At one point, I talked about survivor benefits under our company’s pension plan. As I outlined the benefits, I noticed a strange look on one woman’s face. She was the spouse of an employee.
A few minutes later, I spoke about health benefits, explaining that a surviving spouse was required to pay 100% of the premium. Upon hearing that, the woman took a rolled-up newspaper and began beating her husband about the head.
IN MY WORK as a financial planner, there’s one topic that always seems to raise an eyebrow: Social Security. When people see projections of future retirement benefits, they often respond with skepticism. My sense is that media reports, questioning the system’s solvency, have led people to discount the value of Social Security benefits—or disregard them entirely.
In my view, this is a mistake. While no one can guarantee what Social Security will look like in the future,
RISK IS ARGUABLY the most important financial topic. But which risks should we worry about? There are all kinds of contenders: recession, accelerating inflation, political upheaval, global conflicts, sharp market declines, individual company turmoil.
But I would argue that, as we each assess our personal finances, one risk trumps all of these—and that’s the risk that we have lousy career earnings and maybe even find ourselves without a paycheck. How come? It isn’t simply that we would likely struggle to pay the bills and service our debts.
MY FRIEND ROSTISLAV, who would know, tells me that in Russian there’s no equivalent for the word “privacy.” That’s because privacy—as we understand it—is a foreign concept. Children’s grades are posted publicly in schools and it isn’t considered impolite to ask someone’s salary.
Why is this relevant? As a stock market investor, if you have international exposure, you’ll want to be aware of these cultural differences, because they impact how other countries run their economies and how they regulate—or don’t regulate—their investment markets.
TWO CHORES that most people gladly put off: The first is writing a will—and the second is updating it to reflect changed circumstances. Either way, it’s crucial to name the right executors.
Regarding the first chore, my client roster includes recalcitrant individuals who’ve yet to write their wills. I regularly remind them how badly things could turn out if they fail to do so. For instance, their assets might wind up with individuals whom they never intended to benefit or they consider less deserving of their largess than others.
SOME PEOPLE SAY I eat like a dog. I eat the same food everyday. For breakfast, I have egg whites with mushrooms on a whole wheat tortilla, and oatmeal with fruit and almonds. For lunch, I have a salad of tomatoes, cucumbers, carrots, avocado and baby spring mixed lettuce, and usually a nonfat bean and rice burrito. For dinner, I have vegetables like broccoli, cauliflower, spinach and squash with fish or poultry. When I feel adventurous,
WHEN I GOT DIVORCED, I went from living in a 3,000-square-foot house to a 700-square-foot apartment. For 20 years, I’d been a homeowner. I’d dealt with the drudgery of yardwork, the financial pain of a city-mandated “sewer upgrade” and a never-ending stream of issues with broken appliances, furnaces and hot water heaters.
For the past five years, I’ve been a renter. I’ve dealt with noisy neighbors, steep rent increases and the inevitable boredom that comes with living somewhere where you can’t paint the walls,
WE HAVE A SLEW of economic problems in the U.S. But many of them can be traced, at least in part, to a single cause: We increasingly have too few workers and too many retirees. HumbleDollar’s latest newsletter looks at the issue—and what it means for both public policy and our portfolios.
June’s newsletter also touches on my struggle to understand the financial behavior and beliefs of my fellow Americans, and it includes the usual list of the seven most popular blogs from the prior month.
MY MATERNAL grandmother recently celebrated her 97th birthday. Until three years ago, she lived in her own home. Now, she lives in a senior apartment community, where she remains active and independent.
Part of my grandmother’s decision to move out of her home was prompted by her desire to be closer to family members who could assist in her care. According to a 2015 study, over the previous 12 months, more than 34 million Americans had provided some type of unpaid care to an adult age 50 or older.
IS WHAT YOU’RE paid what you’re really paid? Probably not. The compensation that you don’t see each payday has a tremendous impact on your financial security and your future standard of living—and should affect how much you save and how you invest.
Defined benefit pension plans can be the most valuable form of noncash compensation. Health benefits for active and retired employees are a close second—especially so because they’re tax-free compensation (and hence a huge revenue loss for the federal government).