Recently, I had the distinct privilege to join Sheinelle Jones on the Today show, discussing some rapid-fire personal finance issues in Simple Money style. Is now a good time to buy stocks? Is it a good time to buy, sell, refinance or renovate a home? We even discussed a version of the Simple Money Portfolio and my top two picks for cash flow apps that can improve your financial situation. Click HERE or on the image below to view the segment.
I ask because it dovetails nicely with a series of questions (inspired by Rick Kahler) that I use to begin most speaking engagements. These questions are designed to incite self-awareness, offering us clues about how our life experiences have shaped the (often unarticulated but powerful) beliefs that unavoidably influence the decisions we make with and for money.
Regardless of an audience’s homogeneity, their responses are consistently inconsistent. I have, however, seen some generational persistency on the topic of retirement. For example, on average, baby boomers have a generally positive view of retirement—no doubt shaped in part by the incessant financial services commercials that promise a utopian post-career existence with beaches, sailboats, golf and an unlimited supply of vintage Pinot Noir.
On the other hand, the finance and accounting students that I had the privilege of teaching at Towson University—almost all members of the Millennial generation—had a generally negative view of the notion of retirement. This is for two prominent reasons:
- They pictured hot, humid, early buffet dinners in rural Florida.
- They don’t think that the American dream of retirement is available to them.
Interestingly, according to a new study from AARP’s Life Reimagined focusing on full-time workers 35 and older, this generational pessimism is now creeping up the age ladder to Generation X and baby boomers as well. AARP reports that “while 87% of those surveyed who are working full time say they want to retire someday with nearly 70% of those hoping to retire by 65, just over half don’t expect to retire by 65 or at any age.”
Sheesh. Can I get a ho-hum?
It deserves mentioning that the working set 35 and older does appear to accurately assess their retirement readiness. Corroborating common perception with reality, the National Retirement Risk Index (NRRI) estimates that “52% of households are ‘at risk’ of not having enough to maintain their living standards in retirement.”
Old news, right? But what interests me a great deal more is the following finding in the AARP’s survey: “Although this group acknowledges that they will be working longer, fewer than one in five people across the Gen Xer and Boomer demographics say the thing that motivates them to get up in the morning is going to a job that fulfills them.”
So, more than 80% of the workforce over the age of 34 doesn’t like their work? No wonder they’re so stricken by this distressing conundrum: They desperately want to retire but can’t stand the only vehicle likely to help them reach their destination.
We must acknowledge that our views of retirement and work are inextricably intertwined.
It’s a vicious circle: If you don’t like your work, you’re likely to overvalue retirement. But if you undervalue you’re work, it’s logical to assume your performance will be less than optimal and, therefore, that your wages—your retirement savings engine—will be suppressed.
But there’s a virtuous circle to counter: If you love your work, it’s likely that you undervalue retirement. But ironically, because you love your work, it’s logical to assume your lifetime performance is improved and your lifetime earnings (and savings potential) are increased, better preparing you for retirement.
Yeah, but it’s unrealistic to think that everyone can have their dream job! This is absolutely true, but that doesn’t mean we can’t purposefully and intentionally move toward it, shifting in the direction of a more virtuous cycle.
Or, in the words of career guru Jon Acuff, “Please don’t tell me you’re too busy to look for a new job and then show me your perfectly detailed fantasy football team.… Please don’t tell me you’re too busy to update your resume and then update your social media accounts incessantly.”
And most fascinatingly, the AARP study seems to help point us in the direction of a more fulfilling career: “If money was not a factor, most would volunteer or donate to a cause and travel the world.… The most popular types of ideal jobs for those who would switch are doing something that helps or teaches others and doing something creative or artistic.”
You probably don’t have the same talents that will likely launch 12-year-old Grace VanderWaal into a lifetime of fulfilling work (I still can’t watch this without choking up). But I’d be willing to bet that you could do something to move one step, small or large, in the direction of more fulfilling work, which will likely help you make and save more money over your lifetime while reducing any desperation you might feel about the need to retire.
To help you make the most of this article, please consider these two questions:
- Is yours a vicious or virtuous work/retirement circle?
- What is the next action you’ll take to move in the right direction?
You’ll find sufficient supporters for both the pessimistic and the optimistic view, with a far greater number of pleas to act on these views. But I invite you to consider the relative irrelevance of market highs for the following simple reason:
Any investment with a positive expected rate of return should regularly revisit and recreate its all-time high as a matter of course. Otherwise, it wouldn’t have a positive expected rate of return!
The caveat is that the higher the expected rate of return on a particular investment, the more irregular we should expect its flirtation with market highs to be. Perhaps that’s why the broad index of large U.S. companies—the S&P 500—has experienced 121 all-time highs in the past 16 years while the Nasdaq—an index of tech stocks—has experienced only nine.
You have three choices in the face of the mania that Wall Street and its many mouthpieces both conjure up and rely upon: you can agonize, act or exercise apathy.
I realize how hard it is not to agonize—to not fall prey to the hundreds of daily invitations seeking your attention. But provoking agony is an old sales trick designed to get you to act. Many in the financial services industry still get compensated to transact—to sell—not to advise. They make money regardless of your benefit or lack thereof, as long as you act.
My recommendation, therefore, is to exercise deliberate indifference. Receive the information you likely have no choice but to encounter and make an active decision to be passively indifferent.
You’ll likely benefit a great deal more from pursuing a timeless personal memory this week than concerning yourself with a financial benchmark’s all-time high.
Of course, you aren’t really free to exercise apathy unless you’ve acted on creating a well-thought-out investment plan. For starters, here’s a simple DIY portfolio that has beaten the pros.
It’s the first time a U.S. city has received the top honor, but Charleston ranked No. 2 last year and has been ranked the No. 1 city in the U.S. and Canada for four years running. As scored by Travel + Leisure readers, Charleston received its top-ranked status based on six categories: sights/landmarks, culture/arts, restaurants/food, people/friendliness, shopping and value.
But please allow me to give you the top three reasons why my family moved to Charleston two years ago, and the reason we’ll stay (and invite you to join us).
First, a little background. When people ask me where I’m from, the answer is no different today than it has been all my life: Baltimore. I’m a Baltimorean—or, as we lovingly refer to ourselves, Baltimorons. I was born in Bal’mer and never lived outside a 30-mile radius from it for the first 38 years of my life (and that includes my college years). I so loved the place and its people—my people—that I couldn’t imagine leaving its Old Bay-scented landscape.
My beloved family and extended family, including two sets of adoring grandparents, are all in Baltimore, not to mention a lifetime of dear friends and, of course, the Orioles and the Ravens. Baltimore will always be home.
But about three years ago, my wife, Andrea, and I were on one of those peculiar outings called “Date Night,” the domain of parents with young children availing themselves of the rare adult conversation. After an apparently tall glass of red wine, my wife took a very deep breath and announced that she thought we should move. I assumed the suggestion would require replanting only an exit or two along I-695, so I nearly choked on my crab cake when I learned that my bride was lobbying for a much bigger move—to Charleston. South Carolina.
Masking my unarticulated fear of leaving all that I knew behind, I responded with a barrage of practical protestations:
“It’s a celebrated resort town. It probably costs a fortune to live there!”
But she’d done her research, and immediately pulled up several beautiful houses on her phone that we could never have afforded had they been in Baltimore. Yet, they boasted price tags far lower than the home we were currently living in.
“Then there must be bad public schools,” I next objected. “Anything we save on the house, we’ll likely have to shell out for expensive private school!”
Again, she showed me ratings for schools in the Charleston suburb of Mount Pleasant that rivaled or bested those of the excellent schools our children attended in Baltimore.
I was running out of practical excuses not to leave, but there was no chance she could muster an argument to counter the biggest reason of all—my fear of leaving everyone and everything behind. Indeed, she couldn’t do anything to change THE reason I didn’t want to leave my hometown. That change would have to happen on its own:
The Top 3 Reasons We Moved to Charleston:
3 – Lower cost of living
People don’t think of Baltimore as being an expensive city, but it is. No, it’s not as expensive as some of its Northeast rivals, D.C., Philly, New York or Boston, but relative to most of the country, it ain’t cheap. The move to Charleston enabled us to buy the nicest home we’d ever lived in for meaningfully less money. (I must disclaim, however, that as Charleston’s status as a world-class city becomes more well-known, the flood of new residents has closed the gap between Charm City and my hometown, but those from D.C., New York, Boston or Southern California would still find it a bargain.)
2 – Slower pace of life
Yes, Southern hospitality is a real thing, as Travel + Leisure found, with eight of its top 12 best U.S. cities located in the Southeast or Southwest. But Charleston and the surrounding area is also marked by the lesser-known and still elusive “Lowcountry lifestyle.” It’s better felt than explained, but this outsider notes a more deliberate (not “slower”) pace of life with a heightened appreciation for the natural beauty of the region and an emphasis on relationships. Busyness is more a sign of misplaced priorities than a badge of honor here, while a turning tide or spontaneous happy hour are entirely responsible reasons to reschedule a conference call.
1 – A family adventure
But the No. 1 reason to stay in Baltimore became the No. 1 reason to leave. Have you ever wondered what it would look like to leave everything and everyone you know and plop down in a place about which you knew nothing and no one? As I considered this notion, the prospect of moving was transformed from a fear to an attractive step of faith. I feared separating myself—and especially my children—from the relative comfort we’d found in knowing. The change came when we began to yearn for the excitement of discovering. We weren’t so much leaving Baltimore as we were going on an adventure.
The Reason We’ll Stay In Charleston:
In short, it has exceeded our high expectations. Yes, the well-preserved Colonial downtown with an outsized cultural scene nestled among three rivers, countless tidal creeks and several vibrant beach communities is likely what puts it on the world’s map. But the place is far outshined by its people—a confluence of those who exhibit Lowcountry ideals and those in search of just such substance. However, the primary reason we’ll stay has less to do with Charleston and more to do with us.
Marcel Proust said, “The voyage of discovery is not in seeking new landscapes but in having new eyes.”
It was the act of choosing to discover that has given us new eyes, even as we enjoy the discovery. As a family of four, we decided to go on an adventure, and we’re just getting started.
Wherever you are—and wherever you may go—what implications might that choice have for you, your work or your family?
“Hope deferred makes the heart sick, but a longing fulfilled is a tree of life.” So reads a Solomonic proverb penned in the 10th century B.C. Consider with me, however, a contemporary application of this ancient wisdom, especially in the realm of personal finance.
“We’ve got to apologize, Tim,” said a financial planning client with whom I had a great relationship.
“Whatever for?” I asked.
“You know that new Lexus? The one that backs itself into a parallel parking spot?”
“Yes, I’ve seen the commercials.”
“We bought one,” the client said, with his head bowed in apparent shame.
I’d never communicated that these folks—or anyone, for that matter, who has sufficient means—shouldn’t use said means to purchase a vehicle of their choosing. But the general impression the public has toward financial advisors and educators seems to be that we all think the best use of money is in storing it up and avoiding its deployment. Defer, defer, defer.
It’s not that money is inherently bad or evil, but it’s not inherently good or righteous either. Money is simply a neutral tool that can be used well or poorly. It only has the value—the personality and the relational standing—that we give it.
One of the few criticisms I have of the movement to explore the psychology of money is its use of the phrase “your relationship with money.” Unintentionally, this gives money entirely too much credit by implying personhood. Indeed, if you have a “relationship” with money, you’re likely elevating it unnecessarily, and maybe even subconsciously devaluing those in your life who actually have a heartbeat.
How did we get here, to the point where we’ve personified—and in some cases deified—the “almighty” dollar?
You likely feel as though you don’t have enough time to watch a video that is 17 minutes and 47 seconds, right? But what if watching it allows you to penetrate beneath the scar tissue of busyness and distraction and transform your view of work and the satisfaction you derive from it? Would it be worth it, then?
If you’re willing to watch the video, please feel free to stop reading here, because I’m convinced that, though seemingly out of context, you’ll get the point by the end of the video—the point that there’s a vastly different, far more rewarding way to do what we call “work” than what most of us have been taught and have experienced. It’s the work of an artisan.
But first, a bit on the evolution and etymology of work: What’s the difference between a job and a profession? I ask this question more than you’d think, and the summary response I receive is, “A job is something you have to do while a profession is something you want to do. A job is a necessity—it puts food on the table—while a profession is something that you train for and build over time.”
Fair enough. What, then, is a vocation?
You’ve surely heard the sad news that music legend Prince has died, and you likely caught the fact that he did so without leaving a will. This high-profile case of apparent negligence has rekindled the collective finger wagging over having the correct estate planning documents. But the question remains—WHY?
I had the opportunity to answer this question recently on the Today show, but I wanted to further explore the topic in the hope of providing some additional, actionable clarity:
Statistics suggest that a majority of Americans don’t have a will. And, after reading hundreds of these documents, I’ve found that even most people who do have a will have one with sub-optimal language they don’t understand.
Why don’t we do a great job planning for our death?
The movement of markets is so incredibly complicated that even the world’s most skilled portfolio managers struggle mightily to “beat the market” over the long-term. Building a strong portfolio, therefore, must be similarly (and singularly) complex, right? Wrong. While portfolio architecture and management is not easy, here is a seven-step process that makes it surprisingly simple:
Step 1: Know thyself.
This ancient Greek wisdom is where we must begin, because personal finance is more personal than it is finance. Investing is complex because we are complex. Therefore, we must understand ourselves before we try to understand the markets. This means honestly gauging your time horizon and the returns necessary to meet your goals, but it’s especially important that you understand your willingness to take risk in the markets. You must take the gut-check test.
Step 2: Understand investing.
“A lot of career advice begins right back at age six,” writes author Chris Guillebeau in his newest book, Born for This: How to Find the Work You Were Meant to Do. But in case you’re expecting some fluffy self-help propaganda that over-inflates your ego in an attempt to win your purchase of the book, Guillebeau hits you with a helpful dose of reality early and often:
“‘You can do anything you want,’ adults usually promise, without any explanation or assurance of how ‘anything’ is possible. Nice as it might sound to our young ears, this advice is absurd,” says Guillebeau.
Please don’t get the wrong impression. Guillebeau isn’t a bully or a browbeater. I actually find him surprisingly soft-spoken for someone who has built an enormous online following, written four bestselling books and created one of the hottest-ticket annual conferences in the World Domination Summit. He just refuses to buy into the implicit (and often explicit) promise of the many “success cult” leaders who sell books, courses and videos offering you a slice of their success if you’ll only follow their footsteps (across a pile of burning coals).
And why doesn’t following successful people necessarily make you successful? For at least two reasons:
1) You’re not them.
2) They’re not you.
How, then, does Guillebeau fill 300 pages with advice on finding your dream job, if not by telling you how he did it and imploring you to do the same?