Is A Million Bucks Enough To Retire?

Originally in Forbes“Wow, those guys must be millionaires!” I can recall uttering those words as a child, driving by the nicest house in our neighborhood—you know, the one with four garage bays filled with cars from Europe.

The innocent presumption, of course, was that our neighbors’ visible affluence was an expression of apparent financial independence, and that $1 million would certainly be enough to qualify as Enough.

Now, as an adult—and especially as a financial planner—I’m more aware of a few million-dollar realities:

Retirement Stress Test Graphic - v3-01

1)   Visible affluence doesn’t necessarily equate to actual wealth.  Thomas Stanley and William Danko, in their fascinating behavioral finance book, The Millionaire Next Door, surprised many of us with their research suggesting that visible affluence may actually be a sign of lesser net worth, with the average American millionaire exhibiting surprisingly few outward displays of wealth. Big hat, no cattle.

2)   A million dollars ain’t what it used to be. In 1984, a million bucks would have felt like about $2.4 million in today’s dollars. But while it’s quite possible that our neighbors were genuinely wealthy—financially independent, even—I doubt they had just barely crossed the seven-digit threshold, comfortably maintaining their apparent standard of living. To do so comfortably would likely take more than a million, even in the ’80s.

3)   Wealth is one of the most relative, misused terms in the world.  Relatively speaking, if you’re reading this article, you’re already among the world’s most wealthy, simply because you have a device capable of reading it. Most of the world’s inhabitants don’t have a car, much less two. But even among those blessed to have enough money to require help managing it, I have clients who are comfortably retired on half a million and millionaires who need to quadruple their nest egg in order to retire with their current standard of living.

The teacher couple, trained by reality to live frugally most of their lives, don’t even dip into their $400,000 retirement nest egg or their $250,000 home equity because they have two pensions and Social Security that more than covers their income needs.  Their retirement savings is just a bonus.

But the lawyer couple, trained by reality to live a more visibly wealthy existence, aren’t even close to retiring with their million-dollar retirement savings. In order to be comfortable, they’ll need to have at least $4 million.

A million bucks, then, may be more than enough for some and woefully insufficient for others.

The Scarcity Fallacy: Is Less Really More?

Originally in ForbesHaving the privilege of walking through life with people vocationally, aiding in the acquisition, maintenance and dispossession of earthly resources as a financial advisor, I’m burdened with a heightened sense of the battling spirits of scarcity and abundance.

The dehumanizing poverty that torments the Majority World screams that resources—here and now—are scarce. Remembering when I handed a bowl of vitamin-charged oatmeal to a boy who lives and breathes in La Chureca, the Nicaraguan squatter town subsisting off of Managua’s trash, I occasionally twinge at my willingness to pay $5 for a cup of premium Central American coffee. That expenditure could buy a week’s worth of mush, keeping children of the dump alive.

This is one of the children at the feeding center in "La Chureca," the city dump in Managua, Nicaragua.

This is one of the children at the feeding center in "La Chureca," the city dump in Managua, Nicaragua.

How could I not consume less?

And share more?

Subtract Tasks From Your World; Don’t Let Them Multiply

by Jim Stovall

We succeed by doing a lot of things very well.  There are people who do a lot of things but don’t do them well, and people who do things well but don’t do many things.  We don’t succeed based on what we meant to do, intended to do, expected to do, or made a note to do.  We succeed or fail based on what we actually do.

I find a lot of people in the business world today who confuse activity with productivity.  They take on a lot of tasks but get very little done.  These people often allow their work to create more work.

For example, something will come in the mail that requires them to respond.  Their response might take 10 minutes to accomplish.  Instead of just taking care of the task and moving on, they will set it aside, create a file, diary it on their calendar, move it to a later date, find the file weeks later, address the task at hand, mark it off their list, and close the file.  These people can generate several hours’ worth of work and mounds of clutter over one, tiny, little task.  They allow their work to multiply.

As a general rule, whenever possible, handle all communications via writing, phone, or email once.  Certainly there are exceptions when the task will require more time or thought, but for most mundane tasks, it’s much better to do it now.

Efficient and successful people accomplish many tasks in this manner.  There are several occasions every day when someone has asked me to respond, and if I take a few moments and do it now, I am able to accommodate the request.  If I let the task multiply, I am likely to never do it as it is prudent to give this individual a few moments, but I can’t afford to give them a few hours.

If you work alone, this is important, but if you interact with an organization each day, it is critical.  If you allow your own tasks to multiply, they will explode geometrically throughout the organization.  If someone else takes care of your calendar, coordinates your schedule, or handles your filing, your 10-minute task today can be a two-hour task for you later that creates many more hours of effort and energy for your entire team.

Being effective and efficient is often a matter of deciding what to do and what not to do, then budgeting how much time you can expend on each task.

As you go through your day today, subtract tasks from your world.  Don’t let them multiply.

Today’s the day!

Welth: Is It Wurth It?

A few weeks ago, I had the privilege of conducting a 40-minute radio interview with one of the great business leaders of our time.  (I’ve split the interview into four ten-minute podcasts, the links for which follow this post.)  Truett Cathy is the founder of Chick-fil-A and the author of several books, most recently, Wealth: Is It Worth It?  He’s well suited to ask and answer that question, because after beginning his restaurant career over 60 years ago with a single eatery, he’s built one of the nation’s most successful and well-loved restaurant chains. But interestingly, an adjective he’s not entirely comfortable putting before his name is “rich.”  He says, “One of the worst things I can imagine someone saying about me is, ‘He’s a rich old man.’”

But it would be hard to argue either of those.  After all, Mr. Cathy is 90 years old and falls at number 375 on the Forbes 400 list, with an estimated net worth of $1.1 billion.  However, he defies his age by going to work nearly every day and carries himself with the humility and grace of a line cook, not the founder and chairman.

Wordplay

Wealth is a hot word these days; especially in the financial services business, everyone wants to be about wealth.  So now, instead of being financial advisors or financial planners, stock brokers, insurance salespeople or bankers, everyone is a wealth manager or wealth consultant.  If you work with them, their commercials suggest you’ll be one of the people golfing all day or travelling around the world on a $1 million sailboat or sitting on the beach (with your wealth manager, of course) toasting the purchase of your new 5000 square foot beach home.  Don’t get me wrong—there’s nothing wrong with golf (except that it’s a miserable sport, chasing that little white ball around); and sailing, for those who know how to do it, is sublime; and if you have the money, right now is a great time to be buying a beautiful beach property—but dangling this utopian envy in front of everyone is what I don’t like about the financial industry’s co-opting of the word wealth.

We tend to believe today that the three words “money,” “riches” and “wealth” are generally synonymous, and I do believe that in the contemporary vernacular, they are.  But that wasn’t the initial intent.  Money and riches, if you follow them back to their original root words in ancient languages, always meant something similar to what they mean today.  Wealth, on the other hand, had a much deeper meaning.  It meant enough.  Contentment.

In Wealth: Is It Worth It? Cathy cautions us of the trappings of financial accumulation, giving us insight into how living through the Great Depression and seeing his own father left emotionally destitute by his inability to provide for his family in that incredibly difficult time informed his own belief system around money.  Far from demonizing dollars, he gives us a framework for virtuous money dealings grounded in Solomonic wisdom.  (Cathy is unabashed in sharing that his money philosophy is grounded in his Christian faith, but he also draws on wisdom from sources neither canonized nor ordained and never seems to get preachy.)

Is it worth it?

But Mr. Cathy isn’t convinced wealth is worth it even after you “earn wealth honestly,” “spend wealth wisely and save it reasonably.”  Even then, we still have the capacity to let wealth accumulation overtake us.  He concludes that the only way wealth is really worth it is “…if you give it generously.”

While this resonates as truth, I admit my skeptical self wants to conclude it’s easy for those blessed with abundance, like Cathy, to admonish the rest of us on the value of charity.  Even he acknowledges it’s unlikely that his children or grandchildren will ever suffer from want.  But having now read his personal and financial story and talked with him, I find not an ounce of inconsistency or inauthenticity.  He applied the same approach to money when living through the Great Depression and standing over the grill in his first restaurant as he does today encouraging us to deconstruct and rebuild our view of affluence.  I also cannot think of a time personally, or with hundreds of clients over the years, in which this particular proverb did not hold true: “If I give water to others, I will never be thirsty.”

One of the highlights of Wealth: Is It Worth It? is an interview Cathy conducted with a friend he has forged in pursuit of his campaign for generosity, the venerable Warren Buffett.  He asks, “Warren, how do you define wealth?”  Buffett answers, “Wealth is having enough.”  Interesting, isn’t it, how wisdom changes so little even over thousands of years.  There is plenty of money out there and a lot of riches, but whether among the rich or the poor, we could all use more enough.

There are many more life-giving tidbits you’ll find throughout my radio interview with Truett Cathy.  The show is organized into some bite-size portions below:

1)     Introduction: A blessing to some and a curse to others 
2)     Friendship w/ Warren Buffett; money and children
3)     Truett’s father; living through Depression; discomfort w/ being rich
4)     “Retirement is misery!”; Chick-fil-A’s secret; when to start giving

Check out comedian, Tim Hawkins, hysterical ode to his favorite restaurant, Chick-fil-A!

Tim’s Tools

Tim is pleased to provide readers with access to a selection of tools that can be used to apply the lessons learned on TimMaurer.com.

 

Personal Money Story

 

Personal Money Story.  This simple exercise will help you understand what what drives your personal money values. To download, click below:

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Life Taking, Life Giving - BLANK

 

Life Taking, Life Giving.  This simple exercise will help you understand what you do in life that provides fulfillment and those activities that don't. To download, click below:

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