NWP Monthly Digest | November 2021
So, what’s on your mind this time of year?
Halloween is behind us, and Thanksgiving is staring us down. We’ve all become experts on supply chain management (or lack thereof), and people are really worried about getting their Christmas shopping done ASAP so they don’t have a similar experience to ordering Halloween costumes*.
*It’s a long story. Apparently, Rubie’s Costumes, the largest manufacturer of Halloween costumes in the world, went bankrupt during the Covid Pandemic. Amazon and many other sites didn’t take the listings for these costumes off their websites, thus many were left ordering costumes that didn’t exist. C’est la vie.
For many of our clients, friends, and family, it’s no surprise that retirement is on their minds. Our conversations on retirement run the gamut- from the young clients that want to retire as early as possible because they’re stressed out and hate their jobs, to the older clients that love their jobs and don’t ever want to leave. Truth is, retirement and financial independence are your own journey, and there is little chance it will happen for you right at the tender age of 65.
Do you know why we even have that age stuck in our heads as the retirement age? Our financial planning software defaults retirement goals to age 65, and Medicare still makes it relevant, but it’s pretty meaningless really. The story goes that Chancellor Otto Von Bismark of Germany proposed the first-ever “retirement” program for German government workers in 1881, once they reached the age of 70. That age was adjusted back to 65 following World War I, which wasn’t very generous considering life expectancy was much lower at the time, but age 65 stuck, for some reason. Incidentally, it’s really easy to devise a retirement program for workers that will die before they reach that age. Just sayin’.
When the United States started Social Security following the Great Depression, the average life expectancy for Americans was 58 years old. Very few workers were expected to reach an age that Social Security would be necessary, and thus very manageable from a cost perspective, as we took a page right out of Von Bismark’s playbook. But here we are today, living much longer than congress could have ever anticipated back in 1935 when they started the program.
My challenge for all of you this week, whether you’re in your 30s or your 60s, is to look around at different people in your life and see what they’re doing with their lives and how they carry themselves. 65, my dear friend, is pretty darned young. Chances are, you’re going to be very healthy, very vibrant, and very active when you’re 65 years old, let alone 70.
The chart above is showing us a ratio of when retirement years are expected to remain constant vs. life expectancy at retirement age. While that occurred at age 65 back in 1940, it is now at age 72 (and 4 months) for us lucky Americans. If that’s confusing, just understand that it’s really difficult to finance a retirement that will last for 35 years when you only work for 40 years - if we live longer, we need more money to help pay for retirement and will need to work longer to accumulate said money. Unless, of course, you have a very, very high savings rate.
Being a financial planner, these are things that I think about constantly. But I was inspired this weekend by an excellent article in the Wall Street Journal by David Eckerdt, one of, if not the most influential researcher and scholar on the concept of retirement in America. It’s behind a paywall, but I highly suggest you read it if you have a subscription.
I Spent 44 Years Studying Retirement. Then I Retired. by David Eckerdt
Eckerdt goes into some really awesome detail on his own life about the things that even he didn’t anticipate as he finally entered his own retirement. The most fascinating to me was Eckerdt’s realization of how quickly his work related skills atrophied. From a financial perspective, after being retired for 18 months, he felt he wouldn’t be able to go back to work even if he had to, which highlights the need for some prudent financial planning and analysis before that big day arrives for anybody.
Another gem, directly from Eckerdt and his team:
“Then there’s the wariness that retirees have about claims on their time. My team once interviewed a man, 74 years old, who had stopped going to his three-times-a-week exercise classes. ‘I quit that and I couldn’t figure out why because I really enjoyed it,’ he told us. ‘And then it dawned on me it was because it was getting to be the routine.’ He said that he liked it once he was there, ‘but it got to be a chore to have to be there.’”
Even the fun things can start looking like a job.
Grant and I often make the joke, “there’s only so much golf one can play” when we talk with our clients thinking about retirement, but it absolutely is one of the things that you have to consider. What new thing about your retired life is not going to feel like it’s becoming a chore when you retire?
If you’re looking for a quick summary, here are the handful of surprising things about retirement mentioned in the article, in addition to the two I just talked about:
Space: If you’ve done a lot of work over the years and created, inevitably, the gargantuan amount of files (both electronic and paper) that are a consequence of that work, those files are going to have to find a new home. Where will you store it or will you just throw it all away?
Tech Support: What types of help to rely on from work? Most specifically, technology. When your computer or phone stops working or crashes, where will you get help?
Your Home: Is your current home right for you now that you’re retired? Is your spouse retired, too? Finding the most appropriate place to call home is much different in your retired years than when you’re raising a family.
Your Identity: Can you handle being the old guy/gal in the coffee shop that everyone knows is retired? Can you handle not being the person you were for so long while you were employed?
And finally, and maybe most importantly, are you prepared for the new things that you will engage your mind in? Can you find new things to get excited about or will you fall trap to watching never ending, 24-hour cable news?
As October turns to November, I’ll leave you with a little two-for-one...a little ghost story in honor of Halloween with a retirement spin.
My family and I did the “Haunts of Littleton” walking tour in our lovely hometown in Colorado this past weekend. The history was great, the costumes were fabulous, and the ghost stories were riveting. But I have to share my favorite tale about the lovely woman who worked at the Littleton Town Hall for 45 years until the age of 82.
As the story goes, the amazing thing about this woman is that she had two retirement parties. Not one, but two. Both times, she returned to work the very next day and told everyone she loved it too much to walk away.
Unfortunately, time finally caught up with the woman and she died in her sleep in 1975. But not even death could get her to retire, you see, because The Littleton Town Hall is still haunted by this woman’s ghost and many can still hear her footsteps late at night!
For some people, not even death can pull them away from the work and the people that give their life meaning.
Noble Wealth Pro Tip of the Month
For a lot of people around the country, this time of year is also “Open Enrollment” season.
One of the things that the average American worker swings and misses on more than any other in their personal financial lives is getting the most out of their company benefits.
Medical coverage is the most important, and the team at Noble Wealth has started noticing that it’s becoming more and more difficult to compare the different plans being offered to employees, and to find the right plan at the right cost.
If you’ve gorged yourself on your children’s Halloween candy, better make sure to have the right dental coverage, too.
Not to mention the myriad of “Cafeteria” style benefits available to you that you may not have even noticed are there, like Legal Assistance, Pet Insurance, and dedicated volunteer hours.
Don’t get caught in the “I’m too busy for this” excuse. Spend a little more time reviewing the options being provided for you and your family this year, and how much they cost. If you’d like some help, that’s what we’re here for. Reviewing Employee Benefits and helping our clients review their options is one of the many services we take pride in with ongoing financial planning services.
Things We’re Reading and Enjoying
Music is History | by Questlove
Everyone needs a break from finance, even me. My in-laws were kind enough to purchase this for me for my birthday…and it’s fantastic.
Music Is History combines Questlove’s deep musical expertise with his curiosity about history, examining America over the past fifty years.
Focusing on the years 1971 to the present, Questlove finds the hidden connections in the American tapestry, whether investigating how the blaxploitation era reshaped Black identity or considering the way disco took an assembly-line approach to Black genius. And these critical inquiries are complemented by his own memories as a music fan, and the way his appetite for pop culture taught him about America.
This Will All Be Over Soon: A Memoir | by Cecily Strong
This one was worth the Audible credit. Cecily Strong is my favorite current SNL cast member…
A powerful memoir from the Saturday Night Live cast member Cecily Strong about grieving the death of her cousin—and embracing the life-affirming lessons he taught her—amid the coronavirus pandemic.
Cecily Strong had a special bond with her cousin Owen. And so she was devastated when, in early 2020, he passed away at age thirty from the brain cancer glioblastoma. Before Strong could attempt to process her grief, another tragedy struck: the coronavirus pandemic. Following a few harrowing weeks in the virus epicenter of New York City, Strong relocated to an isolated house in the woods upstate. Here, trying to make sense of Owen’s death and the upended world, she spent much of the ensuing months writing. The result is This Will All Be Over Soon—a raw, unflinching memoir about loss, love, laughter, and hope.
-Your team at Noble Wealth Partners
“There is nothing noble about being superior to your fellow man. True nobility is being superior to your former self.” Ernest Hemingway
