In our glee at discovering how easy it is to buy things we cannot afford, we tend to overlook a workable strategy for incorporating debt into our financial behavior. When we are young and employed, we can support debt to buy a house, buy a car, or grow a business. When we are old and retired, continuing to support debt closes the doors to more pleasant possibilities. In return for tax deductions of present contributions to our IRA and 401k plans, all withdrawals —principal, interest and capital gains— are fully taxable on our state and federal income tax returns. At age 70, plan owners must begin annual minimum required distributions the rest of their lives. Like debt, this pushes the inevitable cost of a present benefit into the hazy future. For many of us, coupling debt payments to the tax cost on retirement plan withdrawals can become unbearable. In our younger years we tend to assume such things will just work out when the time comes. The real glee is available to people who work this out now, well enough to enter retirement debt free with minimal taxes on investment income… for the rest of their lives.
”Pool. It starts with ‘P’ which rhymes with ’T’ that stands for Trouble, right here in River City…” is Professor Harold Hill’s trumped-up but thought-provoking claim in The Music Man. Imagine all 16 billiard balls lying across the surface of a pool table, scattered by the initial “break.” The shots that follow involve aiming a ball to collide with another, imparting the right momentum into the targeted ball to make it drop it into a chosen pocket. Skilled players understand how to plan out multiple collisions to roll the right ball into the right pocket. Sometimes a strategy works out, sometimes it doesn’t. That’s life. The more balls in play, the more options there are available to players. Getting ahead in life is similar: options increase with the number of possible collisions we call experiences. In both games, players need to know the rules and where the pockets are… their goals, if you will. Both are games of skill, and with some study and some practice both can be really, really fun. In either adventure, the right coach can help players to improve their enjoyment of the game… and their scores. Even in River City.
As any shopper knows, stores offer different brands that serve similar purposes but in different ways. Which item we choose depends, ultimately, upon which one makes us feel it will be a “good fit.” While financial advisors do not come in different geometric shapes and brilliant colors, they do offer similar services but in different ways… The search for making a good choice starts with a few basic questions, such as “What can an advisor do for me that I cannot already do for myself?” And, “Will the advisor be paid by his or her company’s commissions on insurance or investments I will be asked to buy, or by an agreed-upon periodic professional fee?” And, “Am I looking for financial planning advice to enhance the fullness of my life, or do I just want guidance with my investments… or both?” Based on your answers, your search for a “good fit” advisor can focus quickly on comparisons of age, experience and suitability among the candidates. If you attend Yoga class or take voice lessons or hire a fishing guide, you know such encounters can turn into lasting, satisfying relationships. Keep that in mind when the time comes to seek advice from a financial planner.
The industrial revolution has stamped our brains with a mechanical metaphor for the arc of our lives: work until we wear out or become obsolete, then retire, and then die. On the bright side, my electric hair clippers with the self-sharpening blades are still going strong after fifty years. With a little cleaning and a drop of oil now and then they still hum along nicely. What an efficient design! We too are constructed with elegant engineering. Our brains are designed for self-sharpening, which opens the door to much happier thoughts than the “work, retire, die” scheme we absorbed in our youth. Where daily chores and events deflect many of us from following a path that will keep our brains sharp, remember: who we are and who we will become are energized by our hearts and brains, helping us define who we think we are and who we want to become. We really can strive to stay sharp for life. Once you believe this is a goal worth pursuing, you may find that switching onto such a path can require a mentor… so think about it, search out a mentor, and cut to the chase.
Our internal metronomes resonate within the higher frequencies of global communications, technological innovation, faster sales “turnover,” daily commuting, and a never-ending series of chores we must finish before sundown. The pace robs us of our chance to reflect upon the choices we must make and limits us to a range of two: “yes or no,” “right or wrong,” “good or bad,” “win or lose.” The rapid pace polarizes us as we slide into one or another of two camps that spring up instantly on every issue, public and private. There’s not enough time for “maybe,” “I’ll decide later,” or “do you have a better idea?” The pace of our daily lives has led a few of us to require a mechanical pacemaker in order to maintain an acceptable heartbeat. Others recognize the accelerating shrinkage of time in their daily lives, and consciously make time to consider some third, acceptable option when making their decisions. Making time to choose among at least three options can even out our rhythm and make room for wisdom to work in our lives. The beat goes on, but at a human frequency. It’s worth a try, don’t you think (circle “yes,” “no,” or “I’ll give you my answer before noon tomorrow”)?
The only two items in clear focus on the photo above are the conductor and the score. With those in place there can be harmony among the nine performers. In this particular scene the original music was written 330 years ago; a good composition lasts across generations of singers and listeners. With training and a little rehearsal, all nine performers can sing with confidence… and joy. The process applies equally well to the way we choose to live the rest of our lives. With an evolving financial plan, an experienced financial advisor, and maybe a coordinated team of trained financial professionals, you and your family for generations to come can follow with confidence the harmony you arrange, rehearse, and enjoy as your own financial composition. This is a learning experience. And it is a living experience. Try it… you’ll like it.