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Money: The Prose of Life
-- Ralph Waldo Emerson
-- Michael Phillips, The Seven Laws of Money Contrary to most retirement advice, making the most of the rest of your life will not depend solely on whether or not you have enough money. More important will be how well you can leverage your inherent wealth – health, creativity, experience, skills, relationships, community – into creating a life worth living. For many of us around age 50, obsessing about money is a common theme, even for those with adequate financial resources. Why is this so? For one thing, because we live in a culture preoccupied with wealth, where many life decisions are dominated and even corrupted by the mindless pursuit of money, it is easy to lose sight of what is really valuable. For another, it is much less risky to worry about money than to face the volcanic changes of midlife and beyond. Lastly, it takes all the self-confidence we can command to buck the prevailing – and ageist – view that we are necessarily done working, and moreover, that once we stop making money, we are worthless. Here are two suppositions about us so often repeated by the mainstream financial community and virtually every personal finance magazine, that they have the weight of truth:
Let’s understand that the concept of retirement itself is only a generation old, a by-product of the Social Security Act of 1935, designed to create jobs by moving older people out of the workforce. There is no reason to accept retirement as “conventional wisdom.” It is neither. Clearly, a generation haunted by the Depression was a lot easier to convince that job security was everything, even if you hated the work, and that your reward would be “Golden Years” of leisure. This may be a persuasive argument when work itself is backbreaking and/or physically dangerous, but that is not the experience of the vast majority of us who made (or make) our living in the information age. Consider recent research about attitudes toward work in the 50-plus population. In 1998, AARP did a survey of its membership and discovered something very surprising: 80 percent planned to continue to work after they became eligible for Social Security; more than a third would do it for reasons other than an income. A survey done two years later by Rutgers University’s Heldrich Center for Workforce Development found virtually the same thing. Both studies were widely reported in the media. We believe that these findings are the result of changes in the nature of work itself today, including where, when and how work is performed, coupled with a phenomenon called “down-aging,” best captured in the New Yorker cartoon caption: “Fifty is the new Forty.” No doubt fears about money – aggravated by a roller coaster stock market -- play a role in the trend to remain on the job longer. But one thing is certain: it is very timely. With labor shortages looming in the coming decade, we would go so far as to say that, even if you sold your company for big bucks or got a fat inheritance from your rich uncle, it may well be your civic duty to pitch in, keep your job if you can and it suits you, or find other, more rewarding work. E-tirement, anyone? According to Daniel Pink who coined the term in his book, Free Agent Nation: How America’s New Independent Workers Are Transforming the Way We Live, “Legions of 60-plus Americans are …using the Internet as a platform for finding and executing work.” As it turns out, Uncle Sam wants you to extend your working life. Someone over there is paying attention to the true cost of giving up able-bodied, able-minded people to “retirement?” The Social Security Administration has now rolled back a complicated formula that was a disincentive to work in that it reduced benefits for every dollar earned over a certain limit. Today, the full benefits that begin at age 65 continue no matter how much you earn. (Of course, the earnings themselves are taxed at regular rates. Sorry.) The Retirement IndustryThe research notwithstanding, retirement is still touted as the American Dream, Act II. We’re urged to “Retire Early!” “Retire Rich!” from every quarter. Howard attended one Senior Expo four years ago and is still getting unsolicited mail and calls from 55-plus gated communities and retirement planners. To understand the consistency and persistence of the message, you have to recognize whose interests it serves. There’s big money (you should pardon the expression) counting on us to pack it all in and devote the rest of our lives to leisure pursuits. The messages may be attractively packaged -- youthful, if graying couples, soaking up the sun in an exotic locale or heading off for a round of golf – but the message is the same: get lost! Obviously, the retirement industry – traditional financial services, cosmetics, entertainment, leisure, travel, pharmaceuticals, and Sun Belt real estate – has much to gain in fueling the national obsession with retirement and a great deal to lose if millions of us choose otherwise. It needs to adjust its vision to one more agreeable and relevant to those Theodore Roszak has dubbed the “New People.” In the three years since we founded 2young2retire.com, we have begun to notice signs that change is afoot. Del Webb, the developer who seeded the West with Sun Cities for the 55-plus population, is now offering home designs that include a home office and high-speed Internet access. The AARP now offers career counseling through its affiliation with Drake Beam Morin, one of the nation’s largest career management organizations. These are signals that retirement as a state of permanent vacation is losing its hold on the popular imagination. That’s progress. We (Howard is 67; Marika, 61 now) have no intention of retiring, a fact that needs to be taken into account in our financial calculations. Clearly, the time horizons assumed by retirement formulas don’t apply to us, and need not to anyone who decides to invest at least as much effort into making money as to managing and preserving it. Let’s put this into context. Where would you rather be? Learning new skills, interacting with other like-minded folks, and being paid for your contributions, or hunkered down with your computer, transfixed by the ups and downs of the Dow? The truth is, thousands of people of 50, 60 and beyond are heeding the advice of Stephen M. Pollan, financial and legal consultant and author of Die Broke, some of the smartest, most radical ideas we’ve come upon to reinvent our relationship with money at any age. “Don’t retire,” Pollan says, “Forget all the hype and marketing. Retirement isn’t a golden age. It’s not about doing what you want where you want. It’s not a dream – it’s a nightmare.” Real SecurityWhat would happen to your prospects for living the life you want if you give your best to each day, whatever that means to you individually? We think that decision alone improves your chances to stay employed – to whatever extent you wish – but more importantly, keeps you employable in ways that mitigate inflation or a volatile stock market. That’s real security, a priceless, enduring feeling of self-worth. Listen to human potential guru Wayne Dyer: Don’t let an old person get in your skin. Millions of us within and on both sides of the Baby Boom generation are confirming that there is no shortage of opportunities to generate an income, whatever one’s age, ability and financial resources. More important are qualities like flexibility, resolve, self-confidence, and the willingness to become a beginner again if necessary. Consider the experience of Anne Kleine of Mrs. Kleine’s Krelish. A former nurse and Hospice veteran, Kleine decided to open a hot dog concession with her husband and partner, Larry. She soon saw another opportunity in the enthusiasm of customers for her “sweet” sauerkraut, a family recipe. With the help of SCORE, a volunteer organization of former executives who specialize in helping small businesses get started, Kleine scaled up production and launched her standalone product. It was eventually marketed throughout the Pacific Northwest, San Francisco Bay Area, Ohio and the Pittsburgh, Pennsylvania areas. Vowing she would "never grade another paper," Ann Mariah Stewart ended 30 years as an English and history instructor at American River College in Sacramento, California, eager to launch a new career. It was a promise she wouldn’t keep. Today, she splits her time between working as a park ranger at Canyonlands National Park and teaching for the Navy, in a program developed by Central Texas College. The latest gig Stewart is considering: an ESL (English as a second language) teacher in China. For more income-generating ideas, see Chapter V: 101 Opportunities for the Open-Minded. “It’s the Economy”
-- P.T. Barnum When James Carville, the campaign strategist credited for having helped Bill Clinton win his first election, coined the often quoted “It’s the economy, stupid,” he was stating something about us that we don’t always like to admit. The way to our collective heart is through our wallet. We, possibly more than others in the so-called developed world, are hung up on money and materialism. For millions of Americans, writes Juliet B. Schor in The Overspent American: Why We Want What We Don’t Need, “what they acquire and own is tightly bound to their personal identity [as] participants in a national culture of upscale spending.” Of course, most retirement planning plays right into these preoccupations with material comforts and security. The lyrics of a popular Beatles song suggest that we know money “can’t buy me love,” yet we behave as if wealth is the “Open Sesame” to everything worthwhile in life. From this, you might draw the conclusion that our money skills are as good or better than the next guy, and that we understand the basic laws of money. This is far from the case. An ABC News.com report revealed that we are surprisingly illiterate as a nation about the subject: “Americans scored an average 42 percent on a 14-question test of basic knowledge of personal finances. For instance, two-third falsely believe there is ‘an organization that insures you against losing money in the stock market or as the result of investment fraud,’” (don’t we wish). Nearly half of those tested think that diversification will protect one’s investments if the stock market falls, and 63 percent don’t understand the basic concept of inflation. High school seniors flubbed the math as well, with 82 percent failing basic questions on interest rates, savings, loans, credit cards and calculating net worth. Uh-oh. Could this be why credit card debt -- $1.73 trillion now -- and bankruptcies have soared to unprecedented heights in recent years? And, more to the point, why Baby Boomers, who have access to a wealth of financial information, are spending money like there’s no tomorrow. “I don’t want to speak too disparagingly of my generation,” says Stephen King, in On Writing: A Memoir of the Craft, “(actually I do, we had a chance to change the world and opted for the Home Shopping Network instead.)” Money Immaturity To an astute observer of the psychology of money like George D. Kinder, a fee-only certified financial planner and author of Seven Stages of Money Maturity: Understanding the Spirit and Value of Money in Your Life, this is one more sign that dysfunctional behavior around money has become an epidemic. Kinder has experienced money madness up front and personal, and on both ends of the wealth scale. Raised in Appalachia, he saw his hardworking attorney father struggle to make money. So devastating was the memory that when Kinder graduated from Harvard in 1971 with a degree in English Literature, he was determined he wasn’t going to sacrifice his soul "in any pursuit as unfulfilling as a ‘job.’" Instead, he would spend "the better part of the next decade resisting and rejecting the idea of a career, setting aside my natural aptitudes in financial affairs for a vain attempt to become an artist." "When I married, my wife and I made a deal. First she would support me for two years, while I pursued my writing and artwork, and studied the soul. Then I would return the favor." When the two years were up, his wife “claimed her half of the bargain. Again I faced the demand of earning money. The old suffering came back," he said. Like the clients Kinder works with today, he found himself holding on "to a body of beliefs with such fierceness and misplaced loyalty that they block us from the experience and pursuit of freedom, often for years, sometimes for our whole life." Wait a minute. Isn’t freedom what money is supposed to bring us, what our “dues-paying” is about? Kinder’s insights about money and suffering ring true in our own lives, and may in yours. At 19, Howard got a message about financial success at any price that shaped his own youthful rebellion against gainful employment and created long-standing misgivings about money. His father, a typical first generation American for whom life was about “making it” in business, collapsed and died of a heart attack at age 49. He had enjoyed early success and made a lot of money, moving the family to an affluent neighborhood filled with other entrepreneurs. Then came two business failures, the stress of a six-day workweek to keep up with the bills, and loss of self-esteem that he never regained. After his death, the family moved into more modest accommodations, and Howard’s mother took a service job. Howard eventually found his vocation in advertising sales, but until recently, studiously avoided becoming an entrepreneur. None of his siblings have chosen that path. Marika’s father -- a career diplomat, enjoying a state-provided house, servants and chauffeur-driven car -- suddenly found himself on the wrong side of his employer, stripped of citizenship, job and home, and “down to his last $1,000.” Although within a year, he begun a new career as a college professor, he was haunted by his earlier losses -- including a pension and access to bank account and real estate -- and preoccupied with rebuilding financial security. Her parents always lived far more frugally than was necessary, renting rather than buying a home, although they had both opportunity and means, driving the same modest car until it fell apart, traveling infrequently, and making other sacrifices to create a financial safety net. The abrupt change in her parents’ fortune left Marika with heavy-duty issues around money and security that she is still working through. Denial, fear, overwork, low self-esteem, penny-pinching, stress, suffering. No one would deliberately choose any of these, yet they are often strange bedfellows in our relationship with money. To what degree are unconscious scripts about money and security from earlier in your life, or from another era altogether, driving the decisions you’re making in maturity? Are you, as poet e.e. cummings quipped, “living so far beyond my income that we may almost be said to be living apart.” Spendthrift or tightwad, we use money as a stand-in for what’s missing in our lives: needs we haven’t satisfied; goals we haven’t met; the whole category of unfinished business that becomes more urgent around age 50. Despite what the latest best-seller about building wealth and “retiring rich” suggests, merely having more money won’t permanently change or improve any of those things. Rich or poor, goes an old saying, you still have to put your pants on, one leg at a time. Reflect on the First Law of Money from Michael Phillips’ The Seven Laws of Money: “The values in your life have to be powerful, tangible values that exist independently of money.” The other Six Laws according to Phillips, developer of MasterCard and a former high-ranking banking executive, are also worth your consideration. When we invest in understanding and clearing up the emotional baggage money brings to the surface -- no overnight task for most of us – it’s just possible the money will take care of itself. It’s no miracle. Just remind yourself that money is a medium of exchange with no intrinsic value. If we didn’t have money, we would, like convicts using cigarettes for currency, have to invent it. Money, the “prose of life,” exists to serve us, not dominate our existence. A Financial Adviser of Your Own It used to be that when you made your first appointment with a financial adviser or retirement counselor, you would be asked to bring in a balance sheet and other detailed statements of your net worth. That’s still true and necessary, but thanks to innovators like George Kinder and Richard B. Wagner, former chair of the Institute of Certified Financial Planners (now Financial Planning Association), those conversations are becoming more comprehensive and holistic – a little like confession without the need for absolution. In addition to "The Seven Stages of Money Maturity™” seminars and trainings that Kinder now leads around the country, in 1994 he and Wagner co-founded The Nazrudin Project named for the Mullah Nazrudin, a character in Sufi stories who comes up with unconventional solutions to problems. An informal fraternity of influential CFPs, including past presidents of the ICFP, that meet each year, the group addresses the “soul of money” and the best ways to help clients understand the connection between money, sex and power, and how it can damage relationships and get in the way of sound financial management. “Money skills are the survival skills of the twenty-first century,” Wagner believes. In turbulent times like these, we need to brush up on the New Math. Computers have standardized portfolio assessments and the selection of stocks, bonds and mutual funds, so financial planners know their own success depends on building solid relationships with clients. You’ll want someone like Kinder, Wagner or Stephen Pollan on your side, so shop around until you’re satisfied you have found an enlightened professional. Both the Institute of Certified Planners (icfp@icfp.org) and the National Association of Personal Financial Advisers can help you find a fee-only planner in your area. As you probably guessed, fee-only means the financial planner doesn’t get his or her compensation on commission and is therefore able to give you an objective opinion as opposed to promoting a specific product. Check with friends. Call around until you find a CFP who talks your language and set up a meeting. Ask him or her to run the numbers for you on several scenarios, including what your finances might look like if you continue to contribute to Social Security and postpone taking your benefits until the compulsory age of 70. In addition to the financial statement, prepare for your meeting by working up as detailed a plan for your life as you can manage. Attend the meeting with your mate or life partner – most planners will insist on it – but also include him or her in the preliminary discussions. Don’t let those columns and rows get you down: it’s only money. Include this document in your preparations and you’ll be well on your way to getting treated as an individual, not a member of an age group. Expect the best and increase your chances of receiving it. Had Enough?For many of us, realizing that we can make income is one way to tackle our scarcity fears. But there is another breathtakingly simple yet powerful strategy that has worked for thousands of people: coming to terms with what, for you, is enough. Try saying the word “enough” aloud. What comes into your mind? What happens in your body? All successful diets work by retraining our bodies to feel satisfied with a lower calorie intake. We can apply the same principle of “enoughness” to our financial life. Here is a little secret from the Voluntary Simplicity movement the retirement industry would just as soon you don’t find out: you can live far more comfortably with less than you thought possible, and, even more radical, you are free to choose. As long as you pay your taxes and curb your dog, what you decide to spend your money on is up to you. If you find yourself worrying about keeping up appearances, bear in mind this simple advice from Fred Rogers of Mr. Roger’s Neighborhood: Don’t be concerned about what others think of you. You’d be surprised how little they do. Consider this an invitation to experiment with the other side of the equation: not income (chances are you have a good handle on that), but where your money goes. First, stash the plastic, yes, the ATMs too, and start paying cash like your parents use to do. Keep one card in a safe place for emergencies, like unexpected home repairs or urgent travel, and always pay it off before it comes due. It’s like a free 25- or 30-day loan. “Credit cards are one of the primary battlegrounds on which you have to fight for your economic life,” advises die broke advocate, Stephen Pollan, “Remove every credit card from your wallet, including gasoline cards. There’s absolutely no reason you need to carry them around. The only things they do is make it easier for you to ignore prices and buy things you don’t need and can’t afford.” Tough medicine with no sugar coating. We took Pollan’s advice and have been amazed at how quickly using cash or a check (one, tucked into a wallet for emergencies) has made us more aware of our spending habits and helped us control them. Bottom line, it works. When you pay cash and keep the receipts, you have an immediate record of your expenses. To avoid replacing one obsessive behavior over money with another, try making a game out of keeping track of your money. A little lightness around this subject never hurt. Simply RichEnough-ness wasn’t the goal of 50-somethings Jim and Kendra Golden, an engineer and lawyer, who quit their jobs, sold their home of 20 years, and headed West in a 32-ft RV to look for America and a new, less stressfully, more meaningful life. However, it was one of the off-road discoveries that changed the way they think about money and how they spend it. As Kendra Golden tells it, life “on board” was simple. They concentrated on seeing and doing all the things they could find interest in the places visited that were free or inexpensive. Outdoor activities; local museums, art galleries, music and theater offered by local colleges, self-guided walking tours, and window-shopping. The couple found that traveling in a motor home made it easy not to buy things because space was limited. They also enjoyed cooking for themselves rather than taking a chance on whatever restaurant they came across. They camped or parked overnight at free or inexpensive sites. They reported themselves “interested (and pleased) to see how significantly we have reduced our living expenses,” and how richly they were living in experiences, new friends and opportunities. Eventually the Goldens found a little town in the Pacific Northwest that met their criteria for the good life and settled there. Children’s book author, Rita Golden Gelman has taken an even more radical approach to her financial life. Divorced, with two grown sons, Gelman decided to blend her passion for travel and exploring other cultures with the desire to live more frugally. In her book, Tales of a Female Nomad: Living at Large in the World, she describes how she manages to live on about $10,000 a year by making her home in places like Bali, where the average civil servant makes $50 a month (the equivalent of our monthly cell phone service!) Puts things in perspective. Of course, the odysseys of Gelman and Golden are not for everyone. But they do teach us what is possible when we base life decisions on something other than the money. Like these adventurers, we can understand where our money is going and what it is buying us – one of the most liberating things we can do at any age. Frankly, it takes resolve and daily reinforcement to rid ourselves of nonstop consuming so attractively packaged as The American Way of Life. Quick question: what other country pins its economy as heavily as ours on a Consumer Confidence Index? Scary, when you remember the so-called confidence of consumers is closely tied to the stratospheric rise of credit card debt. Putting Money In It’s PlaceAccept that money is part of life, neither the most important part nor something we can avoid. Face the fact that we all have emotional issues around money and the time to do something about them is always right now. Talk them out with your life partner, sign up for a seminar or hire a personal coach skilled in such matters. It’s what you don’t know that can hurt you. Tackle the practical details of your finances without delay. Create a simple, record-keeping system that encourages you to document every amount above a figure you find significant. That’s anything over $5 for us. Start paying attention to your spending and make sure you’re getting your money’s worth in the best sense of the term. Your Money or Your Life, the groundbreaking book by the late Joe Dominguez and Vicki Robin, has some excellent suggestions on how to measure what something costs you in life energy. Small, resolute steps like these not only make practical sense but can add up to financial independence and freedom later in life. That’s wealth an accountant might have difficulty accounting for. And there are other, equally important advantages as Rita Gelman and Jim and Kendra Golden discovered. You may discover what contributes to your sense of abundance or enoughness, a psychological and spiritual bonus if there ever was one. You may learn to distinguish between what you need to live well and what is window dressing. As for the excess, the stuff you couldn’t do without – for many of us, literally the accumulation of 20 or 30 years -- there’s Ebay, the popular online auction site. Arguably, Ebay performs a valuable recycling service, but would it exist at all if we stopped buying stuff we don’t need? Log on and get an eyeful of where America’s impulse buying-on-credit ends. Just don’t succumb to auction fever, OK? Adopt an entrepreneur’s perspective toward the rest of your life. You’re going to have a lot to work with, after all. That might encourage you to create a financial reserve equal to 6-12 months of your expenses (the advice of virtually every financial planner) and to bring your expenses in line with your income (the “secret” to prosperity, say the ancient sages). You won’t know until you try. Get out that yellow lined pad and sharpen your pencil. Try This
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