Confidently Spending in Retirement Requires This Strategy

This past week, I had a very revealing and important conversation with a Relaxing Retirement member who lost her husband a few years ago.  While protecting her identity, I’d like to share a key part of it with you.

The reason for her call was to find out if she could “afford” to hire a landscaper to not only cut the grass, but to take care of her plantings and keep her beds free from weeds.  She’s been doing this for years, but it has reached the point where the upkeep is stressing her out, and it is preventing her from scheduling anything into the future.

Respectful of the terribly sad nature of the position she’s now in after losing her husband of more than thirty years, what made her question so interesting is that she asked the question in the first place.  Having worked together to design their Retirement Blueprint for years prior to her husband’s passing, I know that she can not only afford to hire a really good landscaper to do everything, but because they did such a good job building their Retirement Bucket™ of investments, she can afford to virtually double her total annual spending if she chose to without negative impact!

Given this, why is she asking the question? Well, this is a great example of the phenomenon we’ve witnessed for many years, i.e. the strong earning and saving habit force developed by a tiny percentage of Americans during their decades long working lives is hard to break!  For the dedicated saver, “Flipping the Switch” to spending what you’ve saved is hard.  “It just feels weird” is the comment we hear most.

She has conditioned herself to feel as though she “should” worry because that’s what they’ve always done.  While that was valid for years, and it served them very well, she has earned the right not to have to sweat this anymore.  Like the countless members I have similar conversations with, she simply needed to have this reinforced with facts before she confidently moved forward without guilt or the feeling of being reckless.

Altering 40+ years of habit is challenging.  Confidently flipping the switch from saving what you’ve earned to spending what you’ve saved so you can live the life you’ve earned requires being in regular contact with your numbers so you can make educated and rational decisions based on fact vs. your conditioned opinion.

Get in touch with your numbers right now!

Download the Free Retirement Guide PDF

When Approaching Retirement, Be Alert for This Confidence Vampire

Unlike the tiny percentage of the American population who live exactly the way they want after they transition to retirement, far too many who have already exercised tremendous dedication to accumulate a sizable Retirement Bucket™ of investments live in constant fear financially.  And this severely limits the lifestyle you’ve earned.

Unfortunately, maintaining your financial confidence in today’s ever-changing and fast-paced world is more challenging than ever. There are obstacles confronting you at every turn.  Today, I’d like to discuss the first of two Confidence Vampires you must be alert for.

Confidence Vampire #1: Financial Journalists

Take a step back for a moment and think about the “business” of financial journalism for a moment (newspapers, television, magazines, radio, internet).

I will preface this to by saying I mean no disrespect to financial journalists, nor do I question their right to run a profitable business.  However, if you want to develop and maintain the unflappable financial confidence necessary to live the life you’ve earned in Phase II of your life, it’s critically important to recognize that their goals and objectives are in direct conflict with your financial confidence.

The way the media makes money is not by informing, teaching, or advising us, and it’s not by providing us with the most relevant and timely information we need.  They make money through advertising “sponsors,” i.e. companies looking to promote and market their own businesses.

So, the #1 goal and objective of all forms of media is to convince as many thriving companies, who are looking to get their “message” out to as many potential consumers as they can, that they have the largest audience of viewers to deliver their advertisements to.

Skilled Copywriters Create Confusion and Unrest

How to do they accomplish that in today’s day and age?  Since investing, in and of itself, isn’t very exciting, their skilled copywriters are paid handsomely to stir the pot, generate confusion and unrest, and convince viewers that the world’s financial system is fragile and unpredictable, that markets could crash at a moment’s notice, and that the only way to protect ourselves is to “tune in” and watch.

It’s a great tool for them to sound unnecessary, but extremely effective alarm bells, capture your attention, and strip away your confidence.

Why Do They Use Points vs. Percentages?

The most blatant example of this is how they report stock market activity throughout the day.  You may recall that in October of 1987, the Dow Jones stock market index fell 508 points. Back then, that represented a 22.5% drop in one day!

Today, 508 five hundred points represents about a 1.5% drop, but the financial media still uses the term “points” throughout the day.  Why do they continue to do this when it’s clear to any rational observer that it’s a distorted measurement of what is going on?

The answer is two-fold. First, “points” sounds like a much bigger deal than it actually is.  If they say, “The Dow fell 500 points today,” that conjures up a lot more fear and anxiety in the viewer than “The Dow fell 1.5% today.”

The second reason, which is brilliant marketing on their part, is to condition you to “keep score” of your investments on a daily basis just like you would keep score of how your favorite team is doing.

Keeping score every inning in a baseball game is necessary to determine how well your team is doing.  However, when it comes to investing, everyone from Warren Buffett, to Peter Lynch, to Nobel-prize-winning laureates like Eugene Fama insists the last thing you should do is react to what’s happening on a daily basis, i.e. keeping score daily.

This is not a recommendation to stop paying attention. Simply be aware that there is a significant conflict of interest between the financial media’s goals and your goals when you tune in and protect your confidence at all costs.

Download the PDF

The False Belief Too Many Retirees Have Which is Damaging Their Investment Results

Most Americans walk proudly and carefree when market prices are climbing.

Risk becomes irrelevant. Strategic asset allocation looks boring, and disciplined diversification gets called into question because some asset classes outpace others. Many begin to lament not having all of their money in the winning asset class over the last year.

The fact that markets correct all the time and have experienced many ugly stretches during their historic long-term climb is a distant memory.

And, then………the market hiccups!

We experience a normal, garden variety correction, like the 14% intra-year price drop we’ve experienced each year on average since 1980.

The financial media jumps at the golden opportunity to increase viewership ratings by stirring the pot and perpetuating the myth that “this time is different.”

Microphones are placed in front of innocent retirees who claim, “I’m worried. At my age, I don’t have time to make it back.”

Investing for the long term sounds great when you’re in your 30s, 40s, or 50s, but I’m 60 years old. I don’t have time to make up for any losses.”

Does this sound familiar? Have you ever had a similar thought?

If you have, I can assure you that you’re not alone. I can also tell you that it is unnecessarily in the way of you enjoying the Relaxing Retirement you deserve.

Whenever markets experience sharp corrections during their retirement years, the investment time horizon for too many Americans quickly shrinks.

While increases in market prices are typically met with apathy as I mentioned above, or reservation, i.e. “it can’t or won’t last”, sharp declines in market prices are greeted with the gut feeling of permanence, i.e. “it sounds really bad this time. I don’t think it will ever come back in my lifetime!

If you study financial news reporting, you will find a version of this story during every market correction. So much so that the we don’t have time to make it backmantra is treated as an indisputable fact, one which governs investment decisions for the majority of Americans during their retirement years.

However, this dominant sentiment is not supported by facts.

Long-Term Purchasing Power

We invest to solve a long-term problem, not a short-term one. And, that problem is purchasing power.

Take a look at what you spend money on. If history is any guide, outside of a few items, prices will be significantly higher in the future if for no other reason than the stated goal of the Federal Reserve is an inflation target 2% per year.

Given this, in order for us to maintain our desired lifestyle, our income must increase substantially over our lifetime. This is not a want. This is a need.

Our income must increase. And, in order for our income to increase, our Retirement Bucket™ of investments must increase in value over time in order to generate that lifestyle sustaining income.

In short, our shared problem is a long-term problem, not a short-term one. If our lifespan truly is that short as the quote suggests, stock market corrections would have no significance.

First, we wouldn’t own stock index funds because stocks solve a long-term problem.

And second, although potentially uncomfortable to think about, if we did own stocks and market prices temporarily dropped right before our demise, our beneficiaries would inherit and maintain ownership of them while prices corrected back.

How Long is Long Term?

With all of this talk about time, i.e. “I don’t have time to make it back”, let’s examine the facts about just how long is “long-term” using Average Life Expectancy information from mortality tables used by life insurance companies and social security:

  • Life expectancy for a 60-year-old individual is 25.2 years. However, the joint life expectancy of a 60-year-old couple, i.e. the average life expectancy for the survivor in a 60-year old couple is 30.9 years, i.e. just shy of 91 years of age.
  • For a 70-year-old couple, their joint life expectancy is 8 years (age 91.8)

Take a moment to let these numbers sink in.

Assuming for a moment that you are just “average” (chances are very good that if you’re reading this you’re well above average), where are you in these numbers?

For example, if you’re a 60-year-old couple, your number is 30.9 years, so your personal investment time horizon is 31 years! If you’re a 70-year-old couple, your investment time horizon is still 22 years, i.e. the length of time your Retirement Bucket™ of investments must last!

Stock Market Corrections

With your investment time horizon firmly in your mind, now let’s examine historical market corrections and the amount of time it took to “make it back.”

** For simplicity, we will use the S&P 500 Index as a proxy for the market as it provides a long history to track and encompasses a large portion of the market value.

From 1945 through 2019 (74 years after World War II ended), there have been 93 market pullbacks of significance (5% or more):

  • 59 of them were between -5% and -9.99% with the average drop of 7%.
  • 22 of the pullbacks were between -10% and -19.99%, with an average of price drop of 14%. It took an average of 5 months to reach the bottom, and 4 months to recover back to the original price before the drop.
  • Of the remaining 12 pullbacks, 9 of them were between -20% and -39.99%, with an average of price drop of 26%. It took an average of 11 months to reach the bottom, and 14 months to recover back to the original price before the drop.
    • Adding those three together illustrates that 90 of the 93 pullbacks over the last 74 years have fully recovered in 14 months or less, with 81 of them (87%) recovering in 4 months or less.

Investment Time Horizon

With these historical facts, let’s now return to those Average Life Expectancy facts and your investment time horizon to determine if the often-heard quote, “Investing for the long term sounds great when you’re in your 30s, 40s, or 50s, but I’m 60 years old. I don’t have time to make up for any losses” is valid for you.

Let’s assume for a moment that you have followed The Relaxing Retirement Formula™, i.e. you have determined precisely what it costs to support your desired lifestyle, and how much of that must be withdrawn each year from your Retirement Bucket™.

You have set aside multiple years’ worth (5 is a very safe number to start with) of your anticipated withdrawals held outside of your broadly diversified stock index funds, in money markets and short-term fixed income instruments which do not experience volatility levels like stocks.

You then strategically and broadly diversified the remaining balance of your Retirement Bucket™ of investments across a spectrum of stock asset classes using cost-effective index funds weighted toward areas of higher expected return, and you allowed all dividends you receive to accumulate in your money market to support your anticipated withdrawals instead of being reinvested. (a very important distinction)

If you are that 60-year-old couple, your investment time horizon 30.9 years, is the I don’t have time to make it back mantra factually valid?

No!

Even if we experienced what has happened only three times in the last 74 years and it took 58 months (just shy of five years) for market prices to return, you still would not have had to sell any of your broadly diversified stock index funds at a loss to free up funds to support your needed withdrawals because, in addition to allowing your dividends to build up in your money market, you already had those funds set aside outside of your stock index funds.

The reality is that your investment time horizon is a lot longer than you may think, and if you adhere to The Relaxing Retirement Formula™, you do have time!

Knowing this should give you enormous confidence to spend what you have planned to spend no matter what the current market conditions are at the moment.

How to Develop the Confidence to Retire

One of the biggest emotional, social and financial challenges you’ll ever face is the transition from working, receiving a paycheck, and saving money your whole life…to no longer receiving that paycheck from the work you do.

And, to make matters even more challenging, you then have to begin spending The Retirement Bucket™ of investments you’ve taken your entire life to build in order to support your lifestyle!

If you are like our Relaxing Retirement members who developed the disciplined habit of aggressively saving money during your working years, flipping the switch and now spending what you’ve saved doesn’t feel normal.  It just feels strange!

With guaranteed pensions now a thing of the past, even dedicated savers who have done a great job building up a sizable Retirement Bucket™ of investments are not 100% convinced they have enough.

So, they end up working longer than they need to because they think they have to.

Or, worse, they stop working and retire, but because of their fear of making a costly mistake and running out of money, they “pull their punches” and restrict their spending, and end up having to live like the masses who have to say: I can’t afford that.  I’m on a fixed income now.”

Like most dedicated savers faced with the prospect of freeing themselves from their dependence on their paycheck and relying on their Retirement Bucket™ of investments to support them, you may lack the financial confidence to flip the switch from saving what you’ve earned to spending what you’ve saved.

Unfortunately, all those years of discipline and saving, of building up money and investing it, are of no value to you now if you don’t have the financial confidence to spend it.

If this resonates with you in any way, then the best news I have for you, after running a retirement coaching program to help dedicated savers navigate this transition for over 30 years, is that none of them were born with the necessary financial confidence.

They developed it. 

And, so can you!

Retirement Confidence Has to Be Developed

As your Retirement Coach, if you’ll allow me to be that in this series, I want to help you transition to the life you deserve free of dependence on a paycheck.

And, like any great sports coach, we’re going to help you install your Retirement Game Plan, yoursystem,” by revealing and helping you implement the retirement coaching strategies, tools, checklists, and mindsets we’ve developed over the last 30+ years so you can start living the life you’ve earned 100% on your terms.

I look forward to visiting with you in the next edition.

Download the PDF

What is the essence of America? Fighting and maintaining that perfect, delicate balance between freedom to and freedom from.

I was having a great discussion with one of our Relaxing Retirement members about the state of affairs over in Ukraine and how incredibly fortunate we are to peacefully live our lives at the same time that all of the destruction and loss of human life is taking place.

It reminded me of the wonderful quote above by Marilyn Savant which I passed on to this member after our Zoom call. It really captures what we’re all about so I thought I would share it with you today as well.

I would even expand on the quote a bit and say the freedom to pursue your own rational self-interest, while enjoying the freedom from anyone using any form of force or fraud against you in your pursuit.

This is essentially what drove everyone to America in the first place, and hopefully what still drives them here today.

Every once in a while, especially during times like these when we’re witnessing the atrocities over in Ukraine, we all need to take a giant step back and think long and hard about how fortunate we are to be living in this day and age. And, most importantly, right here in the United States.

Because we all lead such busy lives, most of us never take the time to appreciate what we have, not to mention what we’re capable of experiencing.

When we all read and listen to all the complaining about everything that is wrong and how “someone” needs to fix it, I can’t help but think that a lot of people need a little contrast to gain some historical perspective.

If you’re a history buff like me, then you know that up until the 20th century, the world was quite a barbaric place. With everything we now have at our disposal, it’s easy to forget that.

Prior to the 20th century, unless you were in the elite ruling class, you were subservient to some form of a dictatorship or governing monarchy empowered with the right to control every aspect of your life.

You had absolutely no control of your life. None!

Dream, plan, and work for a better life for you and your family? Forget it.

There was no upward mobility and no opportunity to change your lot in life without using brute force to get your way.

Contrast that with today here in America where, for the most part, we have the ability to exercise our own judgment, and choose what we believe to be best for our own well-being (as long as we don’t use force or fraud to deny anyone else the right to pursue the same for themselves).

This basic and profound right did not exist prior to the creation of America.

Stop and think about how incredible that is, and the life it allows you to live if you choose.

Don’t miss the opportunity to take full advantage of it to live the life you’ve earned at every turn, especially while you still have the health and vibrancy to enjoy it.

When Investing for Retirement, Be Aware of Which “Hat” You Have On

During periods of turmoil and above average volatility, there’s a very distinctive habit that all successful investors have formed when preparing for their retirement transition.

That habit is making a clear distinction between which “hat” they’re wearing, and properly managing their “state” to match it.

Let me give you an analogy first.

In life, we all wear many hats.  For example, a few of them for me are:

  • Father
  • Husband
  • Business
  • Retirement Coach
  • Brother
  • Friend
  • Sports Coach
  • Conscientious American

To be effective, each of these roles requires me to have a certain mindset or “state.”

However, the correct mindset for one is unlikely to be the correct mindset for another.

For example, if I’ve been intimately engaged at the office all day, I had to have my “Retirement Coach” or “Business” hat on.

And, that requires a very specific mindset or “state” in order to be effective.

However, when I’m home over the weekend, for example, in order for me to be the father I want to be, I need to have my “Father” hat on.

If I still have my “Retirement Coach” or “Business” Hat on when I’m home, how effective (and pleasant) am I going to be?

For reasons I’m certain you can visualize, it’s going to be a disaster!

How Does This Apply to Your Retirement?

Let’s carry that same analogy forward to another example.

In life, due to our experiences, upbringing, education, and interactions, we all develop our own unique set of belief systems.  And, over time, those belief systems morph into our own personal philosophies which, in turn, govern the way we feel about and the way we react to various situations.

As an example, each of us has a belief system about justice and the way things “ought to be” when it comes to the role government and business plays in our lives.  This certainly flares up right around tax time each year.

Let’s label this your justice consciousness” hat!

As such, when we sit back and listen to any political figure on either side of the aisle discuss tax policy, environmental policy, or the economy in general with our “justice consciousness” hat on, each of us has beliefs about what’s wrong, who’s to blame, and how it should be fixed.

Some more strongly than others!

At the same time, each of us has developed an “Investor” hat.  Hopefully, that’s based on a very specific, rational, long-term focused system like our Relaxing Retirement Formula™.  

And, in order to be effective, you wear that “Investor” hat, and the proper mindset that comes with it, when making investment decisions.

When Things Get Ugly After You’ve Retired

Now, here’s distinction…..

When things are good financially, i.e. no big crisis going on, cash flow is good, and markets are moving in a positive direction, it’s easier to make the distinction between which “hat” you should wear to be effective at which time.

It’s easy to be rational and look at the long-term, big picture.

However, when things get ugly like they are right now during this Covid-19 pandemic, i.e. a crisis brews, markets turn upside down, the media outlets pile it on thick, and our reptilian “fight or flight” mechanism flares up, it becomes much harder to draw the line as to which “hat” we should wear. 

The result during times like this is an inability to distinguish between which hat we’re wearing, and with it, the inability to be effective in any area of our lives.

For example, when you’re watching wall to wall coverage of the Covid-19 crisis on television, it’s highly likely that your “justice and health consciousness” hat is on your head.   

That’s normal and perfectly effective for the moment.

However, it becomes dangerously ineffective when all of the emotions and fight or flight triggers that come with it are carried over to your investment decisions. 

And, that’s what happens to the overwhelming majority of investors during their retirement transition.

Everything’s fine while markets move in a positive direction.  However, when markets temporarily correct and move the other way (as they’ve always done and always will in the future), their rational, educated, long term “investor” hat gets thrown out the window.

In contrast, the investors who achieve the best results are those who make a very clear distinction between the two and are very conscious as to which “hat” they’re wearing at all times.

This allows them to make consistent, disciplined, and effective decisions that are in line with their carefully drawn-out plans.

The Strategy

So, the Strategy I recommend for you is to be very aware and conscious of which “hat” you’re wearing at all times. 

There’s nothing wrong with wearing any of them.  The challenges come when you mix hats or wear the wrong hat for the wrong situation.

Download the PDF

Don’t Let it Take a Crisis to Prioritize Your Retirement Transition

Now in my 32nd year in this business, I can say without any reservation that I have thoroughly enjoyed every day I’ve spent in it.  I continue to wake up each morning before any alarm clock excited to get my day going. 

With the exception of owning and running an NFL franchise, for which I’m only a couple billion dollars short at the moment, I can’t even remotely imagine ever doing anything else. 

With that said, as I’ve shared with many of you over the years, the one downside of our business is having Relaxing Retirement members, whom we’ve known and worked with intimately for many, many years, become sick and pass away.  Even in situations where we know they’ve been through treatment for a while, it’s always awful when we receive the news, especially when they’ve occurred in bunches.   

In a single two-week period, I learned that one of our members, a woman I’d worked with for years, had been diagnosed with leukemia, and that another member’s rapidly progressing Alzheimer’s now required he not be left alone. I heard from yet another member that his wife, after five years in remission, was back in the hospital, and soon to start a new round of chemotherapy. And finally, one of our newer Relaxing Retirement members who had only retired last year, developed a degenerative nerve disease which had already cost him much of his eyesight.

So, why am I sharing all of this sad news with you?  I’m sharing it to motivate you not to wait! 

Another Wake Up Call

The convergence of all of this sad news has provided another one of my life’s “wake up calls.”

We’ve all heard the phrase, “don’t wait for a crisis in your life to motivate you to prioritize and do what you really want to do.”

It would be great if it didn’t take a convergence of sad news to people close to you, or a crisis to get us to think and prioritize differently.

For me, one of those crisis events occurred when my mother got sick and passed away at the very young age of 57 when I was 20 years old. 

After dealing with the reality of losing my mother (unfortunately, she was terminally ill for 19 months), the lesson for me was to never wait to do anything because you never know when it can all be taken away from you. 

I would certainly have preferred that it didn’t take losing my mother for me to learn that lesson and prioritize a little better.

Compound Interest

One of the great advantages of “Phase II” of your financial life is that you are free of your dependence on your paycheck to support your lifestyle, and of the daily pressures you had to face at work.  However, without the deadlines and structure that work provides, some people feel lost.    

That’s why it’s so important, whether you’re still working, or if you’ve already stopped, to give significant thought on an ongoing basis to what you want most out of life, and then get busy doing it. 

As you objectively look around at all the people you know and see, something becomes obvious: certain individuals are more successful and happy than others. 

Not only that, but in stark contrast to most people whose optimism fades with age, these same individuals are more energetic, enthusiastic, and confident.  I see this clear as day among our Relaxing Retirement members. 

There are many explanations for this, but the number one reason for a loss of momentum during the “retirement” stage of life is a lack of constant and never-ending prioritizing and goal setting.  Without it, everyone loses their sense of direction and confidence.

Instead of being excited about what lies ahead, too many retirees become increasingly nostalgic about their youthful years, and the “good old days.”

However, those who continuously clarify and act on their priorities, goals, and plans benefit from the law of compound interest, i.e. just like with money, the more you invest in visualizing and working toward a better future for you and everyone around you, the better your future automatically becomes.

Part of this ongoing process is being keenly aware of the amount of time you spend in what I refer to as “bad energy environments,” i.e. in activities and with people who drain your precious energy.  A mentor of mine once labeled them, “batteries not included,” i.e. they drain your energy and confidence.

Always Progressing

The most exciting part of life is knowing that you’re progressing toward something.  And, that’s why it’s so important to have ongoing written goals and plans, not just weakly stated ones like new years’ resolutions that quickly turn sour. 

Your retirement years provide you with a new lease on life.  You now have the opportunity to clean the slate and spend all of your time doing what you want, when you want, where you want, and with whomever you choose.  

However, that doesn’t just fall into place without careful thought and action.  To get what you really want, you have to plan and act constantly.

As I shared earlier, life can be short.  Don’t let it have to take a crisis in your life to realize this. 

Get out there and soak it all up.  Be busy!  Be exhausted! 

Download the PDF

What All Retirees Can Learn from The Ageless Mick Jagger and The Rolling Stones

My wife Colleen and I had the pleasure of seeing The Rolling Stones play at Gillette Stadium in the summer of 2019, and we were thrilled that we made the “investment” to see it!  It was nothing short of spectacular and inspirational at the same time. 

I was the youngest of four children (by 5 years) and I can vividly recall spending many happy hours in my older brother and sister’s rooms listening to Stones albums.  Clearly, I wasn’t the only one to have this childhood experience because the entire packed stadium of 55,000+ sang every word to every song!

What blew us away was watching Mick Jagger captivate the crowd with his singing and dancing, still 100% on his game….at the soon-to-be age of 76!  Yes, 76! He was awesome!  All of the band members are in their 70s, they’re still playing, and they’re still good!

Jagger didn’t stop moving for one minute and still had the same command of the audience he had 30 years ago.  He appeared ageless.  What an inspiration!

As Colleen and I were discussing his motivation while driving home (clearly not money as his net worth is in the hundreds of millions), I shared with her some of the conversations I’ve had with so many of our members over the years about why they still do what they do well past the point of “needing” to.  (I strongly recommend taking a moment to read the excerpt from my book The Relaxing Retirement Formula on this very topic of refusing to adhere to conventional and severely limiting societal definitions and norms surrounding the concept of retirement and creating your ideal lifestyle.)

I shared our inspirational experience of the ageless Mick Jagger this morning with a very active Relaxing Retirement member who just turned 90 and still manages his commercial real estate property in addition to an extensive social and travel schedule.  I jokingly stated, “I’m not sure I know of two more inspiring examples.  What’s everyone else’s excuse?”

His response was so prophetic that I have to share it with you, “Others age because they listen to constant reminders that they are getting old. And unfortunately, they start believing it. We are constantly reminded by well-meaning family members (our biggest “enemies”) of all the things we can’t or shouldn’t be doing. Turn a deaf ear and mind to all that b.s.  If you think old and act old then, guess what…you’re old. Shoot me.“

Wow!  How’s that for an answer! 

I wonder what Jagger’s response would have been! 

Download the PDF

Develop Your Retirement Priorities with The Mayonnaise Jar and Two Cups of Coffee

Several years back, one of our Relaxing Retirement members exposed me to this tale and I thought it was a terrific analogy for all of us to take to heart.

Enjoy this…

The Mayonnaise Jar and Two Cups of Coffee

When things in your life seem almost too much to handle… When 24 hours in a day are not enough, remember the mayonnaise jar and 2 cups of coffee.

A professor stood before his philosophy class with some items in front of him.  When the class began, he picked up a very large and empty industrial sized plastic mayonnaise jar and proceeded to fill it with golf balls

He then asked the students if the jar was full. 

They agreed that it was.

The professor then picked up a box of pebbles and poured them into a jar.  He shook the jar gently.  The pebbles rolled into the open areas between the golf balls. 

He then asked the students if the jar was full, and they agreed it was.

The professor next picked up a box of sand and poured it into the jar.  Of course, the sand filled up everything else. 

He asked once more if the jar was full.  The students responded with a unanimous “yes”.

The professor then produced two cups of coffee from under the table and poured the entire contents into the jar effectively filling the empty space between the sand. 

The students laughed!

“Now,” said the professor as the laughter subsided.  “I want you to recognize that this jar represents your life.  The golf balls are the important things—your family, your children, your health, your friends, and your favorite passions—and if everything else was lost, and only they remained, your life would still be full.”

“The pebbles are the other things that matter like your work, your house, and your car.”

“The sand is everything else…the small stuff.  If you put the sand into the jar first,” he continued, “there is no room for the pebbles or the golf balls.”

“The same goes for your life.  If you spend all your time and energy on the small stuff, you will never have room for the things that are most important to you.”

“Pay attention to the things that are critical to your happiness.  Play with your children.  Take time to get medical checkups.  Take your spouse out to dinner.”

“Play another 18.  There will always be time to clean the house and fix the disposal.”

“Take care of the golf balls first—the things that really matter.  Set your priorities.  The rest is just sand.”

One of the students raised her hand and inquired what the coffee represented.  The professor smiled.

“I’m glad you asked.  It just goes to show you that no matter how full your life may seem, there’s always room for a couple of cups of coffee with a friend.”

* * *

Well said! 

Take a minute and write down what your golf balls and pebbles are. 

It’s never too late to re-prioritize.

Download the PDF

Total Financial Independence by Playing The Odds – Part II

In the last edition, I walked you through a spirited conversation we had with a friend over dinner about health, and my statistical findings on the leading causes of death from The World Health Organization’s website www.who.int.

This was all sparked by our friend’s comment, “All your exercise and attention to healthy eating is great, but there’s no guarantee you won’t still drop dead of a heart attack.  My father and grandfather both died of a heart attack before they were 62.”

What we discovered through our research was that 71% of all deaths world-wide (and 88% in high income countries like the United States) are related to non-communicable diseases (NCDs), i.e. not an epidemic and not an accident.

And, that among the four leading NCDs, the startling commonality is that they are not random, and not genetic.  They’re primarily brought on by lifestyle choices and the physical effects these choices have on our body:

  • Eating: what do we eat, when do we eat, and how much do we eat?
  • Drinking: how much alcohol do we consume? How much water do we consume?
  • Smoking
  • Exercise: how often, and what type
  • Stress
  • Sleep: how much do you get, and what’s the quality of your sleep?

In health, it’s 100% true that you could get hit by a bus and die.  It’s also true that genetics plays a role in your longevity.

However, as The World Health Organization statistics suggest, your lifestyle choices have a much greater impact on your health, vitality, and ultimately, your longevity.

If you have a sincere desire to be healthy and live a long life, why would you not play the odds?

Study how to eat better, drink much more water and less alcohol, stop smoking cigarettes, exercise rigorously on a daily basis, etc.

Those like our friend who choose to focus on the role that genetics or accidents play in our long-term health, etc. prefer believing it’s out of their control because it absolves them of any responsibility or role in the outcome.  After all, “there’s no guarantee.”

What they’re really saying is they prefer not to make the proper choices and, instead, just do whatever feels good in the moment without any regard to the long-term ramifications.

It’s easier to say it’s out of our control, it’s random, or it’s predetermined.

However, that’s a rejection of the reality that we all have the freedom to make the choice to play the odds at every turn and reap the rewards the statistics demonstrate.

I know I run the risk of that coming across as mean spirited when pointing this out.  Or, that I’m not sympathetic.  Nothing could be further from the truth.  My mother died of a brain tumor which later spread to her lungs at the age of 57.

She strictly ate three square meals a day, never smoked a cigarette in her life, and she consumed one cocktail a year on Christmas Eve.  She played the odds and still passed away at a very young age.

Playing the Odds Also Leads to “Financial” Health

At this point, you’re probably wondering what this has to do with financial health?

In short…everything!

When you read or listen to the majority of individuals (and, by extension, the financial media) talk about those who have achieved financial success, what do you hear?

  • Right Place, Right Time, Luck: Those who have done well had the luck of good timing, choosing to work for many years for company X vs. Y, the business they created benefitted from outside events, etc. and they earned a large income,
  • Trust fund kid, i.e. they inherited it (despite Forbes annual statistics of the remotely small minority to have sustained wealth coming from inheritance),
  • Magic Investment: they somehow obtained information, probably unethically or unfairly, that lead to a great investing outcome,
  • Education: they went to X school and thus had connections that nobody else had.

Do you see the commonality in all of this?

It all adds up to the belief that financial independence and success is all random, luck, and good fortune, and you have very little influence over the financial outcomes in your life.

As potentially mean spirited as this may sound, just as it is with the health examples I gave, it’s easy and convenient to believe that financial independence and success is all random, luck, and good fortune.

Believing that absolves them of the responsibility of focusing on the long-term and making the necessary choices you have made which have generated your total financial independence!

It’s easier to just block all of that out and focus on what brings instant, short term pleasure today, i.e. a new car I can’t afford, a 60-inch flat screen television, eating out five nights a week and running up the balance on my credit cards, or investing in a new “can’t miss hitting a home run” venture I heard about with money borrowed from my home equity line of credit.

Stark Contrast

The reality that I have witnessed amongst our Relaxing Retirement members over the last 30+ years is that almost none inherited anything.  The majority did not earn extraordinarily large incomes during their working years.  And, very, very few went to Harvard or Yale!

The reason they have achieved total financial independence has nothing to do with any of the traditional dogma most folks conveniently buy into, or that Hollywood loves to portray and demonize.

They made decisions long ago that they stuck with over their lifetime to spend much less than they made, i.e. live within their means, and save and intelligently invest the difference.

They took 100% responsibility for the outcome they’ve experienced.  They didn’t look for a mystical guarantee, or a magic pill (investment).

In short, they played the odds slow and steady.

And, this is what it all boils down to.  There are no guarantees and no magic pills, so you may alert anyone and everyone you know to call off the search.

There are, however, successful formulas built on highly probable odds in both health and finance that are in plain view for all of us to see.

I’ve often said that if I fail, it’s certainly not going to be because I wasn’t prepared or I wasn’t willing to accept 100% responsibility for whatever outcome I realized.

In health, and in finance, we should all welcome and take full advantage of the wonderful freedom we have to exercise control and choose our actions.  And, happily do whatever is necessary to play the odds at every turn.

Download the PDF

Total Financial Independence by Playing The Odds at Every Turn – Part I

Last summer, I had a “spirited” conversation with friends over dinner about health which led to some research on my part, and a revelation about the remarkable similarities to “financial health.”

This will take a moment to read, but I strongly recommend investing the time.  It’s that important!

The debate with our friends essentially boiled down to the leading causes of death and the role that luck and genetics play vs. the choices we make.

It all started when our friend said, “All your exercise and attention to healthy eating is great, but there’s no guarantee you won’t still drop dead of a heart attack.  My father and grandfather both died of a heart attack before they were 62.”

I’m sure you’ve heard some version of this comment before.  Ultimately, it’s the same as, “you can do everything right and still get hit by a bus!”  Or, “I know a guy who was healthy who collapsed and died while running.”

All of that may very well be true, but it certainly doesn’t change the facts about the overwhelming leading causes of death, and what those are predominantly attributable to.

Let’s look at some updated statistics I pulled from The World Health Organization website www.who.int about the leading causes of death (the italicizing and bolding is mine for emphasis).

World Health Organization

Non-communicable diseases (NCD) were responsible for 71% of all deaths globally in 2016, up from 68% in 2012 and 60% in 2000.

What’s even more telling is that NCDs account for 88% of deaths in upper and middle-income countries like the United States.  That’s remarkable!

Of the top 10 causes of death in upper and middle-income countries, only two are not NCDs: lower respiratory infections and road injuries which are numbers 6 and 8.

The 4 main Non-Communicable Diseases (NCDs) are cardiovascular diseases, cancers, chronic lung diseases, and diabetes.

Chronic obstructive pulmonary disease claimed 3.0 million lives in 2016, while lung cancer (along with trachea and bronchus cancers) caused 1.7 million deaths. Diabetes killed 1.6 million people in 2016, up from less than 1 million in 2000.

Deaths due to dementias more than doubled between 2000 and 2016, making it the 5th leading cause of global deaths in 2016 compared to 14th in 2000.

  1. Cardiovascular Diseases (CVDs)

CVDs are the number one cause of death globally: More people die annually from CVDs than from any other cause.

An estimated 17.7 million people died from CVDs in 2015, representing 31% of all global deaths. Of these deaths, an estimated 7.4 million were due to coronary heart disease and 6.7 million were due to stroke.

Most cardiovascular diseases can be prevented by addressing behavioral risk factors such as tobacco use, unhealthy diet and obesity, physical inactivity and harmful use of alcohol using population-wide strategies.

  1. Cancer

Cancer is the second leading cause of death globally, with 8.8 million cancer related deaths in 2015.  Nearly one in six deaths is due to cancer.

Around one third of cancer deaths are due to the 5 leading behavioral and dietary risks: high body mass index, low fruit and vegetable intake, lack of physical activity, tobacco use, alcohol use.

Tobacco use is the most important risk factor for cancer causing around 22% of global cancer deaths.

  1. Chronic Obstructive Pulmonary Disease (COPD)

It is estimated that 3 million deaths were caused by COPD in 2016, which is equal to 5% of all deaths globally that year, and 90% of those deaths occurred in low and middle-income countries.

The primary cause of COPD is exposure to tobacco smoke (through tobacco use or second-hand smoke).

Many cases of COPD are preventable by avoidance or early cessation of smoking.

  1. Diabetes

The number of people with diabetes has risen from 108 million in 1980 to 422 million in 2014!

In 2015, an estimated 1.6 million deaths were directly caused by diabetes.

Type 2 diabetes comprises 90% of people with diabetes around the world and is largely the result of excess body weight and physical inactivity.

Healthy diet, regular physical activity, maintaining a normal body weight and avoiding tobacco use can prevent or delay the onset of type 2 diabetes.

What’s the Commonality?

As you read through all of this, do you notice any commonalities?

First, more than two thirds of all deaths (and 88% of deaths in upper income countries like the U.S.) are related to non-communicable diseases (NCDs), i.e. not an epidemic and not an accident.

Among the four leading NCDs, the startling commonality is that they are not random, and not genetic.  They’re primarily brought on by lifestyle choices and the physical effects these choices have on our body:

  • Eating: what do we eat, when do we eat, and how much do we eat?
  • Drinking: how much alcohol do we consume? How much water do we consume?
  • Smoking
  • Exercise: how often, and what type
  • Stress
  • Sleep: how much do you get, and what’s the quality of your sleep?

There’s No Guarantee

Armed with these statistics from the WHO, let’s now go back to my dinner conversation with our friend and her comment: “All your exercise and attention to healthy eating is great, but there’s no guarantee you won’t still drop dead of a heart attack.  My father and grandfather both died of a heart attack before they were 62.”

I again sympathize with the loss of her father and grandfather because I lost my mother to cancer at age 57, but the fact that they both died of a heart attack before age 62 doesn’t necessarily suggest that it was genetic.  What are the chances that their lifestyle choices, and the negative long-term effects they had on their bodies, were similar?

More important, however, was our friend’s choice of the word “guarantee.”  It’s a very, very important word and one that led to my “revelation” about financial health.

Everyone desires certainty in their lives.  Most would prefer guarantees with everything (health, finances, etc.)

Unfortunately for the majority who seek it, life is not a straight line.  There are virtually no guaranteed results in anything.

Given this, to achieve whatever it is that you want, use your freedom to choose.

Research and Play the Odds at Every Turn!

In health, it’s 100% true that you could get hit by a bus and die.  It’s also true that genetics plays a role in your longevity.

However, as The World Health Organization statistics suggest, the tremendous news is your lifestyle choices have a far, far greater impact on your health, vitality, and ultimately, your longevity.

If you have a sincere desire to be healthy and live a long life, why would you not study how to eat better, drink much more water and less alcohol, stop smoking cigarettes, and exercise rigorously on a daily basis.

Those like our friend who choose to focus on the role that genetics or accidents play in our long-term health, etc. prefer believing it’s out of their control because it absolves them of any responsibility or role in the outcome.  After all, “there’s no guarantee.”

What they’re really saying is they prefer not to make the proper choices and just do whatever feels good in the moment without any regard to the long-term ramifications.

It’s easier to say it’s out of our control, it’s random, or it’s predetermined.

However, that’s a rejection of the reality that we all have the freedom to make the choice to play the odds at every turn and reap the rewards the statistics demonstrate.

Stay tuned for the next edition as I reveal my revelation, i.e. the remarkable analogy to financial health!

Download the PDF

The Racetrack Lesson We Can All Benefit From as We Prepare for Retirement

Have you ever driven a car at high speeds around a racetrack?

I haven’t, but I have a friend who has done so many times, and there’s a great lesson he shared with me that is incredibly useful for all of us in many other aspects of life including investing.

As he shared, your margin for error when driving around a racetrack decreases as your speed increases, so you must have a very definitive plan if something goes wrong.  A critical strategy, as you will learn in a moment, is to always keep your eyes on your target, i.e. where you want to go.

That seems simple enough.

Inevitably, however, weather conditions and fuel spills create “tests” for all drivers.  You’re humming along feeling confident on a straightaway when all of a sudden, as you head into a turn, you hit a fuel spill and your car spins out of control toward the wall. 

What follows is what all inexperienced drivers do: they panic, their focus changes, and their eyes get locked in on the wall they’re trying to avoid. 

When my friend experienced this for the first time, his instructor, who was seated next to him, simultaneously grabbed and turned my friend’s head while yelling “focus on where you want to go!

Amazingly, when my friend snapped his head back and adjusted his focus in the direction of the path of the track, the car responded and he steered back into control and avoided any contact with the wall!

The lesson for my friend: when in danger, don’t stare at the wall you’re trying to avoid.  Instead, remain focused on the track, i.e. where you want to go.

Guarded Confidence

So, why am I sharing this story with you?

Well, the path to investment success, your long-term financial health, and a fulfilling life is littered with “fuel spills,” each of which has the potential to grab your attention, influence your mindset, change your focus, interrupt your long ingrained successful habits, and thus, tarnish the outcomes you have worked so hard for and deserve. 

If you have your eyes and ears open on any given day, you know how much more challenging this has become with 24/7 “news” on dozens of media outlets and devices. 

The days of watching Walter Kronkite, often cited as “the most trusted man in America,” on the 6:00 p.m. news for your daily dose of information are over. 

It seems as if everything today is “Breaking News,” and each dose carries with it the “potential” to interrupt your long ingrained successful habits, and throw you off your carefully chartered course. 

Essentially, you have two choices.  You can do what my coach, Dan Sullivan of Strategic Coach, has done.  He made a conscious decision to eliminate television and hasn’t watched anything for 29 months.  Instead, he’s a voracious reader.

His first observation: “it’s amazing how the number of crises in the world has dropped significantly over those 29 months!” 

As we all know, the news media must manufacture and embellish events in order to repeatedly get our attention, so there are varying degrees of crisis.  However, each is reported as new and “different this time.”

Short of eliminating television completely, your second choice is to vigilantly guard your confidence against all forces competing for your attention including all forms of media, and friends, family, and co-workers who may very well have conflicting mindsets and biases. 

In many ways, my job as your Retirement Coach is very similar to the race car driving instructor.  You won’t find me physically grabbing your head and turning it, but every time there is a “crisis” of some degree reported, I want to be there to help you instantly gain perspective, keep your focus on where you want to go, and what I believe is the strategic path with the highest probability to get there. 

Just like the positive outcome my friend experienced when he adjusted his focus away from the wall he was about to crash into and back to where he wanted to go, condition yourself to remain focused on the long-term outcome you want and watch all the good that comes as a result.

Download the PDF