Monthly Archives: May 2018

FIRE.058 Life Can Sucker Punch

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A longtime family friend just lost their spouse unexpectedly.  Their passing is crushing for all of us, especially the surviving spouse of nearly 30 years.  They were very close to each other, outgoing and fun to be with.  Life can change in an instant.

I love EVERY day.  I’m privileged to be in the situations my wife and I are in, including; financially, relationshipally(?), and healthy.  I write about “thoughts of LifeInFIRE.”  I feel most of my posts are on the positive view that I see, and maybe that’s how I present the views around me to myself.  If you ask me, positive helps healthy.

Our friend is strong and healthy, but is now living in their home by themselves.  I cannot imagine the emptiness around them.  At this point, it is their new-normal, that’s just a fact.  A crappy fact.

I chose to offer my experience with finances/structural stuff having been through similar losses for my mom and mother-in-law.  I just wanted to take some pressure off their plate giving them one less thing to worry about.  My offer was accepted with a “whew, I have someone 100% on my side to help out.”  I first said “there is no need to do anything financial right now, no decisions to make.   Don’t do anything for 6 months.”  That relieved a giant stress off our friend.

I gave some ideas to settle in to the new-normal life.  Review some interests that they previously had.  I said to lean on your kids for companionship.  Always take advantage of your friends who have been there, and others who are extending themselves more now.  (I’m really not a great emotional person, but I’ve seen great people really come to help over time).

Now, much of my strength is financial.  I’m able to look at spending/earning structures and see the path ahead.  Luckily, our friend is comfortable.  They were smart to save and plan for the future and enjoy life together all along the way.  That is so important because when this sucker punch happened, the passing was the main punch.  There was no follow-up second financial-crisis punch.  There should be little stress on the financial side, having to panic over how to pay the bills now and into the long future ahead.

Multiple times I’ve seen the benefits of you planning for your life partner surviving you if you should you pass first.  Your partner will not feel a constant month-after-month or year-after-year attack from bills they cannot handle.

In our friend’s current situation, there are some decisions to be made.  Some account renaming, consolidation, trustee location type decisions, but those can wait.  The bills will be easily paid because of lifestyle planning for the past few decades.

In Comes the Financial Planner…

Having said all of that, I was able to attend the meeting their new (fiduciary) financial planner set up to “review” the accounts.  This was OBVIOUSLY an attempt to pull EVERYTHING into his Assets Under Management model, included taking lump sum rollovers from defined benefit pension plans.  No account seemed to be outside the scope of “I can earn your more if I manage it”  (hmmm, “can you guarantee that in writing?”)

The ideas I asked:

  • Should they keep their 401k and not roll over to an IRA (they are not yet 59 1/2 but separated from their previous company at 55)? Matter of fact, this acct was quickly rolled over to an UAM IRA before I could question the action.  Now it’s a 72t SEPP hassle versus a flexible “normal” 401k withdrawal.
  • Should they pay off the small amount of 5.75% mortgage?
  • Should they take advantage of the 12% federal income tax bracket and convert some qualified account money each year, before social security payments and IRA/RMD withdrawals begin?
  • Shouldn’t they consider taking the pension payments from the large stable company, rather than rolling it over to an IRA?
  • What if they feel more comfortable with a little more in their (non AUM) cash emergency fund than in their investment account?
  • Should they put $6500 of her work earnings into a Roth since there is already enough money in the cash account?

EVERY answer was no, except the Roth was a maybe—maybe because the Roth would still be AUM fee-able.   All other options lowered the amount of AUM.

In no way do I feel these answers were “in their best interest” but much, much more “suitable situation” answers.  Those are not fiduciary responses in my option.  To be sure, the 401k to IRA conversion the planner did clearly also shows an AUM strategy.

 

I can see how leaving your partner setup, with a list of accounts, and a simple strategy upon passing. (Love Letter)  Or at least having a financial planner that isn’t driving his AUM straight up.

Did I mention the fact that the AUM percentage fee would be more than our friend’s yearly gross from their part-time employment!?  How the presented “financial plan” that showed 85% success slyly listed the part-time income earning period as until “end of life.”  One way to make the plan “successful” was for our friend to work 4 days per week until death.  DO NOT TRUST AN ADVISORS PLAN IF YOU DO NOT UNDERSTAND THE VARIABLES THEY USED TO MEET THE SUCCESS PERCENTAGE.

 

*** Nothing in this article is to be construed as financial advice.  I am not a financial planner, nor do I pretend to be.  You should always consult your own professional when seeking advice.

FIRE.057 One-Step Below Cool

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It seems most everything I do is one-step below cool.  I do not have the perfect everything.  I do not think of all the cool things I’d like to have.  However, I have an absolutely great life, but it’s not perfectly awesome and luxurious.  I guess it’s just plain-old awesome.  [“Find The Positive“]

I know you’ve seen the advertisements everywhere showing some perfectly cool lifestyle.  Of course, it’s something we all would love to have.  But thinking for a few minutes about the opportunity to have nearly the same thing, at a lower stress level, sounds great to me.

Here are some examples of being one-step below cool:

House:  We own our home.  It’s one-step below cool because it’s a great little 1060 sq ft home.  It’s located 3 houses (10-second run) from a massive desert preserve/park with dozens of miles of trails for running, biking, hiking, etc.  Our home has all the modern conveniences, but our cost structure (taxes, insurance, utilities, even furnishing) amount to a smaller proportion than a larger home.

Beach home: A total splurge is our beach home.  It’s one-step below cool because it’s just a mobile home/trailer. It’s located 2 driveways away (55 second run) from the ocean view/access path.  We get to enjoy the beach, the beach town, other beach towns, neighbors, and family, at a greatly reduced price relative to anything else in the area.

Harley- Scooter:  I can’t have a motorcycle based on my wife’s declaration.  The risks of injury are far too great driving around city surface streets and on the highways, mainly because you just never know what could happen.  My one-step below cool, is my scooter.  My scooter is at the beach home where we vacation.  I get the enjoyment of riding, but on slower, smaller coastal streets, often during the quieter hours of the day (living off-peak).

Mach 1 Mustang:  Here’s my perspective, my wife wanted a Mach 1, I’m not that cool, but my one-step below cool is, she owns her dream Mach 1, but I can drive it if I want to cruise around (surprisingly I don’t drive it more than 1-2x per year).  Side note: because we live off-peak, we are able to drive the car around when the roads are much quieter as well.

Main Cars: We have nice main cars.  Car collector people call them “daily drivers.”  But we are one-step below cool because we buy 3 year old cars and drive them 10 years.  I roll around town in the 2001 version of luxury, an old Lexus.  (“granny” car)

Friends: I have so many cool friends.  Some of them are truly super-cool.  I’m lucky to know and be able to hang out with these people.  However, I’m at least one-step below cool on many comparisons with them.  Maybe they’re more successful in business, or have a bigger family, or take better vacations, or, or, or…

Sports:  I’ve played different sports in my youth and adulthood.  I play hockey and do triathlons, etc.  I’m on teams that are lower level “beer league,” and I race in the age-group pack.  I’ve never had the best high-end equipment to maximize my performance—more specifically, the possibility of performance— but rather just enough quality that allowed me to stay in the sport, and compete, and enjoy myself.  [note:  seriously?!   $12k for a tri bike, not for my med-slow ass]

I just re-read this post and realized it sounds like I’m being phony humble and sharing humility, but that’s not it at all.  I have SO much, but I truly just seem to naturally live one-step lower.  I’ve always said there are Type A and Type B personalities and I’m an A-.  In school, I learned earning 91% resulted in me getting the same “A” as the person who earned 100%.  However, I kept 9% of my effort for myself to optimize my enjoyments, while still presenting the same “A” to those who reviewed my grades.

One big note here, is that in my profession when people were counting on me to deliver, I made sure I put in the effort and focus to be as close to perfect as possible.  I did not slack on deliverables to have more time for myself.  I did my best to deliver quality.  But you can bet I definitely did choose to manage my work/life balance so I wouldn’t burn out, and I still met and exceeded my goals as a dependable, reliable co-worker.

I have a mantra that states “everything has a ding.”  Those four words allow for the release of trying to keep everything perfect.  Everything can be great, can be awesome, but just a sliver below perfect.

You can have everything you if you’re willing to take your time (delayed gratification) and make sure you know what you want and how much will satisfy yourself.

Take a look at your life, your possessions, your wants, and see if you can tweak things just a little to lower the level and still maintain the usability and as important, the enjoyment.  Small life hacks can pay off in multiples down the road.

 

*** Nothing in this article is to be construed as financial advice.  I am not a financial planner, nor do I pretend to be.  You should always consult your own professional when seeking advice.