Looking directly into a mirror gives you one perspective of yourself. However, if you turn the mirror at a right angle to another you will discover several images of yourself. Some may appear distorted and backward, like in an amusement park fun house. Nevertheless, each one allows you to see yourself differently. Similarly, the choices available to us when making decisions with our money can appear to be hard to figure out as well. Like the right-angle mirror, we are forced to view our finances differently even though they are the same.
Whether you are a budding Millennial or an aging baby-boomer our attitude and behavior regarding money and the way we consume it is crucial.
Like the light that enables us to see ourselves in the mirror, two clear, yet extremely variable factors combine to affect the choices available to us. First are our health and our longevity. We don’t know how long we are going to live. Second, assuming we are in good health, is our investment return, which can vary year to year. What is the best way to approach these conundrums?
I love this quote from Ashley Smith, an American author:
“Life is full of beauty. Notice it. Notice the bumble bee, the small child, and the smiling faces. Smell the rain, and feel the wind. Live your life to the fullest potential, and fight for your dreams.”
Deciding which way to live our life to the fullest potential would be an excellent beginning.
I like to imagine if this were the last day of the year and it is early January of that same year. For example, it was January 1st, 2019 and we imagine it is now December 31st of 2019. If we looked back over the course of the year, what events would have to happen for you to be happy?
I call this type of thought-provoking exercise making an “Intention”.
The late Wayne Dyer writes about Intention in his books. He says Intention is a connection to harness our infinite potential.
Nobel physicists like Niels Bohr, Max Planke and others speak of this force that connects you to whatever you want to create or manifest in your life that is available to everyone.
Great physicists are saying that the recent changes in technology have benefitted us in a tremendous way. It has affected our lives socially, economically and even spiritually by transforming not only archaic modes of communication but how we process of thoughts as well. Remember the fax machine??!! If we decide to make changes in our behaviors and beliefs our minds can attain great insights where anything is possible. I believe the fusion of the physical world with new types of technologies including artificial intelligence, robotics, virtual reality, and 5G wireless will spark our imaginations beyond what we ever thought was possible. If this is so then our future will appear profoundly different than what occurred in the past.
Terry is in her early sixties. She is a retired legal assistant and recently widowed. There were no children from their marriage. Over the years, she and her late husband worked hard and had accumulated significant amounts of assets. When she first came to us she appeared to be very preoccupied with investment performance. At one of our meetings, I challenged her thinking and I said to her, “Terry, help me understand your situation better. Why would you want higher returns when you don’t know how to spend your money”? I showed her copies of her bank statements over the past three years. They had been increasing at double-digit rates each year. She observed from our illustration she was not spending enough on herself! At this point she looked directly at me and said, I was scared I would run out of money and have to depend on strangers to care for me.”
The point I was making with her is that we rely too much on our intuition when adjusting for consumption and making investment strategies. Many retirees have a difficult time “decumulating” and spending down their savings in retirement, as opposed to “accumulating” money when saving for retirement. In a recent study from the Journal of Financial Planning, the authors posit that “Fear, failure to plan, and a lack of confidence in pre-determined drawdown strategies may be significant contributors to the conservative consumption observed among retirees.” We worked closely with Terry and helped her find solutions to spending and controlling her fears about spending. She could possibly enhance her standard of living today by spending more in her early retirement years to travel and expand her quality of life. Our cost of living tends to decrease as we get older.
Find your authentic self!
Each of us finds challenges with saving and spending for the future. By looking in the mirror you can discover a new realization about who you are and what you see for yourself in the future. Look in the mirror, smile, and set the Intention for this to happen.
“As the last drop of wine tinges, the whole goblet, so the least particle of truth colors our whole life. It is never isolated or simply added as treasure to our stock. When any real progress is made, we unlearn and learn anew what we thought we knew before.”
Browning, Chris, Tao Guo, Yuanshan Cheng, and Michael S. Finke. 2016. “Spending in Retirement: Determining the Consumption Gap.” Journal of Financial Planning 29 (2): 42-53