Welcome to Mr. Stillman's Opus. I'm Ron Stutzell.
I'm with John Stillman. John, let's talk about famous last words. You know, I have questionable friends and a background, and I know some people whose famous last words were, �Hey, you all, what's this?� And you don't want your last words in life to be, �Hey, you all, what's this?� My favorite example of famous last words was one of the engineers, or I think the main engineer, who built the Titanic, who said, very famously, �Even God himself could not sink this ship.� That's one of my favorite historical quotes of all time. There's no accounting for icebergs though, right? In the financial world, there are quite a few phrases that you don't want to be your famous last words either.
And let me just throw a few out there for you, John. �I recovered what I lost in 2008, but now I think I'll just keep doing what I'm doing.� Yeah, well, this is a pretty common mindset. When the last market crash is still fresh in your mind, it's really easy to say, �All right, well, let's recover from this, and then we're going to never put ourselves in this position again.� And then as time goes by, you know, market cycles being what they are, you have a few good years, investing being fun again, and suddenly you say, �Well, you know, we could get just a little bit more out of this.
We can get another year or so of good market growth. Let's not pull back the reins just yet.� Which, while that might be the right answer, the problem with this approach is that your plan is constantly changing. You have a plan to say, �All right, well, let's get some more growth and not worry as much about the next crash, because it's not as fresh in your mind.� That's not an actual investment plan. That's just letting your emotions dictate how you're investing at any given moment. If you have a plan that actually dictates, it's what you would call buy discipline or sell discipline in the investing world. When and why are we going to buy and sell? And it's not going to be based on emotion, like, �Well, you know, that crash is still pretty fresh in my mind.
I don't want to go through it again.� That seems like a long time ago will probably be fine. That's letting emotion dictate your decision making, and that's not good. Okay, we're talking about famous last words on today's edition of Mr. Stillman's Opus. And John, how about, �I like the security of keeping my money in cash, because I know at least I won't lose it.� Can those be famous last words? From It's a Wonderful Life, you know, and everybody's making a run on the bank. �Your money's not here. It's in Jimmy's house, and it's in Ron's house, and you're not going to foreclose on them, all right?� In today's day and time, with FDIC protection of the money in the bank, yes, you're not going to �lose money� that's sitting in the bank. However, you do need to be aware of the fact that you're losing money relative to inflation. You're losing buying power.
We call it losing money safely. The principal is protected, but that $50,000 that you have sitting in the bank is worth 2 or 3% less next year. The interest rate that you're getting on that money is not keeping up with inflation. And so you just need to be aware of the fact that, yes, while you're not losing principal, you are losing buying power. So when we have people say, �Well, I've kept my money in cash for 20 years.� You know, if you retired at 65 and keep all your money in cash because you don't want to lose it, once you're in your 80s, you can't buy the same amount of stuff for $5,000 that you could in your 60s.
It costs more. And so the idea of not losing your money because it's in cash becomes a little bit problematic because you have lost buying power. And now suddenly, the budget that you had for yourself for the rest of your life doesn't quite work out.
Darrell Bock Hey, y'all, watch this. Hey, y'all, watch my money lose its value or its buying power. How about nobody in my family has lived past 75, so I'm not really planning to live a long time either. Boy, that doesn't sound good.
And she'd say, �No, no, no, no. I just don't have that kind of longevity in my family. My dad died when he was 68. My mom died when she was 65. We just don't have longevity in my family.� I said, �Okay, well, why did your parents die so young?� �Well, my mom had ovarian cancer, and she died in her mid-60s. My dad was a pilot, and he crashed his plane into a mountain.� I said, �Well, that's probably going to be passed on to you.� The pilot thing, certainly not. The ovarian cancer, maybe, but your mom dying at 65 24 years ago is a little bit different from what happens if you end up with ovarian cancer now.
Medicine and technology have changed just a little bit. So we can't say, �Well, my parents died young. I'm probably going to die young too.� And then plan around that. You know, if you want to say, �I want to kind of front-load my fun money in retirement. I want to be sure that I'm doing my traveling in the early years of retirement because I don't know how long I'll be around.� That's fine, but we don't want an income plan where you can't pay the bills if you live to be 80. That's bad planning. And so if you want to front-load fun money, that's one thing. We can't front-load your monthly income needs.
That needs to last a lifetime, no matter how long you live. I don't understand exactly what they mean when they say this. I mean, do they expect somebody to go shoot grandpa because he has to go into the nursing home?
Like, what are you thinking is going to happen at this stage? So a lot of people say, �I don't know, maybe as a defense mechanism, well, I'm just not going to go into the nursing home. I'll just starve myself to death,� or whatever it is before I end up having to do that. And, you know, to some extent, I don't know.
I guess you can do that. My grandmother was dead set on dying at home in her house, and she did. She barely ate for the last year of her life.
She drank Insure and ate Hershey's Kisses for the last 12 to 14 months of her life. So you're probably making a lot of the decisions for you. Most people don't go check themselves in to long-term care facilities. It's usually the kids taking care of it for them. And let me tell you, your kids are going to want to take care of you. So you can't just say, �Well, whatever, I'll be fine.� The kids are going to want what's best for you in almost all cases.
I'm sure there are exceptions. But you have to be thinking about the fact that you don't want to put them in a very difficult position because you think, �Well, I'll just avoid the nursing home.� �That's not my cup of tea.� That's really not realistic in most cases. Now, that doesn't mean you have to go run out and buy long-term care insurance. That's not the only solution. That's one solution.
That could be one of a couple of solutions that you have. Mr. Stillman's Opus, �I can always go back to work if I really have to.� Famous last words? The taste of retirement?
Really hard to step back into that working world. The irony, though, is that a lot of people retire and go back to work in some capacity, not because they need to financially, but because they miss working. They enjoy it. They like contributing in that fashion to society. So I've actually had a lot of clients who retire in their mid-60s and they spend a year or so traveling. They say, �Well, this was fun, but I kind of want to do some work.� So they'll maybe do consulting in the field that they were in, or maybe they'll go get a part-time job somewhere. I have one client who retired from an RTP job, spent a year doing some traveling, and he said, �Yeah, this is great, but I would like to be scooping mulch over here at the mulch yard.� So he works, like, three days a week scooping mulch. And he says, �Well, this is great, but I would like to be scooping mulch over here at the mulch yard.� For more information, visit our website at www.aclu.org.
Whisper: medium.en / 2023-11-27 01:39:29 / 2023-11-27 01:43:33 / 4