Jonathan Clements's Blog, page 198

Two Decades to Yes

IN MY LATE 30s, with my architectural apprenticeship complete, I opened my own firm. Even with a low income, I saved.

Nine years later, in 1988, Philadelphia���s Drexel University invited me to develop its brand-new architectural engineering program. A retirement plan with a generous match was an unexpected benefit, and I always contributed the maximum. As I aged, family inheritances helped somewhat. By 1999, both Quicken and a financial advisor confirmed that, if I chose to, I could retire. I was in my late 50s.

Moving to Drexel had led me to resume writing a daily 300-word journal entry. It was a special form of meditation, settling the day���s events. Over the next 32 years, I created 12,000 entries and 3.5 million words, against which I���ve checked my memories of my path to retirement.

I discovered that I began contemplating retirement far earlier than I expected. The first mention came in 1999, in an entry where I recognized that I could retire if I wished. I wasn���t ready, but at least I could. From there, through my actual retirement in August 2020 at age 78, I addressed retirement on 149 days. I didn���t obsess, but I spent many words considering it, often in clumps followed by months and even years of silence.

The principle that served me well was clear from the beginning. I wanted to ���move to,��� not ���move from.��� I had to know I���d find meaning in my next life. Many times, I considered retiring in anger at the latest stupidity of academic politics or because of frustrated ambition, thinking, ���I don���t need this.��� But I stuck with it. I loved teaching, students and my opportunity to make life better for many as a mid-level administrator. I put up with nonsense because so much was good.

Throughout those 20 years, I regularly searched for activities to fill my days after retirement. I wrote long lists and ranked activities. I experimented with photography, serving on nonprofit boards���I���m in the give-back camp���and pursuing a private pilot license. In the journals, I fantasized about traveling the U.S. in an RV, or living the poet���s life, or building a small computer consulting business. A few ideas were one-week flops. Most were pleasurable, but none sang of a rewarding new life. Academia was too good a fit for me. And, of course, forgoing Drexel���s monthly contribution to my bank account weighted the seesaw, too.

What ended my 20-year search? Age helped. My wife developed Parkinson���s, requiring me to shift to a caregiver role. We moved to a large condominium to deal with her medical issues. I quickly found myself on the building���s board and ultimately its president. Thanks to my many retirement experiments and the advance of technology, I���m now able to provide online, volunteer computer consulting across the U.S.

And those years of journals became the inspiration for writing something substantial, first a self-published autobiography and now articles like this one. My role at Drexel changed as well, reducing its attraction. When, in 2019, the university offered a big retirement package, my decision was easy. The time had come. I knew ���moving to��� was now right.

My journaling continues. When I looked at the year after the paychecks stopped, I found no mournful entries. The few times I met with faculty members and staff, I smiled, but had no urge to return.

My review of my journals did expose one major omission. As an engineering professor, I taught that the beginning of any design effort required that you know the literature of your field. Yet my journal entries show no effort to learn about retirement beyond being financially prepared. I did make an early change from stock-picking to low-cost, diversified investments, thanks to reading the theory and the results.

What I neglected, as have many others until recently, was pursuing literature on retirement itself. The first I read was Larry Swedroe and Kevin Grogan's excellent book, Your Complete Guide to a Successful & Secure Retirement. There must have been earlier material that would have helped. I hadn���t searched for it.

When I finally read the book, I was relieved. The authors generally confirm what I recorded in my journals. We agreed that saving consistently works. My ���move to��� rather than ���move from��� principle is consistent with their recommendation of identifying non-monetary life goals. That principle saved me from making a rash decision. My efforts to try a new life in imagination, and with small-scale experiments, was consistent with the book���s recommendations, too. Those efforts were an enjoyable and noncash version of saving for retirement, and ensured I was ready for my new life the day the old one ended.

James E. Mitchell is a professor emeritus of architectural engineering. He spent 32 years at Drexel University. Before that, Jim was a principal in the architecture firm Jordan-Mitchell, Inc., in Philadelphia. He���s currently the unpaid president of The Philadelphian Owners Association.

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Rough Over There

INFLATION IS TAKING its toll on Americans��� view of the economy. But things could be a lot worse. Exhibit A: Europe.

Last week, the U.K. reported��its inflation rate had surged to a four-decade high of 9.4%. June���s reading was a significant bump up from May���s 9.1%. Even higher inflation is expected as year-end approaches, with the Bank of England seeing annual inflation hitting 11%, according to The Wall Street Journal.

In fact, consumer prices across Europe are rising rapidly amid surging energy costs. As much of the U.S. baked in the July heat, all-time record hot temperatures were notched in major population centers across the pond. Sky-high costs for summertime cooling are crimping consumers��� pocketbooks, with food and housing-related expenses also on the rise. To combat the energy crisis in Germany, streetlights are dimmer and people are taking shorter showers.

Americans headed to Europe will no doubt notice that their travels are cheaper, thanks to a much weaker euro. The financial press pounced the instant the U.S. dollar and euro hit parity. The ���Big Mac Index��� is often used to illustrate how cheap or expensive other parts of the world are relative to the U.S. Right now, a strong dollar means relatively inexpensive McDonald���s burgers in Europe.

Last Thursday, to combat rising inflation and a falling euro, the European Central Bank issued its first interest rate increase since 2011. Meanwhile, we���ll learn the U.S. Federal Reserve���s next move on Wednesday afternoon. The financial markets expect another 0.75 percentage point rate hike to cool off the 9.1% headline U.S. inflation rate. The big question: Will these rate increases break the back of inflation���or do further big increases lie ahead, which would likely mean more turmoil in the stock and bond markets?

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Staying Rich

WHEN HE DIED IN 1877, Cornelius ���Commodore��� Vanderbilt was by far the wealthiest American, with a fortune of $100 million. In the 10 years after his death, his son William succeeded in further doubling those assets. It was an astonishing level of wealth. But that���s precisely when things began to turn.

One of Cornelius���s grandsons built the 125,000-square-foot Breakers mansion in Newport. Another commissioned Biltmore in North Carolina, which is still the��largest home��in America. And, of course, the family endowed Vanderbilt University. The result: Just 50 years after Cornelius���s death, the family���s wealth was essentially��gone.

Just as lottery winners and professional athletes often end up cursed by their own wealth, so too were the Vanderbilts. Receiving a windfall, it turns out, can be a double-edged sword, no matter how large it is. If you���ve received a windfall���or are planning to leave one to your heirs���below are six recommendations to help avoid the fate of the Vanderbilts.

1. Sketch a plan.��A common piece of advice for those receiving a windfall: Avoid taking action too quickly. That���s a good recommendation, but I��think it���s also��incomplete. It doesn���t tell you when it���s safe to take action or what to do.

That���s why I would start by sketching out a plan���with the emphasis on��sketching. It���s difficult to formulate the right plan on the first try. It takes time, and there���s no way to force it. Instead, the only way to zero in on the plan that���ll work best for you is to begin with some incremental actions. If you���re thinking of making gifts to charity or to family, for example, start with just a few small gifts. Whatever you have in mind, see if there���s a way to take some half-steps. This will allow you to see what works and what doesn���t, and then adjust.

2. Avoid illiquidity.��If your windfall somehow hits the news, you���ll inevitably receive calls from folks suggesting investment opportunities. But as noted above, you���ll want to take it slowly. Just as important, you���ll want to avoid getting tied up in anything too illiquid. I wouldn���t jump with both feet into anything. I would be especially wary of real estate deals, angel investments and private funds���anything that will make it difficult for you to withdraw your funds if you decide to reverse course.

3. Think in terms of buckets.��If you���ve ever visited Biltmore or the Breakers, it���s easy to see how the Vanderbilts lost their fortune. Even the wealthiest families can only build so many mansions before they run into trouble. In fairness, though, it isn���t just the Vanderbilts. This same issue affects many windfall recipients. Give a small child just $50, in fact, and he���s likely to fall into the same trap.��Whenever someone receives an amount of money that���s multiples of what they had before, it presents a real challenge���because, at first, anything and everything seem affordable.

That���s why I suggest segmenting money. Maybe you want to pay off your mortgage or purchase a new home. Or maybe you want to set aside funds for��your children's or grandchildren���s educations.��Or perhaps��you want to treat part of your windfall like an endowment, to provide ongoing support.��However you choose to use your funds, the��most important thing��is��to establish��an overall allocation. That way,��your windfall won't appear��like a bottomless resource.

4. Avoid complexity.��Suppose your portfolio grew by a factor of 10 or even 100. Should it look any different? Of course, it will be larger, but should the investments you choose be any different than before?��This is a question I hear a lot. People wonder whether they should be looking at more ���sophisticated��� investments.��� But in my opinion, the answer is no.

A larger portfolio does��allow for��more flexibility. All things being equal, if you want to tie up funds in a real estate project or in an angel investment, that���s going to be easier with a larger portfolio. But a larger portfolio doesn���t necessarily��need��to be more complex. When I design seven- and eight-figure portfolios, I do it with precisely the same index funds that I use for smaller portfolios.

5. Avoid reflexive planning.��For better or worse, the standard estate planning toolbox tends to focus mostly on the estate tax. That���s for good reason. Many families want to move as much of their wealth as possible to their children. With a top federal rate of 40%, who wouldn���t want to minimize the estate tax? In fact, for very high net worth families, it���s worth virtually any amount of legal and accounting fees to implement��tax-saving strategies, such as the use of irrevocable trusts.

But that isn���t the only answer. Before going down the road of bequeathing as much as possible to the next generation, I suggest��taking a step back. Consider what would be best for your heirs. Warren Buffett is often quoted on this topic. He���s said that he wants to leave his children ���enough to do anything, but not so much that they can do nothing.��� That, I think, is the key. We���ve probably all met folks who received too much from their parents and, as a result, appear lacking in motivation.

That���s why it���s worth considering alternative formulations. One would be to leave your children something, but not everything. Suppose your net worth is $10 million and you have two children. Instead of leaving $5��million to each child���easily enough to sap a young person���s motivation���you might leave just $1 million.

And with the funds you do leave, you could��place restrictions on their use. You might stipulate that the money be used only for specific purposes, such as a home��or education. While there are no guarantees, provisions like this can increase the odds your bequest helps build long-term stability for your heirs.

Another way to structure a bequest is to tie it to specific ages or stages. That can make sense. Ultimately, these choices will be specific to your family and will probably change over time. What���s most important, though, is to be intentional with your choices. What I recommend is to give thought to what you ideally would want��before��walking into an estate planner���s office.

6. Avoid ostentatious displays.��This last point might seem obvious. Going straight to the Ferrari dealership isn���t the most fiscally prudent move. But that���s not the only reason to avoid big purchases. The other reason is because such spending can attract attention. Especially in the initial weeks and months, a key goal is to keep your financial situation under the radar. That will give you the space and time to make the sort of incremental decisions outlined above���without input from those who may not have your best interests in mind.

Adam M. Grossman��is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on Twitter @AdamMGrossman��and check out his earlier articles.

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Voyage to Nowhere

"REGRETS, I'VE HAD a few. But then again, too few to mention."

What was true for Frank Sinatra most definitely isn���t true for me. I���ve had more than a few regrets, and I want to mention the most recent one.

Late last year, Mark Cuban offered me $100 in bitcoin to download the Voyager app, deposit $100 and make a $10 trade. For those of you who are lucky enough not to know what Voyager was, it was an app that offered ���a secure way to trade over 60 different crypto assets using its easy-to-use mobile application.���

I���ve been retired now for a few years. Since idle hands are the devil���s workshop, I���ve used some of the time to accept bonuses offered by brokers, banks and financial institutions. Besides the obvious reward, I find these offers to be educational, though this time it was a little too educational.

Like most people, I was intrigued when I first heard about bitcoin. After a colleague explained to me its inner workings and all the benefits of the blockchain, I was fascinated. I really thought that bitcoin might be worthy of investment.

This didn���t last long. I realized that bitcoin may not be all it was cracked up to be when, a few hours later, I tried to explain it all to my wife and none of it made any sense.

I should have gone on living bitcoin-free. But when Cuban made me the offer, I figured that���even if bitcoin went to zero���I would still have my original $100. I decided to play it safe. I made the required $10 trade with a quick roundtrip in and out of tether, a cryptocurrency designed to trade one-to-one with the U.S. dollar.

In the end, I decided not to sell the bitcoin that Cuban gave me. I figured that if there was something to this cryptocurrency thing that had eluded my less-than-discerning eye, I could use the rubric ���nothing ventured nothing gained��� and ride it all the way to financial independence. It also allowed me the more tangible benefit of mentioning at cocktail parties that, ���Of course I���m invested in bitcoin.��� That said, I should have transferred the $100 in cash that was mine back to my bank, but I may have become preoccupied with taking Personal Capital up on its $25 offer.

Well, on July 1, 2022, Voyager informed me that it had ���made the difficult decision to temporarily suspend trading, deposits, withdrawals, and loyalty rewards,��� though it would still allow users ���to view market data and track your portfolio.���

I could view my investments. I just couldn���t withdraw them. Apparently, my money had been loaned to an outfit called Three Arrows Capital. The crypto hedge fund failed to repay the $670 million it borrowed from Voyager, which triggered Voyager���s Chapter 11 bankruptcy filing on July 6.

While I always knew my bitcoin investment could go to zero, I figured that the sliver of bitcoin and the $100 in my account would still be mine. I never thought they would be loaned to another company. Yes, I should be more concerned about my losses in the stock market year-to-date and not the measly $100 I ���invested��� in Voyager. Still, the whole thing is rather upsetting. Nobody wants to be the mark, especially for someone like Mark Cuban.

Voyager is currently exploring ���strategic alternatives with various interested parties while preserving the value of the Voyager platform.��� I hope this will allow me to ���access��� my $100 and 0.000046 of a bitcoin, but I���m doubtful. I���m just thankful I didn���t ���invest��� more. I now have the meager benefit of being a little warier of making similar future investments���though I���m also thinking Garlicoin may be a way to make my money back.

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Facing Down Risk

IN REFLECTING ON his life, Apple founder Steve Jobs noted that, ���You can only connect the dots looking backward.��� When we���re the authors of our own story, it���s all too easy to connect those dots in a way that���s most flattering to ourselves. But to be useful to the reader, a narrative must be honest���and it should start at the beginning.

My first money memory dates to the early 1980s. I was maybe 10 years old and sitting at the kitchen table with my father, who was looking over some papers. It was his office���s new retirement plan, he said. My dad was a lawyer. He explained that, with this new plan, employees were going to be allowed to choose their own investments. That sounded interesting and like a good idea���for about one second.

Then my dad described how difficult it was for each person to be his or her own investment manager, picking and choosing from among all the options. Especially after the 1970s���a dreary decade for stock investors���it was hardly clear that the right move at that time would be to invest heavily in the market. With the benefit of hindsight, of course, that was the perfect time to jump into stocks with both feet. But no one knew then that a two-decade-long bull market was just getting started.

At the time, I didn���t even have a savings account. But I could understand the challenge my dad was describing, suddenly being put in the position of being his own investment manager. It was no different from asking an investment manager to become his own lawyer. It didn���t make a lot of sense. The same was true for my father���s colleagues���fellow lawyers, secretaries, IT folks. All were experts in their respective fields, but not in investments. The task seemed difficult, if not completely unreasonable. But that was only part of what made it difficult.

In every family, there are subjects that aren���t talked about very much. They aren���t necessarily secrets, but they simply aren���t anyone���s favorite topic. That was certainly the case in my family. The story goes back to the 1890s, when my great-grandfather emigrated to the U.S. Soon after arriving, he began selling odds and ends off a horse-drawn wagon. Over time, that evolved into a chain of stores selling lumber and building materials. All went well until the late 1960s, when the family decided to sell to a larger retail chain.

What happened next was unfortunate: Like a lot of acquisitions, the larger company paid mostly in stock. In the doldrums of the 1970s, the larger company���s stock lost much of its value. If I had to guess���and I���m only speculating���that unpleasant experience factored into my dad���s thinking that day as he considered how much risk to take in his new retirement plan.

This early memory from the kitchen table has always stuck with me. It was the first time I had learned anything about the stock market, and it didn���t seem like a lot of fun. Over the years, I���ve learned much more, and it���s now part of my job. But to be honest, I still view the market as a hall of mirrors���and that���s on a good day. I���m probably giving my 10-year-old self too much credit, but it may have been on that day, at the kitchen table, that I started getting interested in investments.

Aside from that experience, I didn���t think a lot about financial matters as a kid. I did start a business in high school���selling sunglasses via mail order. But the years up through college were otherwise uneventful from a financial point of view. College tuition was high, but it hadn���t yet reached today���s absurd level, and I was able to graduate with no debt. For that, I���m eternally grateful to my parents.

Things changed, though, when I finished college. Instead of pursuing a traditional job or going to grad school, I instead decided to start a business. I had enjoyed the experience in high school of creating something from nothing, and I wanted to try it again. Thus started the next phase of my financial life, which couldn���t have been more different from the tranquil financial life I had enjoyed up until then. It was a rollercoaster.

Left with a name. The business I started was a software company���a sort of internal social network for large companies. It was a reasonable enough idea, and I had some success selling the product. Customers included law firms, hospitals and companies like Johnson & Johnson. In the late 1990s, I raised one round of financing. But in the end, I wasn���t able to build it into a large enough business before the 2000 dot-com crash.

Being in my 20s, this wasn���t a big deal. I���d learned a lot from the business and I was happy to try something new. There was just one problem: At the moment when I wanted to lean on my savings, they evaporated. What happened? During the 1990s, I had started working with a stockbroker. He seemed like a good choice. He was a family friend. He worked for a well-known firm. He seemed experienced. And he had a DeLorean in his driveway, which seemed to indicate success.

For a time, I thought things were going well. He had built a portfolio of stocks for me and, through the late 1990s, it grew. What I understood only later was that it was barely diversified. The bulk of it was invested in a handful of technology stocks, which all dropped at the same time. On top of that, because the broker had suggested I borrow against my stock holdings to buy a car, the whole portfolio went, more or less, to zero.

From a financial point of view, this was a disaster. I wondered why this experienced financial professional had stacked the cards this way. The silver lining: It helped plant the seed for my later career as a financial planner. It motivated me to want to help others in all the ways that my stockbroker had not. In fact, in my work today, I mostly just do the opposite of what I experienced as a client back then. I work to understand a client���s needs in detail before designing a portfolio. Instead of picking stocks and building a concentrated portfolio, I diversify with funds. Instead of using high-cost funds with sales charges, I stick with low-cost index funds. Instead of betting too heavily on a rising stock market, I���m always preparing for a rainy day. And I���m wary of leverage.

It���s a cliche to say that, when one door closes, another opens. But sometimes, that happens right on cue. In the aftermath of the dot-com crash, as I was reassessing my business, I received an inquiry. It turned out that this other startup wasn���t that interested in my company. Instead, it wanted to buy my company���s domain name. We almost had a deal���for an amount that might have paid for a (modest) new car. But the prospective buyer backed out when he found that another startup had filed a trademark application that would have posed a conflict.

On the advice of a quick-thinking lawyer, I reached out to the other startup using the ���contact��� link on the company���s website. The email I received in response came from the young company���s founder, who turned out to be a college student. It took some time, but we eventually reached an agreement. Because his company was just getting started, he didn���t have a lot of cash to offer. At the same time, his early results seemed promising, so we agreed that the deal would include some stock.

For a time, that stock was no more meaningful than a piece of paper in the back of a file drawer. But over time, the company enjoyed impressive growth and eventually it went public, making its early employees and their backers very wealthy. Ironically, this was the sort of bet that my old stockbroker was pursuing���buying tech stocks and hoping to catch lightning in a bottle. In a funny kind of way, it validated his strategy. But I draw the opposite conclusion: I view the startup that bought my domain name as the exception that proves the rule. Sure, there are stocks that go to the moon. But the number is small compared to all of the companies started each year, and it���s small even compared to all the companies that are currently public.

Decision time. For a variety of reasons, I���m not going to name the company involved and, in any case, it���s not that important. What is important: The decision I had to make. What did I do with the stock after it went public?

The data say that investors are better off, on average, going with index funds than trying to pick stocks. At the same time, I have a healthy respect for the entertainment that stock-picking can provide. It���s far more fun to pick stocks than to invest in index funds. But it���s important to separate entertainment from investing, and to recognize the odds associated with each. I don���t look at individual stocks as poison, to be avoided at all costs���just as I don���t look at the occasional Powerball ticket as completely reckless. That's why my recommendation to the families I work with is this: If you want to pick stocks, do it in a separate account, with a fixed���and small���percentage of your portfolio.

So what did I do with the stock after the startup went public? The answer: I took my own advice. I sold a lot of my shares and diversified. Because I���m still working, with a number of years until retirement, I kept most of the money invested in the stock market. But instead of one stock, I chose a set of Vanguard Group index funds that cover most of the world���s markets. In the U.S., this includes the S&P 500 and the extended market index. The latter includes everything outside of the S&P 500. Together, these are the equivalent of a total stock market index, but I bought them separately so that I could control the mix, tilting toward mid- and small-caps. Also in the U.S., I chose Vanguard���s large-cap value and small-cap value index funds. In overweighting small-cap and value stocks, I���m acknowledging their record of long-term historical outperformance.

Ten years later, what���s been the result of this effort to diversify? There���s no doubt that, if I���d just held the one stock from the IPO, it would have been a better move financially. Still, I don���t regret diversifying. In fact, I don���t think investors should ever regret spreading their investment bets widely. The reason: Even with all the antacid in the world, it���s simply too nerve-racking to have the majority of your net worth tied to the fate of any one company. As I write this, the company���s stock is down almost 50%. Because I sold most of my shares, I haven���t lost much sleep over the decline. That, I think, is how it should be with any investment portfolio. Harry Markowitz, father of Modern Portfolio Theory, once described diversification as the only free lunch in the world of investing. Others have observed that the optimal portfolio isn���t the one that has the greatest growth potential. Rather, it���s the one you can live with. I agree with both sentiments.

Measuring success. My grandfather, who ran the family���s retail business, was an unconventional guy. One side of his business card, which was bright orange, included just the word ���SMILE��� in large block letters. On the other side, it carried this quote: ���Success is never final, failure is never fatal.��� That line is sometimes attributed to Winston Churchill. It certainly applies to personal finance.

As I said at the outset of this essay, we���re each the author of our own story. We can connect the dots in any way we wish. The story I���ve presented here is factual. But I���ve probably left out a few of the less flattering detours along my financial journey. The reality is, anyone who has ever been involved in a startup can romanticize the experience and later laugh about the financial gymnastics required to keep things going. But I���m sure I have more gray hair than if I���d taken a more conventional road.

Research has shown that, once a family���s annual income exceeds a threshold of around $75,000, happiness doesn���t necessarily continue increasing along with income. I have to agree with this. At a certain point, many people reach what the late Jack Bogle, founder of Vanguard, called ���enough.��� That���s why the investment benchmark I use isn���t the S&P 500. Instead, it���s a concept that���s more fundamental: contentment and peace of mind. That may not sound very rigorous, but I believe it���s true.

What brings people happiness? Here���s what I���ve observed among folks later in life: It���s things like living within walking distance of adult children. Taking grandchildren for bicycle rides. Taking a camper up to the mountains or loading the kids in the car for a trip to the beach. Training for a marathon. Working part-time, just for the enjoyment of it.

I know that when I say this, I run the risk of sounding like an idealist. I���m not suggesting that we all become ascetics. There���s no doubt that more money in the bank carries many benefits. Among them: the option of early retirement, the chance to explore the wider world and the opportunity to engage in philanthropy on a grander scale. In the end, of course, it���s a balance. As the title of this collection of essays suggests, it���s a journey. And that���s probably as it should be.

Adam M. Grossman��is the founder of Mayport, a fixed-fee wealth management firm. Sign up for Adam's Daily Ideas email, follow him on Twitter @AdamMGrossman��and check out his earlier articles.

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More Harm Than Good

EVER SINCE COVID-19 disrupted our lives, I don���t go to the gym that often. I usually work out on my own. When I go, I sometimes see Tony. Tony is still Tony. He���s a chronic complainer. It���s usually about little things.

The other day, he was chatting with a woman at the gym. While Tony was talking, she gave me a smile. It was her way of warning me that Tony was complaining again. I know everyone complains, including me. But there���s a limit to how much you can complain before it does you more harm than good.

Early in my career, I worked with a man named Bob. We were both production planners responsible for making sure the factory was meeting its production deadlines. During our weekly status meeting, Bob was complaining once again to our manager about an issue at the factory. The boss ignored Bob���s comment until another coworker, Barbara, said she was experiencing the same problem.

Bob became angry because, when he brought up the issue, it went unanswered. The boss said, ���Bob, you complain all the time. Barbara rarely complains. You should save up your complaints for something that���s really important to you.���

What our manager was trying to explain to Bob was that people stop listening to you if you complain too much. You lose credibility. They don���t take you seriously if you constantly nitpick.

That���s what happened to Bob. People stopped listening to him. When that happened, his job became more difficult. Although Bob was a hard-working employee, he was eventually let go.

I kept in touch with Bob over the years. He jumped from one job to another until he became a driver for a major U.S.-based multinational shipping and receiving company. It was the perfect job for Bob. He spent most of his time out on the road delivering packages. It was just him and his truck. No one to complain to. Bob had found his niche and worked there for the rest of his career.

I learned early in my adult life that, if you want to be successful, it sometimes takes more than skill, education and experience. You also need to be able to get along with your coworkers. I found it increased my productivity and overall happiness at work. That���s why it���s important to sharpen your social skills���and be selective about the fights you pick.

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Buffett’s Pension

AS MY OLD NEWSPAPER company slid toward bankruptcy, it signed over the deeds to its newspaper buildings to the pension plan in an effort to meet its obligations. It was like burning the furniture to keep the house warm���and it worked about as well as you might expect.

When the company finally filed for bankruptcy��in 2020, it laid the blame on its unfunded pension obligations. The pension fund was short by $1 billion, according to a subsequent audit by the Pension Benefit Guaranty Corporation, which took over the plan and now pays me a monthly benefit.

This is not an uncommon problem. Collectively, U.S. pension funds are short-funded by more than $1 trillion, having only 75 cents on hand for every dollar in benefits promised to employees, according to Boston College���s Center for Retirement Research. Given this backdrop, it���s surprising to hear of another newspaper company���s pension plan that���s overflowing with money.

Graham Holdings���which for most of its existence owned The Washington Post���has a $2.1 billion pension surplus, according to the company���s recent filings. It���s so stuffed with money that the company expects to never contribute another cent to the plan.

Credit for this is owed primarily to Warren Buffett, who steered the pension fund���s investments in an unorthodox direction while he was a company director in the mid-1970s. In a 19-page memo written to then-CEO Katharine Graham in 1975, he said hiring the usual institutional money management firms would be ���doomed to disappointment.���

He predicted that rising inflation rates would eat up the returns of the bond portfolios then favored by pension managers. Buffett instead recommended that the fund selectively buy stocks to meet the plan���s obligations. The Post���s directors agreed and hired two small, specialized investment firms that Buffett recommended in 1978.

The majority of the company���s pension pot is still overseen by Ruane, Cunniff & Goldfarb and First Manhattan Co. Both firms have long ties to Buffett. First Manhattan founder David ���Sandy��� Gottesman is a billionaire many times over thanks to an early investment in Berkshire Hathaway. Gottesman, age 96, currently sits on Berkshire���s board, where Buffett, 91, presides as CEO.

Ruane, Cunniff & Goldfarb is perhaps best known as the investment manager of the Sequoia Fund, which outpaced the S&P 500 over a 45-year period, despite notably rotten returns in 2015 and 2016. Firm founder Bill Ruane met Buffett at a value investment seminar at Columbia University taught by legendary investor Benjamin Graham.

The two investment firms have made enormous gains over the past 45 years. Graham Holdings had $3.2 billion in pension assets and roughly $1.1 billion in pension obligations as of last September, according to a company report. The largest holding is���no surprise���Berkshire Hathaway.

All of this has created an unusual problem for Graham Holdings, whose stock price doesn���t reflect its pension riches. The firm would like to redeploy some of the money, but pension laws are far stricter now than they were when corporate raiders gutted pension funds in takeover plays in the 1980s. If the company used the money for anything other than retirement checks, it would owe a 50% federal excise tax on top of any state and local tax levies.

The Graham family, which still controls Graham Holdings, sold The Washington Post newspaper to Jeff Bezos in 2013 for $250 million. They transferred enough money to meet all the Post���s pension obligations, plus an extra $50 million.

Graham Holdings, which retained the rest of the pension pot, is a conglomerate with seven TV stations, car dealerships, the Kaplan test prep business, restaurant chains and a few publications like Slate and Foreign Policy. The standout performer of the whole lot has been its pension fund.

���Current management deserves no credit for this,��� Graham Holdings��� Chief Financial Officer Wallace R. Cooney said at a December 2021 meeting of shareholders. ���All the credit goes to Katharine Graham and the wisdom she had to ask Warren Buffett for his advice, and take it, back in 1978. Mr. Buffett recommended that we invest our pension assets in equities and hire smart advisors to manage those funds���and that is exactly what Mrs. Graham did.���

I wonder if other pension managers might take a page from Warren Buffett���s plan and invest a greater share of their assets in stocks. I know I wish that my old newspaper company had done that a long time ago.

Greg Spears is HumbleDollar's��deputy editor.��Earlier in his career, he worked as a reporter for the Knight Ridder Washington Bureau and Kiplinger���s Personal Finance magazine. After leaving journalism, Greg spent 23 years as a senior editor at Vanguard Group on the 401(k) side, where he implored people to save more for retirement. He currently teaches behavioral economics at St. Joseph���s University in Philadelphia as an adjunct professor. The subject helps shed light on why so many Americans save less than they might. Greg is also a Certified Financial Planner certificate holder. Check out his earlier articles.

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Batting .500

ALMOST SEVEN MONTHS on, I���ve failed miserably with one of the New Year���s resolutions I wrote about for HumbleDollar���but I���ve done well with the other.

I���d like to take credit for my success in not obsessively checking my IRA, but the discouraging reality of the financial markets has a lot to do with it. This year, going online to view my account several times a day���which I���ve been known to do���would have left me feeling truly hopeless.

My IRA has dropped some 16% over the past six months, which is especially depressing because this is the money I use for indulgences that aren���t part of my monthly budget���things like going on vacations. Fortunately, I have Social Security and my state pension to fund the rest of my life, though inflation is making that an increasing challenge.

Right now, I don���t want to touch my IRA. Most of my mutual funds and individual stocks are down from where I bought them. Like many others, I was probably a little too optimistic after the strong gains of recent years.

To avoid selling at a loss, I���m going to finance part of a big trip this year with a 0% credit card I just opened. It stays at 0% for 15 months. My hope���or perhaps prayer: My funds will rebound in that time and I can pay off my travel expenses. The best laid plans of mice and men?

During this extraordinarily hot Florida summer, I���m using my dining table as my desk, so I can save money by not cooling my study. That brings me to my other New Year���s resolution: Remove clutter and keep it from coming back. I could embarrass myself by posting a photograph that illustrates my failure. That photograph would show the random piles of paper on my dining table. The study also has mini-piles of miscellaneous items that have no place or purpose.

An inherent problem with my fight against clutter is that I hate throwing items into the garbage, where they might end up in landfills for an eternity. I���ve always been an avid recycler. But what do you do with old floppy disks? Or how about the coffee maker that leaks water from the carafe side but not the Keurig side, which is the side I never use? I guess I could donate the machine, along with a note about its limits.

One bright spot: I���ve finally started using the paper shredder I received as a birthday gift last year. I���m sifting through drawers and folders filled with papers. Unfortunately, that sends me down memory lane, especially as I look at old newspaper clips and notes from readers. I know my kids don���t care. They aren���t their memories.

The other problem: Procrastination in retirement is so easy. I always figure I have tomorrow to tackle the clutter. But in the meantime, the clutter keeps growing.

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Home Help

I RECENTLY WROTE about lifecare��communities. These provide a continuum of services���independent living, assisted living, custodial care���to meet changing needs as a retiree ages. The lifecare contract guarantees that, no matter what happens to your money, there will be a place where you can receive the appropriate level of care.

That brings me to a recent innovation offered by some continuing care retirement communities. Called lifecare at home, it���s much less costly than moving into a retirement community, and it addresses the needs of many seniors who are reluctant to leave their home. The service is offered by the lifecare community where I serve as a volunteer board member, and I expect its popularity will grow.

As with lifecare communities, lifecare at home guarantees to meet a retiree���s future care needs in exchange for an entry fee, plus ongoing monthly payments. Lifecare services are provided at your home, including the equivalent of assisted living or 24-hour nursing care, if required.

Home-based lifecare might cost 80% less than moving into a lifecare community. After all, you���re only buying care services���not the full overhead costs of shelter, staffing, food, activities, security, groundskeeping and everything else that goes into operating a lifecare facility and campus.

To the extent you need help, an at-home program assists you with the activities of daily living, such as bathing, food prep, laundry, cleaning, shopping and medication management. The program is responsible for the cost of this care, while you remain responsible for the cost of your home.

The entry fee and monthly charge are actuarially determined, so they���ll vary with age and sex. A married couple is treated as two individuals in these evaluations.

As with lifecare community admissions, your current health status will be evaluated. The lifecare-at-home option is similar to long-term-care (LTC) insurance in that, to qualify, you can���t currently need services. If you���re considering lifecare at home, show prospective providers any LTC policy you own. You���ll want to understand how the policy dovetails with the lifecare contract. Some costs may be covered by your LTC coverage. One benefit of the lifecare contract is that it protects you against future inflation in care costs. Older LTC policies may not have kept up with inflation.

Once you sign up, care coordinators are assigned to arrange for any needed services. These coordinators are reachable by phone 24/7. If you���re hospitalized, they���ll connect with the hospital discharge team to make sure services are in place when you return home.

As your care needs change, the coordinators will add or change existing services. Typically, services are provided by contracted home-care companies that are vetted for quality. If a service doesn���t work out, the care coordinators are responsible for making a change, including dismissing the current provider.

Care coordinators are also responsible for knowing the clients assigned to them. This includes information about their health, their medical providers and anything that may affect providing care in the home.

If a ramp needs to be installed to the front door, for example, they can order the work. If home maintenance is needed, they have the resources to get that done, too. The cost of extras like these is paid by the homeowner, not the care contract.

Lifecare at home can also help with pets. Continuing care facilities may allow pets, but all have some limitations on the size and number. Part of the at-home coordination service is to make provisions for your pets if you have a sudden health issue.

There are many questions to ask before signing a contract. My previous article covers evaluating the financial health of a lifecare community. Those recommendations still apply because the lifecare guarantee is only as good as the strength of the organization providing it.

Ask what happens if you change your mind. Are there provisions for a refund of the entry fee if you quit the service within a given time? Alternatively, if you decide later that you want to move into the affiliated lifecare community, ask if the entry fee you paid for home services counts toward admission costs. Also, would you have a higher priority to enter the community if there���s a waiting list?

Ask what happens if you move elsewhere, perhaps to be closer to your children. Does the lifecare-at-home contract have some portability, so you can obtain similar services at a new place?

It���s always a good idea to talk to current enrollees before signing up. For instance, you might ask if they���re allowed to attend activities and events held on the lifecare campus. Finally, you may want to consult a tax advisor on the deductibility of the fees you could end up paying. The bottom line: For those who want to stay in their home, a lifecare-at-home contract may remove the care coordination headaches that can become increasingly challenging as we age.

Howard Rohleder, a former chief executive of a community hospital, retired early after more than 30 years in hospital administration. In retirement, he enjoys serving on several nonprofit boards, exploring walking paths with his wife Susan, and visiting their six grandchildren. A little-known fact: In May 1994, Howard was featured���along with five others���on the cover of Kiplinger���s Personal Finance for an article titled ���Secrets of My Investment Success.��� Check out his previous��articles.

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Read That Statement

HAVE YOU HEARD that you shouldn���t check your 401(k) at times like this? Market volatility can wreak havoc not only with our account balances, but also with our decision-making. Ignoring our 401(k) statements might help us stick with our long-term investment plan.

True as that may be, there���s a good reason to peek at your second-quarter statement: to see if you can find a new feature���the lifetime income illustration. It was mandated by Congress as part of the 2019 SECURE Act, but it���s only now showing up on many 401(k) statements. Here are three points to help you make sense of the new feature:

Snapshot.��These are the monthly payments that your 401(k) could potentially fund if you annuitized the balance as of the statement date���nothing more and nothing less.

Other factors can have greater sway over your eventual retirement income, such as future 401(k) contributions, market performance, inflation, how much longer you work and the assets you own outside the 401(k) plan. The estimate ignores all of this.

Annuity. Where do the estimated monthly payments come from? The lifetime income illustration assumes your 401(k) account balance is turned into an annuity���with the estimated income based on a uniform set of actuarial��assumptions for ages, dates, life expectancy and interest rates that may or may not be true for your situation. The illustration assumes that you���re age 67 on the statement date, which is the simulated annuity start date or, if you're older, your actual age is used in the calculation.

You���ll see both a single-life annuity and a qualified joint-and-survivor annuity modeled on your statement. The payments shown are not indexed for inflation. There would be no cost-of-living adjustment, so the monthly amount would lose spending power over time.

Mindset. Why did the SECURE Act mandate this new statement feature? Lawmakers and the retirement industry want 401(k) investors to change how they think about their retirement savings. They want us to think less about amassing a sum of money and more about how much income it might provide in retirement.

My advice: Take these estimates for what they���re worth. The lifetime income illustration is a peculiarly specific addition to 401(k) statements. It could be helpful if it jolts you into thinking about how much regular monthly income your savings might generate. But you wouldn���t want to limit your considerations to annuities alone.

It���s no surprise that the major players in the annuity industry supported the illustration���s introduction, as well as a new bill called the LIFE Act, which could lead to the use of annuities as a default investment in 401(k) plans. They���d get behind any legislation that could help them sell more product.

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