BECAUSE WE FORGET SO QUICKLY… 35 YEARS AGO A FINANCIAL PLANNER ASKED ME HOW MUCH I WOULD EVENTUALLY LIKE TO PULL OUT, ANNUALLY, FROM MY INVESTMENTS, IN ORDER TO FUND MY LIVING EXPENSES DURING RETIREMENT. I HAD READ THAT A 6% ANNUAL WITHDRAWAL WOULD BE HISTORICALLY SUSTAINABLE, SO I SUGGESTED 6%. HE THOUGHT THAT WAS PERFECTLY REASONABLE. SOMEWHERE BETWEEN THEN AND NOW, WE HAVE DOWNGRADED OUR EXPECTATIONS AND WE HAVE NOW NAMED IT THE, “4% RULE” (https://www.investopedia.com/terms/f/four-percent-rule.asp).

OHH, WAIT…4%…HA, how about 3.3%! (https://www.marketwatch.com/story/the-4-rule-is-being-debated-again-but-heres-what-you-should-do-11636999447)

Charles Tadros, M.D.

December 21, 2021

Saint Louis, Missouri

WE HAVE BEEN TOLD DRAMATICALLY INCOMPLETE, IF NOT INCORRECT, INFORMATION ALL THESE YEARS. IN ORDER TO RETIRE COMFORTABLY, WE DO NOT NEED TO SAVE, THEN INVEST, JUST 10-20% OF OUR PRE-TAX INCOME DURING OUR 30-40 YEARS OF EMPLOYMENT. WE REALLY NEED TO SAVE AND INVEST 75% OF OUR INCOME FOR THE FIRST 10 OR 15 YEARS WHEN WE START MAKING MONEY (“Ma, I’m moving back into the basement!). THIS AMOUNT IS INVESTED INTO A PRE-TAX, LOW COST S&P INDEX FUND UNTIL WE RETIRE. I CALL THIS FRONT-LOADING OUR SAVINGS AND INVESTMENTS.

What we actually SAVE, even if our cost of living is much less when we retire, will not be even close to what we need in order to retire for the typical 20-30 years of retirement. We need the additional money brought in by LONG-TERM INVESTMENTS. During our working years, we will be adding funds to these investments. We will not be touching the principal, interest or capital gains for 20, 30, or even 40 years.

Remember, traditionally, 10-20% of our pre-tax income is what we would be saving, and then investing, until 65 years old. However, for each of the last few years before retiring, the contributions to the investments will not make us much return due to the lack of time in our retirement fund(s).

An old assumption is that we would be continuously employed for all of our working years. Many of us will not. For these unemployed or underemployed years, too often, nothing is placed into savings or investments.

An old assumption includes that our salaries will rise every year until we retire. For most of us, this will not be true.

An old assumption is that we will retire at 65 years old. Many of us retire or cut back our income/earnings much earlier than this.

An old assumption is that our costs and other living needs are reduced in retirement. Too often this is incorrect.

An old assumption is that our retirement account(s) will be untouched until retirement. Very often this is not true.

An old assumption is that the more educated we are, the more employable we will be, and the higher income we can achieve. Very often, this is not true.

Often, the more education or training we have had, the more debt we have accumulated, and the longer time we have had producing smaller (or no) incomes until our real careers begin. Additionally, during our extended education, and shortly thereafter, we typically become engaged, get married, buy a house, have children, buy a nicer car, and take fancier vacations (ie rapidly rack-up expenses) leading us to have minimal to no savings or investments for many years after our education is complete.

And old assumption is that the more specialized we are in your education or training, the more income we can command. Often this is true until there is a downturn in the economy, or job displacement by technology, or via offshoring of our jobs. Often, the most expensive person to employ is the first to be let go. Additionally, overly qualified people have a hard time convincing future employers to hire them for jobs which require fewer skills than what that potential employee has already attained.

Finally, job loss, after age 50, portends a low probability of ever obtaining a future job with the same status or income.

Charles Tadros, M.D.

December 19, 2021

Saint Louis, Missouri

OFTEN, THERE IS MUCH MORE WEALTH IN SMALL TOWNS THAN ONE MIGHT EXPECT.

Yes, fewer expensive things to do, fewer events to attend, fewer shopping opportunities, but this means, less spending on frivolities.

Smaller incomes, but also cheaper living expenses.

Less competition to purchase local real estate.

Less expensive labor and benefits costs.

Easier to become involved in the politics and policymaking which may affect your business or income.

Smaller market for any product or service, but also, less competition to capture local market share.

With the internet, we are still able to access the universe of products and services, when needed.

Charles Tadros, M.D.

December 19, 2021

Saint Louis, Missouri

JUXTAPOSING OTHERS’ MISTAKES WITH OUR QUESTIONS REGARDING THEIR ERRONEOUS THINKING (or with better, or correct answers) IS MORE POWERFUL FOR EFFECTING CHANGE IN THAT PERSON THAN DELIVERING BROWBEATINGS OR LENGTHY EXPLANATIONS.

Charles Tadros, M.D.

December 16, 2021

Saint Louis, Missouri

THERE IS SO MUCH CONFLICTING ADVICE OUT THERE…

When do we listen to the encouragements or discouragements from family and friends (people who typically know us and love us), versus just listening to our own gut?

Decisions and events in our lives are not going well. When do we double down, press on, and work harder, versus cutting our losses, quitting, and move on?

Charles Tadros, M.D.

December 16, 2021

Saint Louis, Missouri

OFTEN, WE ARE NOT READY TO HEAR HELPFUL WISDOM, NEEDED ADVICE, OR PERTINENT INSIGHTS. HOW WE DISMISS THESE PERSONS’ HELPFULNESS, DETERMINES WHETHER OR NOT THEY WILL APPROACH US AGAIN WITH THE VALUABLE CONTENTS OF THESE AND FUTURE CONVERSATIONS.

Be insightful enough to remove our egos and become more gracious and thankful. Then go back, explain, apologize, and reinitiate these life-changing conversations.

Charles Tadros, M.D.

When we listen, understand that we can become anxious, overwhelmed, and embarrassed. Understand what is happening to you. Make no excuses, but explain to the speaker your internal conversation and feelings.

December 16, 2021

Saint Louis, Missouri

THE ADVANTAGE OF READING A PHYSICAL BOOK, MAGAZINE, OR NEWSPAPER IS THAT THESE ACTS PHYSICALLY ISOLATE US AND FOCUSES OUR ATTENTION.

The disadvantage is that these acts occasionally slow down our fact checking and slow down our jumping around and jumping ahead to more interesting or more important information.

Charles Tadros, M.D.

December 7, 2021

Saint Louis, Missouri