Kitchen Table Finance by David Shotwell CFP(r) and Nick Nauta CFP(r)

December 11, 2023 Ep 147 – Retirement Planning News – November Edition

This is episode two in our series of retirement planning headlines and what they may or may not mean for your upcoming retirement. Our little round roundup of things we’ve read over the last couple of weeks that are out there in the media.

Watch on YouTube HERE

Charlie Munger

Our lead story is an interview with Mr. Charlie Munger, who sadly passed away just a few days ago on November 28. He was 99. Charlie Munger is best known as Warren Buffett’s right-hand man at Berkshire Hathaway. He was considered a brilliant investor in his own right and just a real down-to-earth, cool guy.

There are many books of his wit and witticism out there. He gave a very interesting interview before he passed away published in the Wall Street Journal, which has made our list here.

An interesting fact about Charlie Munger is that he has a dorm named after him which has no windows. He designed it so that people or students would go out and mingle with each other because they liked sunlight. One of his responses from the interview a few weeks ago when asked about picking stock prices, he said, “Why should I try to pick my own stocks if I’m an individual investor? I don’t design my own electric motors or my own egg beaters.”

It is also interesting that Munger and Warran Buffett, two of the wealthiest men in the world, both lived in the same houses for decades. They drove modest cars and neither had private jets.

There was also a quote in this article where Munger says one of the reasons he was economically successful in life is because he read so much his whole life starting when he was about six. He also talks a lot about how it’s not necessarily about being the smartest, it’s about the person who continues to learn and continues to get better and improve. He and Buffett were both that way in terms of echoing the old cliche “Not all readers are leaders, but all leaders are readers.”

Wall Street Journal: How to Know When It’s Time to Retire.

Interesting statistic: The average retirement age was 62 this year 2023, which is up from the age of 57 in 1991.

So, in about 22 years, the retirement age has increased by about five years. We are curious if that tracks with like how much life expectancy has increased in that time.

If you wait too long you might regret the extra years you gave to work. However, if you leave too early, you could feel lost in your new life, which is a real thing as far as people retiring early and not quite sure what to do or where to go from there.

We do see that quite often. There’s a lot more to decide about retiring than just whether are you financially able to. The people who retire successfully are the ones who are retiring to something, not from something.

If you’re leaving the workforce and not ready to replace that, you might be floundering a little bit. We have a worksheet we use as a part of our process regarding our ideal day, week, and year. You fill it out as if you didn’t have to worry about anything this would be your ideal way to spend a day, a week, and a year. Then you compare that to your current and it helps a lot of people think through the changes they need to make right now to help them get to that ideal scenario in retirement.

3 big reasons exchange-traded funds went ‘mainstream’ with investors

On the investment side of things, it’s a little more technical but it applies to a lot of individual investors out there.

In a nutshell, exchange-traded funds are portfolios of stocks or bonds that trade on an exchange like stocks rather than the way mutual funds traditionally trade. They are generally more tax efficient, track an index, and are lower cost than actively managed mutual funds.

A lot of individual investors see exchange-traded funds as being tax-efficient with passive investing. We would add the fact that most major discount brokerages, Schwab, E-Trade, and Fidelity, will now let you trade most exchange-traded funds with no trading costs. So they can be an effective tool. They’re building blocks like any other tool you might use to build a portfolio.

We have all these online brokerage firms now, where in the past you had to call a broker to make a trade. So they would, for lack of a

better word, sell you a mutual fund. Now you can find things on your own. Passive investing has a strong story right now if you compare it to active investing.

We’re starting to see those track records come through and it turns out it’s hard to consistently beat the market. In our portfolio models, we use a lot of exchange-traded funds and we use traditional mutual funds depending on the best fit. They are all just tools. But this article makes a good intro point for people who are interested in learning more about exchange-traded funds and why they’re seen as the best.

Click on Detroit: Michigan ranks as one of the best places to retire in US

Michigan, our lovely home state, ranks as one of the best places to retire in the U.S., This is based on a U.S. news study where they polled seniors in retirement, looking at different aspects of quality of life. Lo and behold, we’ve got Grand Rapids, Lansing, Ann Arbor, Detroit, and Kalamazoo, all ranking in the top 100 in the country.

Our initial reaction was surprise to see Detroit on there. Most people don’t think of Detroit as a good place to retire but it can depend on the criteria. The cost of living has a big impact on a survey like this and if nothing else the cost of living in Michigan tends to be pretty good.

Look at the questions that they asked these people and how people responded and ask yourself, “Are those the things that are important to you?”

You may get very different results if you find that the things that bump Dan Arbor to the top of the list aren’t as important to you as some of the things that might be drawbacks from your plan. Like winter.

Where do you want to be? Why would you want to be there? What’s important to you?

Wall Street Journal: The Pay Raise People Say They Need to Be Happy

Our favorite thing here was they quoted one of our favorite writers on the topic, Elizabeth Dunn, whose book, Happy Money. informs a lot of our day-to-day conversations with people. The basic idea is once you get beyond a certain living income, the value of money. in terms of happiness, flat lines.

This article is a good intro to that idea and puts in perspective the fact that the more money you make, the more money you think you need to make for happiness. However, the actual results don’t compare. The general point is every time you make more money you just raise the bar. The hedonistic treadmill is the fancy word for it.

Wall Street Journal: How to Avoid Being Boring at 60

This is about a guy who, as he turned 60, realized that his friends didn’t want to keep hearing the same stories over and over. So he needed to go out and find some new stuff to talk about. We thought his thought process was cool. This is not a bucket list in the normal sense. The man made some rules and one was no stereotypical stuff, like jumping out of an airplane. But also nothing so dangerous that he might not be able to do the other 59 things on his list. Bullfighting was out. Nothing went on the list that was just a matter of spending money.

If it was just a matter of saying, “I’m going to go buy this experience,” it didn’t count. Then he eliminated anything too simple or easy to do and things that were too complex.

He went on a police ride-along, attended a mega-church because he had never, and bid on art at an auction and then had to sweat it out that he was going to win the auction. His goal was to not come home with a piece of art but he had to bid on something.

These are just a few examples of his 60, but each one made him think about the world a little bit differently and each one turned out a little different than he had envisioned. We spend a lot of time talking about retirement goals, and things you want to do, and we get a lot of stereotypical answers. So we thought this was a cool way to think about different ways to liven your life up.

Wall Street Journal: Why It’s a Terrible Time to Spend Money

I guess the question is, “Is there a good time to spend money?” It’s all relative, right?

It’s always a bad time to spend money you don’t have. Being financially responsible right now is more important than ever. Which is extremely difficult considering the pressure of the holidays and the advertisers out in full force. Black Friday, Cyber Monday, and all the deals.

CNBC: Nearly half of investors believe 2024 elections will have bigger impact on their portfolios than market performance, survey finds

There’s always going to be plenty to worry about, and you can always count on Washington making a crisis out of everything that they possibly can. We don’t want to dismiss people’s concerns over the election in markets, but if you step back and look at the facts behind the market impact of a president, whether it’s a Democratic or a Republican president, there’s not a big difference one way or the other.

However, this article states that a poll cites that 68% of Republican voters and 57 % of Democratic voters expect that the election outcome will impact the stock market and the economy. And so that perception and that reality are not the same.

Just like every election year, you’re going to see an uptick in volatility, the market going up and down. But once we have a conclusion,

it will go back to a more normal cycle.

Gather around and follow the Kitchen Table Finance podcast to learn about money and simple ways you can invest right now.

You can find more practical advice at srbadvisors.com and contact the team for personal planning by emailing info @srbadvisors .com.

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