Categories: General
      Date: Jun 29, 2016
     Title: My Breakfast With a Cynic

A family friend (“Mike”) told me the story of one of his family friends (“Joe”) who was contemplating retirement and asked if I would have a conversation with him. Mike also pointed out that Joe was “anti-financial adviser” and not to look at this as a prospecting opportunity. I obliged and suggested a breakfast meeting.

A family friend (“Mike”) told me the story of one of his family friends (“Joe”) who was contemplating retirement and asked if I would have a conversation with him. Mike also pointed out that Joe was “anti-financial adviser” and not to look at this as a prospecting opportunity. I obliged and suggested a breakfast meeting.

At that meeting, Joe and I covered the basics, with a short discussion regarding our careers and families. Joe then hit me with his agenda: “(1) I am more of a do-it-yourselfer, and if there is any cost for today, please let me know; (2) my wife and I both have earned significant incomes by working hard – more than 60 hours a week – for our respective companies over the past 25 years and have saved mostly through retirement accounts; and (3) I’m worried. Can we retire? – that’s the only question I have and why I wanted a different opinion.”

After listening, I restated several things, confirming the amount of capital they had between them, their pension and Social Security amounts, and income needs for their desired lifestyle. Joe nodded that those were the baseline facts. In looking at my notes and doing some simple math, I told him not only can they retire, but they could support me and my family as well. He chuckled politely, but I could tell my comment agitated him.

He then opened up and went on with a litany of cynicism, stating that the country is going broke, so is the Social Security system in the next 20 years, and that Donald Trump has a 50 percent chance of becoming president of the United States. In a nutshell, he dismissed my professional opinion – seeing it as uninformed and overly optimistic. He really did not have much of a question; he needed someone to agree with him. He stated, “I could have done the math, but there’s a lot more to it than just how much money we have.” From a professional standpoint, I was mildly insulted.

I responded, “I am aware that the federal debt is roughly $19 trillion, that it has almost doubled in the last 12 years, and that it now officially exceeds our GDP each year. Further, I realize that the trajectory of the current Social Security system cannot sustain itself with dollars allocated to the socalled Social Security Trust Fund ...”

“Then how can you tell me I can retire by just looking at the simple math?” he asked.

“If simple math allows you to make the decision that you cannot retire, how can your simple math regarding the debt tell you that the country is going to bankrupt itself?” I retorted.

“Given the current direction of the debt and rate of growth,” he replied, “this cannot be sustained on any long-term basis.”

“I agree that such a scenario can’t endure long term, but what of the scenario itself? It’s not here yet,” I tried to reason. But his three words struck me: “cannot be sustained.” The questions then become: When and in what fashion will “not sustainable” arrive? And how in the world – as advisors or individuals – are we supposed to make retirement or investment decisions based on the trajectory of the national debt? The point is “not sustainable” is not here yet, nor is it visible on the horizon.

His next question was this: “How do you, as an adviser looking at this situation, draw the conclusion that the national debt will not severely alter or end our economy as we know it?” “For the same reason it never has before, Joe,” I tried to reassure him. “I have conversations all the time with people who are in the process of making major financial decisions. Then I see the tide change when they start thinking of retiring. That's when fear of the future really sets in. So it feels different to them, but in reality, is it? The world is still moving forward as it was before."

The financial media does not tell us this very often, but – on the morning I write this – the interest rate on U.S. Treasuries for 10 years is 1.625 percent (as of June 15, 2016; see What this means is that the world is willing – nay, eager – to loan us money at the nominal interest rate of 1.625 percent. To me that is nowhere near Armageddon, nor something that should make investment or retirement policy for the clients with whom we work.

We ended the conversation with his assuming he cannot retire because the national debt will crash the economy – something he apparently knows that the rest of the world does not. The other two issues – the state of Social Security and our next president-elect – were left on the table when breakfast was over.

I learned from Joe that we justify our emotions with what we believe to be true – fact or not. He was scared to retire because of what could happen. His fear of the future significantly outweighed his faith in it. Does he realize that if all he sees are unsuccessful outcomes, that someday they will come true for him? How is this any way to spend the next 20 to 30 years of his life? What does it teach his children and grandchildren?

The point of this little essay is this: We all have a piece of this guy in our DNA. Fear can affect our decision-making and our quality of life. Do not succumb to this little monster. I am hearing this monster more and more in client conversations, fearmongering on who the next president will be and how that person will ruin the country as we know it. This fear is normal at election time every four years, but this time it’s more intense given the differences in the two candidates. My belief is that when the new president is sworn in next year, the world will not end. The sun will come up, and we will all move forward with our lives.

As we do so, let’s be aware of our fears but not give them any power in the decisions that we make in various aspects of our lives. Let us operate from a position of well-thought-out strength and an offensive attitude. In my experience, what we fear most is exactly what we should face head on to uncover the opportunity. Our attitude and grit toward how we view the world creates our reality – not the president, the national debt or the fear of the moment. I do not know how we will get through the challenges we face, but history is on my side when I say that we will get through them.

In regard to Joe, the cynic, I do not think I changed his mind one bit during our hour together. On my drive home, I was upset that I had wasted my time. But then I thought of this newsletter, and the opportunity for this story – a perfect example of how our outlook and thoughts matter!

Thank you, Mr. Cynic.

P.S.: At Panoptic, Daryl and I have made the commitment to produce an original piece each month for at least the remainder of this year. Please give us your feedback, and reach out with questions or topics you want further information on. At the least, we want to validate that we have readers and that this is a worthwhile endeavor for the people with whom we work in our little corner of the world. Thanks.

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