How hysteria killed America

Part 2, Financial Advisers

In the months leading up to my retirement in 2009 I studied six or seven books by so-called financial advisers regarding what I must have in the way of income and capital to comfortably retire.

The major assumptions seemed slightly askew but I concluded just because they didn’t apply to me that doesn’t mean they weren’t right for lots of other folks. The assumptions were that you would owe a big mortgage on your house as well as sizable loans on your several luxury automobiles. You would be used to traveling widely throughout the world and staying in luxurious accommodations. One book mentioned that spring trip to the vineyards of France that you take every year along with the Mediterranean cruises in the fall. Don’t want to give that up.

In addition, of course, you entertained lavishly and often throughout your life. How dreary would retirement be without the ability to spoil your friends and family members.

All of the books had an odd hysterical tone to them. You needed millions and millions of dollars to even consider retirement and even then you would have to live like a poor hermit. There was even the suggestion that if you planned to draw down your capital in retirement you would be cheating your heirs out of their rightful inheritance.

It all sounded a bit like Gloria Vanderbilt’s old suggestion that you could never be too rich or too skinny. Certainly, it sounded like you could never be rich enough to retire.

When I thought about it, however, I realized that these very same people writing these books make their fortunes based on exactly how large your fortune is and that reducing these piles of money only cut into their profit. From their own self interested perspective, you could never have enough.

By the way, all the authors were of the opinion that you were more likely than not to live practically forever. A happy thought, but somehow they managed to turn even that idea dark. So the chances of living so long you would run completely out of dough just as you needed it most hung over all the discussions. Best bet: keep working and keep investing and trading with me.

At the same time, many financial advisers decided to proclaim their lack of respect for Social Security. It is a bankrupt big government scam, a Ponzi Scheme. The SS trust fund is running out of money. No one can actually live on this amount anyway. Think of all the money you would have made if you had given the same amount to us to invest for you! Think of the commissions we would have made! We don't hear as much about this as we did before the collapse of the stock market. But the idea will not go away completely since there is money to be made.

By the way, Social Security is working perfectly and has plenty of money. It was never set up to operate from trust funds. It was to pay out to beneficiaries as funds came in from wage earners. The trust fund developed because so little was paid out in the early decades and so much was coming in. When an increase in the Social Security payroll tax is needed in the future,  it should be enacted. It will not be the end of the world for young workers. Social Security works and the older folks in our country have never been better off than they are at this moment.

But I still hear some people say, I’ll have to work until I die, according to my financial advisor.