The Americans’ goals were huge and the challenges overwhelming. The British expected a swift end to the war. How could a group of squabbling colonies and her untrained army overcome the powerful British Empire? America’s Commander in Chief had his doubts. Washington wrote his cousin “I think the game is pretty nearly up.” But leadership, ingenuity and resolve reemerged – “victory or death” – and the strategists devised a surprise attack. Under Christmas stars, Washington led a scrappy army towards a Hessian garrison in Trenton. Their victory would serve as a lightning bolt and refreshed the Continental Army. Yet, six more grueling years of sacrifice and bloodshed lie ahead.
Victory by the American underdogs was unfathomable to The Empire. Artist Benjamin West was commissioned to capture the signing of the Treaty of Paris on September 3, 1783. The painting pictures the American delegation. However, there is a vacant splotch on the canvas’ right side. The British had great contempt towards the Americans and refused to poise. The “Pale Ghosts of England” didn’t want to be depicted in defeat and the painting was never finished.
The Americans had two main advantages – the British had spread themselves too thin and the Americans were fighting for a grand cause. The war had been won by a ragtag group of men, women and children – common people often overlooked in history books. John Honeyman, a butcher and weaver, served as Washington’s spy and contributed to the victory at Trenton. Peter Francisco, a Portuguese blacksmith, was also known as the Virginia Giant – 6’ 8” and 260 pounds. Elizabeth Burgin led the escape of over 200 American prisoners from the deadly British prison ships where more colonists would die than on the battlefield. And teenager Betty Zane in a daring mission resupplied Ft. Henry’s defenders with gunpowder in one of the final battles of the war. These and many others were ordinary people doing extraordinary things – unsung heroes who knew something bigger.
Retirement planning isn’t the drama of war. However, it has similarities. Success requires clarity of the mission, battling with life’s uncertainties, and there will be victories and defeats. And throughout the journey, you’ll remain steadfast to your battle plan, and have the strength and wisdom to make adjustments along the way.
I often reflect on the many client conversations I have about retirement, and life. So I thought I’d share three common themes. But first a quick story…
“I’ve picked my retirement date and I want to make sure I’ve got my financial affairs in order,” said the lady. “Oh, and I’m inheriting some money. My aunt passed recently, and as her executor and trustee, I’ve been liquidating things. I’m heading out of town for the holidays. I’ll talk to my CPA early next year when I make the distributions to beneficiaries, my sister and I.”
Hold on, let’s review her estate summary. Significant income was going to be taxable, but to whom – beneficiaries or the estate/trust – was unclear. That is a big tax planning issue. Income at the trust level is often taxed at the highest rate. An individual hits the top tax rate with taxable income about $407k (about $458k for a family); however, the trust may hit it at $12,500. The tax bill might be cut in half if that income was “passed through” to her in 2014, rather than the trust incurring the higher tax liability for 2014 and deferring the distribution to 2015.
Life is busy. But why allow big things to fall through the cracks? Her CPA was consulted for his tax advice and actions necessary prior to New Year’s Eve. She might have a nice tax savings in her Christmas stocking when she returns.
Retirement Can Surprise You – It’s not a lifetime of cruise ships, golf, or whatever leisure activity the ads suggest. Mitch Anthony, author of The New Retirementality, discusses the importance of finding and maintaining “purpose in life.” Retirement is a great transition in life. For some, work is their life – so there’s the need to develop other hobbies and interests. And working beyond age 62, or 65, or whatever mythical goal line for “normal” retirement, doesn’t make you a loser. Some continue to work for the paycheck. Others do it for benefits, including the payback from “being engaged.” Anthony writes, and I paraphrase, “If I took up a lifetime of golf, first I’d become bored, and eventually I’d become boring.” So practice retirement before you pull the trigger.
Retirement’s More than Managing Investments and Money – Money is a yardstick for some. For others, it’s a tool. Things it doesn’t buy are time, happiness, love, wisdom, talent, curiosity, or trust. My mentor at Vistage, an international organization of CEO’s, stressed the importance of having “balanced goals” – family and relationships, professional, personal, financial, community, spiritual, etc. What do you want your life to look like? Yes money is a tool to help support that. But knowing the “whys” of your life is a much more relevant and compelling driver to the “hows” – how much you need to save (or can spend), and to invest, insure, tax and estate planning, etc.
Life’s Tough… As is Retirement and Planning – I still chuckle when I think about Erma Bombeck’s book titled If Life’s a Bowl of Cherries, What am I Doing in the Pits? Tony Blair, former British Prime Minister,described the complexities of life and challenges today. No longer can we solve problems sequentially – one at a time; today’s world is multi-dimensional and challenges multi-directional. Often, it’s then prudent to get several heads together, each representing different expertise and perspective, to think things through, and to have shoulders to lean on when times get tough.
Life doesn’t move in a straight line. Life’s curly. I wish you health, prosperity and strength in the years ahead.