Sensible Retirement Investing

This past week was busy! Please enjoy this newspaper column from published October 2005

...

Tombstones on the Cake

It was my birthday recently. The writers' almanac that I check most days featured that day a poem that began, "Your birthdays now are lit with irony, and years build up like tombstones on the cake.... " ("One Hundredth Birthday" by Kim Bridgford from Instead of Maps, David Robert Books.) 

Boy, there's a grim way to start a 50-plus birthday. Of course, as many have noted, if this is middle-aged, then are we all assuming we're going to live to 100? 

These doleful thoughts were on my mind as I walked into our kitchen. My husband was leaning against a counter, looking at me with narrowed eyes. Not much on either of us is narrow, so that caught my attention.          

"Is this an okay time to do a terrible chore?"

I narrowed my eyes back at him.

"What did you have in mind?"

"At work they asked us to re-pick investment vehicles for our 401K."

Talk about tombstones on a cake.

Ten minutes later we were knee-deep in modern life.

First of all, we've been saving for years and years so we now have enough put away for one really terrific year of retirement. However, if we live to 67 it's going to get interesting. We've talked about taking up heavy drinking and smoking if we stay too healthy. 

Second, why is it then when one is talking about oodles of money, one never sees real cash? There's something very weird about how seriously we regard the digits printed on our papers. 

Then there were the overarching choices we were supposed to be making. The packet described about a dozen different funds to which we could send our savings. Some were lower interest, relatively stable bond funds. Some were middle of the road mutual funds. Some were co-called "aggressive," i.e.: riskier funds. 

How nuts is this? Thousands of our nation's brightest human beings devote their professional lives towards procuring for you, me (and themselves) a 10% instead of 5% return on investments. Isn't that amazing? There are lower rates out there and there are higher, but most of the hoopla of the financial world is about finding places to save your money so it will earn a little more that it could earn in a bank.

Consider. If you invest $10,000 for ten years, the difference between 5% and 10% is about $10,000. Nothing to sneeze at, but then again, if you quit a pack-a-day smoking habit, that would save more than $36,000 and your chances of living long enough to need the cash would improve also. (I've quit smoking twice in my life. Can I say I'm saving $22,000 per decade?) (I first wrote this essay in 2005. I just recalculated these numbers and was astonished to learn that the average cost of a pack of cigs these days is $10! Wow!) 

My husband mentioned that a friend asked what our retirement investment plans were. He replied, "Mary Beth and I are thinking we can go back to back and shoot our way out."

Well, back to the choices. What did we like best; the fund heavy on non-essential consumer goods, or the one with lots of health care investments? We picked health care. Doesn't seem as if they know how to export it to China yet. What does it say about a nation when one of its strongest growth markets is sick people?

Another fund featured the discount store famous for not paying medical benefits to most of their employees. I won't even shop at that mart, let alone invest in their hooligan practices.

We smiled to see yet another international conglomerate that was the cause of one of our earliest dates as a married couple. We joined a protest against the way this company endangered the lives of infants in the third world. Right after the two of us held protest signs for a few hours, the company changed their ways. We still claim it was the two of us that changed their mega-billion dollar minds.

And on it went. There's nothing like working through retirement plans, meager as they may be, to get the strong sense that the reverse spelling of "middle-aged" is "have learned how to live with compromise."

Or, as the bumper sticker used to ask -- "Have we become the people our parents warned us about?"

We made our choices, picked several funds across the risk spectrum, finished our coffee. We are middle-aged enough to be grateful we can save modestly and regularly, just as our grandparents did.                 

The next day I received a report from the woman who manages MayaWorks (a Fair Trade organization in Guatemala). Last week she visited towns hardest hit by the mudslides spawned by a recent devastating hurricane. She interviewed many families about what they lost and what they need now. 

Typical was a family of a mother and father with two children. Their home was destroyed. They lost everything. This is their list of what they believe they need.

"Two beds, a change of clothes, ponchos, kitchen utensils, a chicken to cook, and a loom."

What a way to view "investment vehicles" in a different light.