The Age Of The 30-Year Retirement

Thoughtfully consider this mental picture: There was a captain of a ship in the 1400's.  His ship had a leak that allowed only a small amount of water.  The leak was so small that it would not be noticeable for 15-20 years. 

The captain was overly anxious about the threat of dragons and sailing over the edge of the earth that it caused him to always be on the lookout. 

Why should he not be afraid?  The threat of dragons and falling off the earth was well documented.  The chatter of the pubs always had a tale of a ship that had disappeared no longer to be seen.  They surmised that "it must have fallen off the edge of the earth."  The maps also had locations of extravagant beasts and dragons to avoid.  'Hic sunt dracones' (or Here be dragons) and similar warnings were commonplace on maps of the day.  These warnings haunted every sailor's sleep.

The captain could not trust his lookout to the serious dangers.  So much so that all of his energy was spent looking out over the horizon.  In the meantime, the slowly leaking water in the boat was so incremental that it became a part of everyday life.  It did not really hurt anything and it surely was not as serious as the immediate threats of dragons or falling off the edge of the earth. 

One day a 'dragon' snuck up on the ship without notice.  It was actually a small iceberg that could barely be seen on the surface.  But 90% of the iceberg was beneath the surface.  By the time they saw the iceberg, the ship had become so heavy with the extra water in the hull that the ship could not make tight turns without tipping over.  They barely avoided the exposed part of the iceberg but were unable to turn hard enough to get farther away from the real and impending danger.  The bottom of the ship struck the iceberg sending the ship and its crew to the bottom of the ocean.

The Moral Of The Story

While there will always be risks to avoid, the ones that prove fatal tend to be those that are evident only over long periods of time.  The real dangers also lie beneath the surface, often going unnoticed by most of the 'experts'.

Throughout history, we humans have been ruled by fear.  It is a part of the Creator's design and an essential instinct of 'survival'.  However, it is the moral obligation of any office that possesses integrity to outline the real fear or define the larger fear that everyone is missing. 

One large fear for those who have beautifully executed the practice of saving their money over their lifetime, is the fear that they will 'lose their money'.  The common conversation of the day cannot help but go into extreme survival mode by doing everything in their power to eliminate the possibility of losing principal.

The 30 Year Risk

The joint life expectancy for the average, non-smoking 62 year old couple is 92.  So one of the couple, 87% of the time it's the lady, will, on average, live about 30 years in retirement. 

Therein lies the real risk that almost nobody will discuss because it does not sell newspapers.  Why?  As we all know, fear sells and it is difficult to get anyone too fearful about something that takes as long as 30 years to culminate.  Also, selling immediate fear puts bread on the table today.

There are immediate risks to consider, so we do not want to downplay those.  But those risks are already fairly common knowledge to most professionals: underdiversification, market timing, principal risk, credit risk, geographical risk, currency risk... to name a few.  Those risks can generally be managed (never controlled!) by a professional and they are typically the the only known dragons on the average investor's map.

Meanwhile, the ship is leaking incrementally... only the subconscious is telling us there is something wrong but we can't quite put our finger on it.

Our office is not so concerned about satiating the smaller immediate fears as we are about increasing your fear about something that is much more real, lesser known and damaging to your lifestyle 30 years from now.  You read correctly.  We want to actually increase your fear of one of the most unknown and detrimental risks for your nest egg because you are likely more fearful of lesser risks that can be more readily addressed.

If you are also more long-term oriented (i.e. if your interest has been piqued enough to read this far), we would like to expose the very real long-term risk for you.  Just call to make an appointment or click here and leave a comment letting us know that you want to understand more about the "30 Year Risk".

 

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