Sunday, April 23, 2017

Add Some Passion to Your Dream

Something rather unusual happened the other day. For the first time since I retired, I had the opportunity to throw some “new money” into the market.

Since I retired a little over four years ago, during most months we have lived on our renewable income and the mortgage payment we receive from the owner financed sale of our house in Maryland. In our case, renewable would be my wife’s early Social Security and my FERS pension. This has been enough to cover everything but extraordinary expenses such as repairs to the old house before the sale, the cost of moving to the new house, certain large tax bills, and that first-class vacation to Hawaii. On those occasions we dipped into our savings. After all, that is why we saved for retirement.

As an aside, let me add that when and how to take Social Security is a rather complicated question that requires an individual analysis before rolling the dice. First of all, you will have to guess how long you will live. If you take early Social Security at age 62 and die before roughly age 78, you win. If you wait until full retirement age, in my case 66, and die before 78, you lose. If you can wait until age 70, you can collect your maximum benefit. If you have longevity in your family, you might want to wait.

Or not!

The rules change all the time. In our case, we were able to flip my wife’s individual benefit to a higher spousal benefit at the time I started my Social Security at full retirement age. I had planned this maneuver with the understanding the rules might change before I reached 66. Then there is the question of necessity. If you are 62 and are unemployed, you might want to go ahead and take Social Security even if you believe you will live to 90.

After receiving my first three Social Security payments, I realized that my checkbook balance was higher than expected, as we were still living on renewable income and that monthly mortgage check. For the first time in more than four years, I had some new money. It reminded me of the years spent in the stretch run to retirement. I wanted to retire at the earliest possible date. Baring a winning lottery ticket, that would be the day after my 62nd birthday, the first day I could retire without a pension penalty. I remember how exciting it was to watch my version of a 401(k) growing with every paycheck. I was even more passionate about my self directed, after tax investments. When the balance went up in the checkbook, I would move some of that money up to our money market fund. I would tell myself stories about money that only moved in one direction—up, first from checkbook to savings, then from savings to investments in the stock market. This was almost always true except when we needed to buy a new car. Then money would move down from savings into the checkbook and off to the car dealer.

I was emotionally involved in my dream. I wanted to achieve my goal of early retirement so badly I could taste it. Think about times in your life when you were able to fuel a fantasy with your emotions. I expect this happened somewhere along the way to your wedding. It also happened to me when I was in engineering school. After nine years, I so wanted to get off the factory floor, that my academic efforts were fueled with passion.

Revisiting the memory of that feeling for even just a moment, as I purchased a small amount of a somewhat speculative stock, reminded me of how important passion can be in helping us to achieve our goals, but how to turn it on when we need it?

It seems like others are better able to hit our happy buttons for their benefit than we are able to tap into our emotional reserves for our own benefit. Last week I received a “private invitation” to experience a test drive in the new Alfa Romeo Giulia or Giulia Quadrifoglio, just the kind of car I would like to own some day. My wife had fun teasing me about this advertisement as she knows that although I am a logical researcher who reads Consumer Reports, a little passion will help in separating me from our money when visiting a car dealer.

If advertisers, marketers, politicians, and preachers know how to ignite a fire under our inertia, why can’t we learn to do it to ourselves? Tony Robbins correctly differentiates between the musts and shoulds in our lives. If it must get done, it will get done. Sometimes a should will get done, but often we find an excuse to avoid doing what we really know, in our hearts, SHOULD be done. The musts tend to be fueled with passion.

You Gotta Want It!

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