blog post 4/12/2016

The Cost of Cool

Recently, I watched Napoleon Dynamite on cable television. It’s a 2004 comedic movie about an awkward high school kid, named Napoleon, and his attempt to get a date for the prom. It certainly wasn’t the greatest comedy I had ever seen, but it had its moments. In the film, there was one character that stood out to me. His name was Uncle Rico, played by actor Jon Gries.

Uncle Rico was a sort of underachieving, yet well-meaning, forty-something fellow who wore out of date clothes and a bad hair piece. With frequency, he spoke longingly of his high school football glory days. He reminded me a bit of Al Bundy, from the television program Married with Children.

I imagine that a real life Uncle Rico was probably considered pretty cool back in high school. That made me think of some of the guys and gals I knew back then, who were not considered cool. Many of them got good grades and rarely went to parties. They generally didn’t wear the latest fashions, drive powerful sports cars or stay out late at night.

Sometimes these kids would be called nerds or geeks or, worse yet, were bullied by the supposedly cool kids. Myself, I was rail thin, had red hair (which seemed to change with age,) freckles and wore glasses. Believe me; I know all about not being considered cool.

Several of the so called nerds that I’ve stayed in contact with are now successful doctors, attorneys, civil servants, politicians, and business owners. Some live in nice homes in safe, clean, neighborhoods and are raising lovely families. I’m fortunate and thankful to be able to provide financial planning help to some of these good folks. I now realize they weren’t trying to be cool back in school. Rather, they were working toward becoming successful, productive members of society.

I also bump into some of the people from my old neighborhood who were considered to be the cool kids back when. Many seem quite successful and happy. Others, let’s just say it appears they peaked at the age of 17. Perhaps the disparity in life trajectory might be due to the fact that while the cool kids were out partying, the nerds were out preparing.

Today, people are spending fortunes over the course of their working lives simply to become or to remain cool. They drive the most expensive cars, live in the largest and most expensive homes and wear the most costly jewelry and clothing they can – often purchasing these depreciating assets with their high interest credit cards.

This desire to appear cool in the eyes of our peers is so common that we have a term for it: “keeping up with the Joneses.” There was an article in the San Francisco Chronicle which spoke to this phenomenon. It mentioned something to the effect of people spending money they don’t have, to buy things they don’t need in order to impress people they don’t even know. The shocking thing is the article was written almost 90 years ago and seems doubly true today.

“The typical working household nearing retirement with a 401(k) and an IRA has a median $111,000 combined, which would yield less than $400 a month in retirement,” according to a recent report by the Boston College’s Center for Retirement Research. That is less than $100.00 dollars a week- before taxes! It’s clear that profligate spending is costing some people their entire retirement savings and others a significant portion of it.

Sure there are some few people who make or have so much money that none of this really matters. For most of us, however, we must make a choice: be cool now or be comfortable and confident in our retirement. Choose wisely.

Personally, I don’t want to wake up 20 or 30 years from now and realize that I have become the retirement savings equivalent of Uncle Rico, a guy who lived it up early on only to find myself lacking in my later years. I don’t want that for you either.

I believe that through appropriate planning, taking into consideration a multiplicity of factors including but not limited to our retirement time frame and tolerance for risk, that we can all become more successful financially.

When it comes to saving and preparing for the future, maybe we do not have to choose between being cool and being a nerd. Perhaps, with proper planning, we can build toward to rewarding future while reasonably enjoying ourselves in the here and now.

Scott McGimpsey April 12th , 2016

This material was prepared by Scott McGimpsey and does not necessarily represent the views of the presenting party, nor their affiliates. All information is believed to be from reliable sources, however, we make no representation as to its completeness or accuracy. Neither Summit Brokerage Services Inc. nor Scott McGimpsey is engaged in rendering legal, accounting, or other professionally services. If such assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any federal, state, or municipal tax penalty. Moreover, a diversified portfolio does not assure a profit or assure protection against loss in a declining market. UNIFIED PLANNING GROUP is an independent firm with securities offered through Summit Brokerage Services Inc., Member FINRA, SIPC