Planning for the long-term – tomorrow

Bob was not happy. He’d just gotten back from a meeting with his stockbroker, the guy who manages his 401(k).

“He’s, like, 21 years old and smart as a whip, and he always shows me these charts showing that if I had bought one dollar’s worth of such and such a stock 50 years ago, it’d be worth $50,000 today. He never shows the chart of the stocks that I bought 10 years ago that aren’t worth anything today.

“I’m asking him if there’s anything we can do to get more income out of the account, and the kid says, ‘You have to think long-term. In the long term this, and in the long term that. Over the next 10 years this will happen, and in the next 20 years that will happen.’

“I’m 74. Just how much longer does he think my ‘long term’ will be? When you’re my age, long-term planning is making it to the weekend. I don’t need the money when I’m 94; I could use it now. When I’m 94, I might not even know I’m wealthy. And what am I going to spend it on then? Women? Sports cars?”



The funny thing is, when you’re 21, the long term also means just making it to the weekend. All this advice about saving money while you’re young, when you still have a long term, is great, but there’s just one problem: Most 21-year-olds don’t have any money. They’re tens or hundreds of thousands of dollars in debt from college or trade school. They’re not the ones who are buying $70,000 cars and taking spa-cations and European river cruises.

The few young people who have money are wasting it on $80,000 weddings and breast and butt enhancements instead of socking it away for their futures. And why not? You can probably make more by being a waitress at Hooters than you can with a B.A. – for a few years, anyway. When you turn 30 and become hideous by the extremely low standards of balding, potbellied, drunk-by-noon barflies, the B.A. still has value; the breast implants, not so much.

I can’t tell you how many times I’ve heard fathers of the bride tell me that they offered to make down payments on houses for their daughters if the girls would just elope instead of having big, expensive weddings. I’ve never heard of one bride-to-be saying ‘I do’ to that fantastic deal. It’s not in our DNA to think about the future, even though, as we should all know by now, the more expensive the wedding is, the shorter the marriage will be.

I have friends who have a retirement plan that they stick to religiously. Without fail, they make sure they put some money away for the future each week by buying $50 worth of lottery tickets. That is long-term thinking. Surely, sometime before they retire they will hit a $200 million jackpot, so no worries there. People win almost each week, so their shot has to come sooner or later. It would be more convenient to hit the jackpot before they retire, but they don’t mind working until they win. They’re willing to pay their dues.

Each week they have a long discussion about whether they should take the payout as one lump sum or spread it over 20 years. They talk about the tax implications. They worry about how to handle relatives and needy strangers who will try to separate them from their hard-earned fortune. They already know which lawyer and accountant they would hire, which homes they would buy, which bills they would pay off first. They have already decided not to tell anyone when they win until they get their home phone changed to an unlisted number. That’s because they know how to plan for the long term. They’re not going to make the same silly mistakes Bob did.

Jim Mullen’s new book, “Now in Paperback,” is now in paperback. You can reach him at jimmullenbooks.com.

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