The Retirement Opportunity

Mar. 01, 2019 9:12 AM ET2 Comments
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  • Daniel Amerman, CFA calculates how a return to ZIRP would lead to 21% bond returns if various assumptions hold.
  • Institute for Innovation Development speaks with a financial advisor who found a way to retire on favorable terms.
  • Thought For The Day: With creativity and initiative, it is possible to fashion a retirement that maximizes opportunities to express your life's mission while maintaining solvency.

21% Bond Returns, If These Assumptions Prove Correct

"Investing in 10 year Treasury bonds during a one-year transition from a… cycle of the containment of crisis to a recession-induced… cycle of crisis, would indeed produce a 21 percent holding period rate of return (contingent upon the assumptions)…" (Daniel Amerman, CFA)

U.S. Stocks' Tech Premium

"One supposed justification for the premium attached to US stocks is the higher weighting to the 'Information Technology' sector. The idea being that tech stocks have higher growth prospects, justifying higher valuation multiples. Never mind that many of them are also relatively high risk. Today's most successful tech is often tomorrow's trash… Products become obsolete in this sector faster than in any other field of business" (Rob Marstrand)

Low Rates And Low Productivity

"Coming from a real estate family, I learned long ago from my father that banks are most eager to lend money to those who need it the least. Borrowers with the best balance sheets and most collateral are rewarded with the lowest interest rates and the least covenant-heavy terms. In the stock market, this translates to the companies with the highest credit ratings… commanding the lowest cost of capital. The lower interest rates are, the better off these market leaders are regardless of how they use their borrowed capital." (Cashflow Capitalist)

NY Beseeches Amazon

"New York Governor Andrew Cuomo has been pleading with Amazon (AMZN) executives, including CEO Jeff Bezos, to reconsider their decision to abandon plans to build a new office there, NYT reports. In the past two weeks, he's offered to help top brass cut through New York's byzantine governmental process following opposition by local politicians who assailed Amazon's "abuse of corporate power" and torpedoed the deal." (Wall Street Breakfast)

One Financial Advisor's Approach To Gradual Retirement

"The more I thought about selling my practice at a future time, the more I began to recognize that I loved what I was doing and didn't really want to stop. I did, however, want more time to engage in activities that I found interesting. So I gradually added more vacation time to my schedule, with the confidence that I had deliberately built a great support team who could take care of things in my absence. We also began to incorporate some events with clients that could also assuage my play needs such as travel." (Ray Loewe, quoted by Institute for Innovation Development)

Thought For The Day

With frequent and justified talk of retirement crisis - emanating from huge percentages of middle-aged households with no or low savings - we don't often enough hear about the possibility of "retirement opportunity." I would venture to define such an opportunity as something so appealing as to divert those otherwise headed for crisis in the opposite direction.

An example of this may be found in the Institute of Innovation Development's interview (quoted above) with Ray Loewe, a financial advisor who was reaching an age where it made sense to start thinking about retiring, with all the advantages that would confer, yet regretting the things he would miss were he to do so.

Most people like at least some aspects of their work and appreciate the opportunity to earn income, though they would sorely welcome more time and flexibility in their lives. So Loewe, as the owner of his advisory practice, started delegating most responsibilities to his staff, coming in for client meetings while taking more time off. Having developed a friendly relationship with his clients, he developed a model where he would invite clients to participate in social and travel opportunities sponsored by his firm, through which he could better learn of his clients' true hopes, dreams, and goals, while also satisfying his personal desire for socializing and travel.

What Loewe figured out was that retirement for many people, as appealing as its promise of freedom is, also entails a stark all-or-nothing choice between a cessation of the daily grind accompanied by the cessation of the monthly paycheck, the freedom to "play" with the anxiety of having to pay for all that fun without knowing when the money will run out.

For him, a redefinition of work was the key to solving this dilemma, as Loewe explains:

Rethinking 'work' can be the wild card that makes the impossible, possible. It can provide money for fun activities. Work can provide the continued engagement; it can be focused on doing things you love. The truth is that there is no longer an on/off switch, work and play can be a continuum with the emphasis going back and forth where needed."

I think this is a helpful insight for all of us. To an important, if only partial extent, our work defines who we are, what our life mission is and has the added advantage of bringing in income. Not all of us have a set-up that would as easily allow us to reach the sort of balance that Loewe achieved, but with creativity and initiative, it is possible to fashion a retirement that maximizes opportunities to express that mission, enjoy it more than before and maintain solvency. Do you have any ideas on retirement opportunities of this kind?


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This article was written by

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GIL WEINREICH - Author of "The Mentor," a unique parable for financial advisors and those who aspire to become one. I have worked in the FA arena since 1997, and during that time, the New York State Society of CPAs twice awarded its prestigious Excellence in Financial Journalism award to me for a monthly column I wrote on business ethics. Previously, I reported on international news for Voice of America (where I was awarded a newsroom writing award) and prior to that worked as an editorial assistant at U.S. News and World Report. I live with my wife and children amidst the verdant and vibrant hills and dales of Jerusalem.

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