A Thanksgiving Family Tradition

I grew up with the traditional big family Thanksgiving dinner, first at home with my parents, then visiting them after we grew up, and finally at my brother's once he and Lisa took over.  After Jackie and I moved to Washington, we still went back to California at least a couple of times.  I think the last time I went back was 1999, the year my dad died a few days later, on November 30.  I went back at Thanksgiving to see him one last time, and it was indeed the last time.

In any case, I think starting the next year, we decided to go out for Thanksgiving dinner.  Neither Jackie nor I like to cook, and we aren't big fans of turkey, and I don't like most of the stuff that is usually served with it, like stuffing or cranberry sauce, so we celebrated at a restaurant.  Not every year, but most years since then, we have gone to Black Angus on Thanksgiving.  We started going to that restaurant because, even though it is not really a restaurant that caters to kids, they had enclosed booths with high walls, so we could corral the kids and keep them from bothering other customers.  Over time, it developed into our thing to do.

We only go to Black Angus once most years, so we don't get tired of it.  We eat a light breakfast, then go to the restaurant between 1:00 and 2:00.  We order everything we want: appetizers, salads, steaks, mushrooms.  Not dessert, because we get pecan pie and cheesecake (for Jarrod) at Costco and have that waiting at home.  Usually we don't get wine anymore, but we used to.  I'm not sure if they will serve a traditional turkey dinner if you want it, but none of us ever ask.  I get prime rib every year, with the mushrooms.

We go around the table and talk about what we're thankful for (although this year was pretty lame, I have to say), but mostly we just eat, talk, eat some more, and bring home leftovers.  This year it was a chance to catch up with Lucas a bit, because he is living on campus at UW.  And then we go home, and the rest of the day and the weekend is free, and it's great.  It was greater when I was working all the time, because I almost never got four-day weekends, and if I did it was so we could take a trip, so it always seemed to me that I had this huge stretch of free time after the Thursday meal.  It was a holiday I really looked forward to.

The strange thing about eating at a restaurant on Thanksgiving Day is...that it's not so strange.  Black Angus is packed on Thanksgiving; it is probably their biggest day of the year.  You have to call a few weeks early to get a reservation.  If you come without one, you just have to hope that someone doesn't show, because they are booked solid, even at 1:00 (we had to take 1:15 this year because 1:00 was filled.)  If you are in our situation, with extended family mostly far away, it makes a lot of sense.  We don't stress out trying to do shopping the week before (except the desserts), we don't have to get ready for guests, we don't prepare any food, and we don't have to clean up afterward.  It's just easy, and it's still family, and it's still food, and everyone seems to like it.

You Need $2.5 Million

"You Need $2.5 Million to Retire."  That's the title of an article that popped up on LinkedIn today, written by a guy named Nicholas Pell.  Well I have a word for Mr. Pell:

Bullshit.

At least I hope it's bullshit.  I'm going to come up about $2 million short if it isn't, but I'm pretty sure it is bullshit.

It's also the kind of nonsense that keeps us working until we die at our desks, always wanting more, doing everything within our power to help some huge, highly profitable company stay huge and highly profitable, and always figuring we have to have the bigger house, the new car, the sailboat, the second home, the trip to China, and every other thing we ever wanted.  $2.5 million will buy you a lot of stuff.

In addition, it's advice that will keep financial planners employed.  Anyone striving to put that kind of money away is a good candidate for some financial planning advice, so I figure this type of article (and there are a lot of them) is self-serving.  It's always professional financial planners who write them.

Here is the way I see retirement savings:  The kids are gone, the house is paid for, you can move to a smaller home and live more simply.  To help you, there is social security, and any pension or other money you may have coming, so you have some income.  And then you have retirement savings to make up the difference between your income and what you spend.  If you don't have enough savings, you adjust your spending.  If you don't have any savings and no pension, you live off social security.

But let's say you have $500,000.  Figure you want the money to last 25 years or so (you'll be pretty old by then.)  That's a supplement of $20,000 per year.  That's not much, but in my case I think social security for both me and Jackie plus my pension (I have one, small but enough to matter) will net us at least $40,000 per year.  OK, so $60,000 doesn't sound like much either.  But the kids will be gone (this is soooo important) and we won't need so much space.  Also, that $60,000 comes with no social security tax and at a low income tax rate.  Assume as well that the house will be paid off, or we will sell the house and buy another with no mortgage.

We want to travel, and health care costs are scary and unpredictable and potentially ruinous, I know, but really, you just can't live on $60,000?  $5,000 per month with no mortgage doesn't sound so terrible to me.

So back to Nicholas Pell.  How will you manage with $2.5 million in retirement funds instead of my paltry $500,000 (I hope!)?  Well, as my clever and astute readers have already figured out, you can now supplement your income by a nice fat $100,000 per year for 25 years.  (I am simplifying a bit of course, ignoring both inflation and investment income, assuming that they will cancel out.)  I agree that most people should be able to retire with that much money.  So much better than those poor slobs who only saved $2 million and have to scrape by on $80,000 a year plus social security.

It all seems a little crazy to me.  I wonder how many people actually have $2.5 million to retire with.  10%?  2%?  I just looked at the Google -- about 3.5% of US households have a net worth of $1 million or more.  So I would say maybe 2% or fewer of us will actually retire with $2.5 million.  Does that mean the other 98% can never retire?

Nah, it just means that $2.5 million is nuts.  The better approach would be to start figuring out what you do have, then learn to live with that.