The Motley Fool's Money After 40: Building Wealth for a Better Life

Book by Gardner David Gardner Tom

Chapter One: Why Retire?

What is precious is never to forget

The delight of the blood drawn from ancient springs

Breaking through rocks in worlds before our earth;

Never to deny its pleasure in the simple morning light,

Nor its grave evening demand for love;

Never to allow gradually the traffic to smother

With noise and fog the flowering of the spirit.

-- Stephen Spender

You don't actually want to retire, do you?

Why?

Just giving up? Or planning to walk away and play with your own toys?

Is it that you're trying to get somewhere or trying to escape where you've been?

You don't actually want to retire, do you?

Listen to what happened to our grandfathers.

A Tale of Two Grandfathers

Our grandfathers were both accomplished and risk-loving entrepreneurs, one in Pennsylvania, the other in Washington, D.C.

Early last century, our Pennsylvania grandfather flew all around the North (occasionally the Great White North) selling saws. He sold his company, the modern-day DeWalt, to AMF in 1949. AMF eventually sold its DeWalt division to Black & Decker, where it remains a treasured brand. He retired at fifty-two. He loved investing and continued to do so successfully but never took another job in his life (he did treat the card game of bridge like a job, becoming a master before he died).

Our Washington, D.C., grandfather played football at Georgetown University, started his own insurance company after college, eventually bought a minority ownership in the Washington Senators baseball team (later the Minnesota Twins), and continued to go to the office every day until at the age of ninety, when his legs wouldn't take him anymore. He never intended to retire.

Did he need to go down to that office every day until the age of ninety? No.

And yes.

He probably did need to, because he loved to. He was a pas-

sionate man with a true Irish temper, and wanting was needing for him.

Both of these men made great impressions on us. But one of them made his impression over the first six years of our lives: Our early-retired Pennsylvania grandfather died relatively young, at the age of seventy-two. We cherish memories of his rascal's grin and propensity for secretly slipping us gumdrops minutes before supper was served. Sad to say, though, that's where the recollections end; we see him from afar, ever with the eyes of little boys.

By contrast, our Washington, D.C., grandfather charmed, influenced, and occasionally scared the dickens out of us for the first thirty-five years of our lives, leaving indelible marks until his eventual death in 2001 at the age of ninety-eight. One of those indelible marks was his lifelong lesson -- born out of and borne out by his longevity -- to stay active and engaged in the deeds of this world.

He who did not retire, never thinking to do so, died at ninety-eight.

God bless them both.

What Are You Living For?

We're certainly not here to suggest one family's recent history proves that working long equals living long. Leaving the working world does not automatically reduce one's life expectancy! That said, we tell the story because we do believe you increase your chances for extended happiness with the approach you take to the future when you're fifty-six or sixty-six -- every bit as much as twenty-six or sixteen!

So we should reframe our thinking.

That's a necessity, given the regrettable but pervasive associations that the word "retirement" has in our society. Most people, of course, use it to refer to those days after the conclusion of formal full-time work: "Congratulations to Bob, who is retiring today following thirty-seven years of postal delivery" -- or "To Susan, who is retiring after two decades of leading this august organization."

Do we really want to say this? Because here's the way it comes out: "So long, Susan," we think -- bye-bye, Bob. "Retirement" carries heavy baggage, with its implications of departure and resignation. Standing there with a drink in your hand lifted for a retirement toast, it's hard not to think, "Their worthwhile days, their recorded life and times, are over." Do Susan and Bob want to be written off this way?

They probably don't think anything of it. Given the constant use of this word "retire" -- which we'll avoid using ourselves as much as possible in this book -- Bob and Susan are probably subconsciously falling into the same thinking, which is what happens when you're constantly exposed to a given word and its underlying concept without questioning its claims on you.

Listen, retirement is exactly what we should be trying to avoid in our lives, unless we're talking about the ultimate retirement. Up until that point, we should focus on the present and the future, asking what more we can learn, who else to help, how better to live day to day, all the questions that have always been asked and answered by human beings looking to improve their lots.

So let's please agree not to refer to any period of our lives as "retirement." We should almost always shoot for its exact opposite: engagement. Engagement will make you forget to ask yourself, "What are you retiring from?" Engagement asks the very much more relevant and interesting question: "What are you living for?"

This is a fine question for so many people to ask at (more) frequent intervals of their lives; your harried authors are again reminded of this even as we write and suggest it. The great thing about heading toward the second half of your life is that not only are you old enough to recognize the importance of asking "What am I living for?," but you're also young enough to fully exploit all of the opportunities wrapped up in the answers.

What are you living for?

If you've been traversing these past few decades asking yourself when you will retire, replace any fantasies of escape with something much better: the answers to that key question. Because another synonym for "retire" is "withdraw" -- which provides the perfect play on words when we recognize that withdrawal is exactly the condition so often faced by those who leave the working world only to discover that disengaging from its society can be a hollow experience.

Why retire?

For Further Thinking

Boxer George Foreman on why he came out of retirement:

Tom: After a ten-year retirement, you decided to fight again. You came back in 1987. Why did you come out of retirement?

George Foreman: For ten years I stood as an evangelist. I had this dynamic experience back in '77 after my last boxing match as "The George Foreman." I lost. I had a religious experience in the dressing room. I had a vision, and in a split second I was dead and alive again. On my hands and on my forehead, I started screaming because I saw blood. "Jesus Christ has come alive in me!" Of course, they rushed me to the emergency room. (Laughter.) But I will never forget that experience, to have a vision of death and life again. And I had a second chance to live. It changed me. For ten years I couldn't even shadowbox. But something happened. I got broke. I wish I had been a golfer, believe me. But because I was a boxer, that was my only profession, and I had to come back. Of course, the high point was to regain the title in 1994, [when I] defeated Michael Moore. It was unbelievable, because people tell you, look, you are a middle-aged man."

David: How old were you then, George?

Foreman: I was forty-five years old. The oldest man to ever become heavyweight champ of the world.

David: Have you ever thought about breaking that record?

Foreman: I do. I think about it all the time. I told my wife just the other day, "Look, David Toole was about to fight Lennox Lewis for the title. They couldn't agree on money." I said to my wife, "Look, I can pay David Toole that money he wants. If he is a number one contender, I can beat him. Then Lennox Lewis has got to fight me. I can be the heavyweight champion of the world." I went on for about two hours. After I finished, she said, "Shut up. Go lie down." (Laughter.) So when it gets to the point that you are more afraid of what your wife is going to do to you than Lennox Lewis and Mike Tyson, then it is time to leave it alone.

It's Okay to Aspire to Couchpotatodom, Too

Okay, we hope we've at least challenged your thinking about retirement, and whether it's even desirable. We intentionally take a radical view to make as strong a case as we can for not retiring, since most of the treatment this topic gets assumes that retirement is the Ultimate Goal of All Your Working Years. While our argument may not be a mainstream one, it is bolstered by some mainstream numbers. An AARP study reported in BusinessWeek (October 2002) reveals that 69 percent of workers forty-five and over say they plan to work "in some capacity" during their golden years, including 34 percent -- a full one out of three Americans -- who said they would work part-time entirely "for interest or enjoyment's sake" (italics ours).

We also hasten to add that some people truly wish to stop taking any salary of any kind and just rest, relax, relax some more, rest again, etc. Occasionally, when we're wearied by work, this sounds really good to us, too. We don't mean to suggest that dedicating one's latter days to relaxation for its own sake is bad or wrong. We do mean to challenge you to look deeper when we ask the questions "Why retire?" and "What are you living for?"

Financial Independence, Not Retirement

One simple and delightful term that we have had frequent occasion to use in past Motley Fool writings, both online and off-, is "financial independence." This is what so many of us are shooting for with our work and financial efforts. For those efforts, financial independence is a worthy end. Yet -- and here's the crux -- it is not just an end but also primarily a means.

Financial independence, wonderful achievement that it is, is most of all a means that enables you to live a life of opportunity and choice -- in a word, one of our very favorite words, FREEDOM. It is this freedom that we yearn most deeply for, for ourselves and our children. It isn't about being rich, and indeed there isn't any single amount that objectively makes Americans rich, or officially earns them financial independence. It's all relative. It's about being able to do what you want to in life, what would give you the most gratification and joy -- we all define these things differently -- untrammeled by worries or concerns over money. "Mere money," we should say.

To us, financial independence is a concept virtually synonymous with the American Dream. It's what America was designed to achieve for its citizens. No surprise that it continues to happen to more people here than in many other countries of this world combined.

Are you living the American Dream? Not yet? Well, if not, it's our aim to help get you there. If you're forty or over and find that you lack knowledge in one or more key areas of your finances, peruse again our table of contents and notice that each chapter has a relevant topic for anyone forty and over who'll most likely confront a decision about that. This book is for people who want to make better financial decisions.

Are you living your American Dream?

Our American Dream isn't retirement!

Nor should it be yours.

"Why retire?" we ask. We think it a perfect way for Fools to begin a book ostensibly about retirement. No, no...the American Dream is financial independence. Being free to live where you want, how you want, and do what you want. Let's work to make that happen.

Action Plan

· Prepare yourself to spend some time thinking through your future plans. It's not most people's favorite thing to do, but it's critical. Grab a notebook and dedicate it to your retirement planning. As you move through this book, you can jot down lists and thoughts and things to do.

· Now ask yourself if you really want to retire. Really, we mean it. Take a minute and think it through. If you do want to retire, ask yourself why. Next, think about what you're living for and what engages you on this earth. What communities, big and small, are you in? Write down your thoughts and answers to these questions.

· Make a list of people you admire who are in or near retirement -- those whose lifestyles and degree of contentment impress you. Then identify exactly what it is you admire. Is it how efficiently Thelma gardens? Is it how Fred manages to be involved in a dozen different hobbies? Is it how Louise has done so much good in her community and always has a smile? Is it how George Foreman loves life? Figure out how they do what they do. Have a short talk with these folks, if possible. See how they budget their time and what their priorities are. Then think about how you can be like them, and what steps you'll need to take. In many cases, with a little effort, you can become the kind of person you admire most. That's a great way to live the rest of your life.

Copyright © 2004 by The Motley Fool, Inc.|Introduction: May We Help You?

Everybody needs money! That's why they call it "money"!

-- David Mamet

It was the summer of 1994. The stock market was falling, talk of recession was in the air. The Internet was rising out of its niche into the mass market. And we decided to put everything professional on hold in order to transform our modest newsletter, "The Motley Fool" into a business. We had no anticipation of success. No plan to work together full time for the next ten years (had we known, things would be different). It was a sweltering summer in the nation's capital. We swept out the shed on the back of David's property, sat two computers side to side on rickety card tables, balanced Fool caps on our monitors, drank ginger ales, and set ourselves to the task of fielding financial questions online.

Should I buy stock in Intel?

What can I do to keep from getting rooked by a car dealer?

How can I teach my children about money?

What's the difference between fixed-rate and adjustable-rate mortgages?

Is my broker taking advantage of me?

What should I do if I have $9,000 of credit-card debt?

Is it a good idea to buy the annuity my advisor is selling?

Should I part with my shares of Xerox?

When is it best to take my Social Security distributions, at sixty-two or sixty-five?

The last decade has thrown a flood of financial inquiries our way. There were times when the flood was so ceaseless that our email boxes could've been declared Superfund sites. All the while our harmless little acorn venture, watered by your curiosity, was blossoming into an oak tree.

Two years later, we signed our first book deal with Simon & Schuster, the firm that's published our more than half-dozen books. Right about when the media started asking if the Brothers Fool could possibly be serious, we signed on to syndicate a column of financial education into the business sections of the nation's newspapers.

Public demand for education about finance was on the upswing.

And why not?

Seventy-five million baby boomers were heading into the second half of their lives.

We then cobbled together our profits and built our own studio at Fool Global Headquarters in Alexandria, Virginia, where each week we broadcast ...