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When Nothing is Certain, Far More is Possible

Too often I believe, people hesitate to hire a Certified Financial Planner™ professional because they don’t even know what’s possible.

One of the reasons we don’t see possibility is that we tend to focus on things, like money; debt; investments; or taxes – and not on the relationships that make these things possible in the first place.

Take the phenomenon horizon as an example. Yes horizon, that thing that exists between the earth and the sky.

That thing that quite literally doesn’t exist except in relationship between the earth and the sky.

Without that relationship, there is no there there!

Financial planning isn’t merely about things like stocks, bonds and mutual funds. And it isn’t about blue prints, road maps, or even financial plans.

It isn’t about things at all!

Financial planning is about relationships – and cultivating the skills necessary to navigate life’s uncertainty.

“In preparing for battle I have always found that plans are useless, but planning is indispensable.”

Dwight D. Eisenhower

We live our lives in a world of uncertainty – never knowing what the future will bring. We can’t possible know. And no amount of knowledge, information, calculation, or analysis is going to predict what is fundamentally unpredictable.

Knowledge is useful, but only where knowing is possible. To navigate effectively in today’s world of uncertainty we need more than just knowledge and information. We need skills, and we need sensibilities.

And for that we need to start treating money, debt, investments and taxes less like things and more like the relationships that they are!

Those who insist on treating money like an object; debt as an inherently bad thing; investments like a crap shoot; or taxes as if they’re certain, are headed down a narrow, fixed, rigid, possibilities-constrained dead end road.

The road to possibility isn’t narrow, and it’s certainly not fixed or rigid. It may be paved with good intentions – but only if those intentions are to cultivate the skills and sensibilities to navigate and embrace life’s uncertainty.

Because when nothing is certain, far more is possible.

It’s in this spirit of uncertain adventure that we engage our clients in conversations for possibility, for navigating uncertainty, and for co-creating the future.

By cultivating new skills and sensibilities relating to money, debt, investment and taxes, our clients are reinventing their financial reality.

You can too.

Accounting for Spending

It’s a common trope among certain types of financial planners: “Save more, spend less… and don’t do anything stupid.” So celebrated is the phrase with some advisers, organizers of a recent conference emblazoned it across baseball caps – attendees proudly wearing the hats as if they were at a MAGA rally.

Beyond the condescending tone and hyperbole however, lies a particular kind of Wall Street fear mongering: Americans of all stripes are facing a looming retirement crisis to which there is no alternative. Cut out your lattes and other discretionary spending or you are destined for destitute. But don’t worry, we’re here to help – just buy our stocks, bonds and annuities.

There’s little doubt that in the aggregate, American’s need to save more. A Boston College survey reports that American’s face a $7.7 trillion retirement income deficit[i] – the difference between what we now have saved, and what we should have saved by now.

But unless you consider debt and taxes to be spending, saving more doesn’t require you to spend less.

Together, we Americans owe almost $14 trillion in combined household debt[ii] and pay over $2 trillion each year in state and federal income taxes.[iii]

If only there were a way to turn Debt & Taxes into Savings & Investment.™

Transforming debt and/or taxes into savings opens the possibility to keep our lattes. And what’s more, save adequately for retirement while spending more, rather than less on the many other things we care about.

That’s because the very act of savings means not spending that same income. Consider for the moment a married couple, California educators earning a combined $150,000 a year. At first glance it might appear that this couple will eventually need to replace their $150,000/year earnings. Yet further investigation reveals that as California State Teachers’ Retirement System (CalSTRS) members, their gross paychecks are already reduced by 10.25% – the employee’s contribution to the retirement system.

That means our couple lives not off $150,000 of gross income, but less than $135,000 – as more than $15,000 a year is “saved” towards retirement.

And watch what happens to their retirement income needs if our CalSTRS couple starts saving 10% of their income via pre-tax 403(b) contributions:

This simple accounting exercise paints the picture Wall Street doesn’t want you to see, for:

The more you save, the less you need to save for.

And it’s not just $30,375 (the difference between $150,000 and $119,625 in our example) that doesn’t need to be saved for, it’s that difference adjusted for future inflation. Meaning that if inflation runs just 3% over the next 15 years, today’s $30,375 difference is tomorrow’s $45,945 that doesn’t need to be saved for.

Not having to replace $45,000 is like not having to have $1M saved for retirement – because a million dollars is roughly the amount it takes to generate $45,000 a year of sustained retirement income.

Of course if the more your save, the less you need to save for – it follows that the less you need to save for, the more you can spend.

But wait. Hold on a minute. Doesn’t that mean the more you save, the more you can spend?

Yes! Indeed it does!

What initial appears to be a paradox, is actually a fundamental accounting truth:

·         The more you save, the less you need to save for.

·         The less you need to save, the more you can spend.

This leads to the paradox:

 ·         The more you save, the more you can spend.

But this only looks like a paradox because we tend to think of savings as coming from (i.e. “out of”) spending. But when savings & investment come not at the expense of spending, but at the expense of debt and taxes – existing spending is spared and the paradox disappears.

And along with it any fear and loathing associated with “save more, spend less… and don’t do anything stupid.”

Turning Debt & Taxes into Savings & Investment allows you to Save More, Have More and Spend More.

Often, more than you ever thought possible.

[i] Center for Retirement Research at Boston College

[ii] Federal Reserve Bank of New York

[iii] FRED Economic Data, Federal Reserve Bank of St. Louis; www.usgovernmentrevenue.com




1. The time of transition from “working too much” to “making work optional.”