“I think we’re going to the Moon because it’s in the nature of the human being to face challenges. It’s by the nature of his deep inner soul... we’re required to do these things just as salmon swim upstream.” – Neil Armstrong
“I think we’re going to the Moon because it’s in the nature of the human being to face challenges. It’s by the nature of his deep inner soul... we’re required to do these things just as salmon swim upstream.”
Neil Armstrong
This week we celebrated Yom Ha’aliyah, even though the real day is to be celebrated before Passover. According to Wikipedia, “Yom Ha’aliyah... is an Israeli national holiday celebrated annually according to the Jewish calendar on the tenth of the Hebrew month of Nisan to commemorate the Jewish people entering the Land of Israel as written in the Hebrew Bible, which happened on the tenth of the Hebrew month of Nisan. The holiday was also established to acknowledge aliyah, immigration of Jews to the Jewish state, as a core value of the State of Israel, and honor the ongoing contributions of olim, Jewish immigrants, to Israeli society. Yom Ha’aliyah is also observed in Israeli schools on the seventh of the Hebrew month of Heshvan.”
While I understand why it’s celebrated on two different days, it’s still sort of strange to have a “day” celebrated at two different dates.
In this week’s Torah Portion of Lech Lecha we read about the first recoded immigrant to Israel, Abraham. Part of our patriarch’s greatness was his ability to figure things out for himself, not following the herd. Too often, people just accept certain mantras as truth, without ever questioning the logic behind them.
Rabbi Jonathan Sacks, of blessed memory, in a piece titled “The Courage Not to Conform,” wrote, “Leaders lead. That does not mean to say that they do not follow. But what they follow is different from what most people follow. They don’t conform for the sake of conforming. They don’t do what others do merely because others are doing it. They follow an inner voice, a call. They have a vision, not of what is, but of what might be. They think outside the box. They march to a different tune.
“Never was this more dramatically signaled than in the first words of God to Abraham, the words that set Jewish history in motion: ‘Leave your land, your birthplace and your father’s house and go to the land that I will show you. (Gen. 12:1)’ Why? Because people do conform. They adopt the standards and absorb the culture of the time and place in which they live – ‘your land.’ At a deeper level, they are influenced by friends and neighbors – ‘your birthplace.’ More deeply still they are shaped by their parents, and the family in which they grew up – ‘your father’s house.’”
Non-conformity in finance
FINANCIAL MEDIA push their own version of conformity. You need to invest a certain way, own certain investments regardless of your specific situation. They really push conformity when it comes to retirement planning, namely, saying you need 80% of pre-retirement income in order to retire and drawing down 4% of your portfolio annually.
How much income does one need in retirement? Do a Google search and you will get answers ranging from 75%-80% of your pre-retirement income. This is caused by lower tax rates, no more money being fed into retirement accounts, and no more mortgage. Unfortunately for many retirees, especially those retired in Israel, this number has little basis in reality. Rarely do any of these articles mention the need to plan based on your specific situation. They always put forth a cookie-cutter solution, which isn’t relevant for many.
When a couple retires, they will often find that their expenses are different. It is therefore important to sit down and make a realistic new plan based on these changes. I am a bit more cautious with my clients as I apply a basic equation: Leisure=money spent. After retiring, people find themselves with more free time, and they may want to use it to travel, eat out or for other leisure activities.
Then there is the other issue. We all know that “making it” in Israel isn’t so easy. Many retirees with whom I sit have an immediate goal of helping out their children. That help can take the shape of direct financial support or “Grandparents Tuesday” (the day that Saba and Savta pick up their beloved grandchildren and buy them ice cream, falafel, etc).
Once you have a handle on your income needs, you should go ahead and create an income stream. Forget about the 4% drawdown rule. In many instances, you can create a portfolio that will be able to generate the income you need without having to draw down principal. Depending on your risk profile, dividend-paying stocks – and with the recent rise in interest rates, bonds and US government-insured certificates of deposit – can all generate more than the 4% the experts say is needed. Why draw down principal if you don’t have to?
It’s your retirement. Forget about how others plan. Sit down with an adviser and start figuring out your very own goals and needs, and create an investment plan that’s specific to your situation.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates. Aaron Katsman is the author of Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing. www.gpsinvestor.com; aaron@lighthousecapital.co.il.