Climb Every Mountain: The Disciplined Path to Retirement

Climb Every Mountain: The Disciplined Path to Retirement

Saving for retirement is like climbing a mountain, which most will never attempt.

I’ve done it in miniature, a few years back. I won’t claim that summit-side, I surveyed vistas and pondered the place of life insurance in estate planning – I can’t kid you kidders. But I did learn a bit from the hike that should enliven our discussion, so take up your trekking pole and follow.

It was at Fox Glacier, in New Zealand. I was collapsed on a rich, red boulder, my knees stabbed by an invisible, knife-wielding fiend, when I noticed a sign.

“Red Zone – No Stopping! Landslide Hazard! Keep Moving!”

Clocked in the noggin by a whipping boulder shower – a blessed relief from my pain, I considered. No timely luck, as usual, so I pulled things together and shuffled the last few hundred steps – at last, heart shrieking: the summit. It was simply a matter of will, plus I wanted to see that darn glacier.

My fitter friends – younger, it goes without saying – were waiting. I posed for their photos, as gallant Tenzing Norgay atop Everest – a pose, indeed. That brave accomplice of NZ’s own Sir Edmund Hillary, with the smile that said, “Not bad, Sir Ed, but you wouldn’t have gotten here without me” – I always liked him, though he’d probably rate me a pudding. It’s a grand photo, if you’ll take my word, despite the scruffy camping beard and well-shrunk fedora.

I felt terrible in the moment – winded, wounded, lamenting the forgetting of a chocolate bar in the car – but I put on a brave face, la figura dragged Kiwi-side. It was a triumph, minor enough; but you know, friends, for a second on that boulder, I could have sworn I wasn’t going to make it. The view from that summit was all the more glorious – it’s New Zealand, after all.  

So, I learned a lesson. Take a deep breather, figure it out, and no matter the pain, proceed. A step at a time, one foot before the other, poco a poco, shag za shagom, as my Russian friends implore – set out, keep going. As old H. Rider Haggard would cry, trek!

So here we arrive at retirement planning. Not as glamorous as a stroll through the Red Zone, but, honestly, readers – and you can always trust me to be frank – preparing for retirement is tougher.

Despite the flowery stuff earlier, you won’t hear any ‘a journey of 1,000 steps’ stuff from me – I draw the line. Besides, the journey is longer, more arduous, and full of sharp rocks, the metaphorical kind. But listen here, now: start on the trail early, keep on the way, and when you arrive you’ll gasp from the view.

That’s what they tell me, the ones who have done it. The income for comfort, security and health, and vacations, too. Maybe you dream of wild lands, scree-ridden slopes and terrain near unearthly. Well, what fun is reverie? Get packing, so to speak. Trek! People do it all the time.

More often, it seems, they don’t. Consider the riddle via recent developments. During the pandemic, Congress altered the rules on 401(k) plans. Holders could withdraw from their accounts to cover vital expenses to a limit of $100,000 or 100% of the account, whichever was smaller. If paid back, the funds could be taken tax-free. A perfectly understandable policy, in the exigencies of the moment.

This raised an uncomfortable question, though: should you ever borrow from a 401(k) or similar plans? Some analysts fear savers treat retirement accounts as ‘rainy-day funds’ rather than incipient nest eggs for their golden – read, vulnerable and needsome – years.

It’s easy enough to figure. A surprise expense: the roof blows off, the basement floods, a new child springs out, the Prius gets swallowed by a sinkhole – don’t scoff, it happened to my pal out in Cali – and you need cash with a quickness. In an emergency, it’s all hands on deck, cast off the lines, let fly the sails – your IRA now looks like a lifesaver. It is, but I question your throwing it overboard.

We needn’t overreact. The 401(k) and similar accounts are only part of the plan. Alone, they aren’t enough to fund retirement. Then there’s a problem inherent in their system: participation is voluntary. Take Social Security: you don’t have a choice; the deduction comes out every payday and into the fund. You retire and you get something, in all likelihood. We did it for your own good, our elected masters say, and just this once they are right.

With a 401(k), big brother (small caps) won’t help you by force: contributions are voluntary. You can withdraw funds, per tight regulations, but it can be done. Making these accounts work takes determination and discipline: a goal, a plan – you know it by now. Yes, it’s like climbing a mountain: step by step, and you’ll summit. It’s onerous sometimes, but it works.

The 401(k) offers tremendous benefits to retirement savers. Do people take proper advantage, I wonder? Evidence from Vanguard and Fidelity, two key 401(k) providers, suggests the average account for the key 50-59-year-old cohort is worth around $180,000, although the median is only one-third that amount. It gave me pause, this paucity.

Worse than the failure-to-exploit issue is this: 60% of people eligible for the 401(k) fail to participate at all. No play, no pay. Those poor millennials in particular are reticent to sign up: only 52% own an account. Perhaps their student loan payments are tying up investible cash.

What to do? Experts agree: increase your savings rate until your virtual knees start to buckle. Leave the money alone to compound. Understand the importance of low investment costs. A managed index fund, for example – hands-off to clients but carefully steered by advisors – saves on fees and steadily beats the stock pickers on performance. A good look into them is in order.

In the evening after my climb, I was hanging wet boots on a clothesline, when the clouds dreamily cleared. There, straight up in the sky, was the Southern Cross, majestic. I’d heard of these stars, reading boyhood nautical adventures. Only visible in the Southern hemisphere, alas – an impossible voyage. If a lay-about boy from the suburbs of Boston can get there, anyone can. Just take a deep breath, and step lively. Before setting out, your advisor has a nice, detailed map to share with you.

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