Richard A. Lindsey, CPA

Lindsey & Waldo, LLC – Certified Public Accountants

  • Mar 18

    “When planning for a year, plant corn. When planning for a decade, plant trees. When planning for life, train and educate people.” – Chinese Proverb

    Retirement used to mean not only a complete withdrawal from the workforce, but often a retreat from life. Even the word “retire” has the connotations of shuffling quietly off to bed.

    We call that traditional concept a “cliff retirement” because it is so abrupt. One day you are working full-time, and the next you are playing full-time (or slumped in your chair watching TV feeling unwanted and over the hill).

    We all need meaning and significance in our lives. And close social relations are an intrinsic part of our humanness. For many people, work provides meaning, significance and social relationships.

    Try this retirement planning exercise. Draw a large circle and write the names of 10 people inside the circle to whom you are genuinely close. Don’t include any relatives. To a certain extent, they have to love us, and although our connections with our families can be very nurturing, it is often friends who really help to validate us and widen our horizons.

    Now cross out any of the 10 names you know through your work, which might eliminate half or more of the people you listed. Thus a cliff retirement can devastate not only your meaning and purpose, but your social network as well. Retirees who no longer work at all say their close friends dwindle to an average of about nine people.

    As a result of their isolation, people who opt for a cliff retirement often deteriorate quickly and die relatively young. Financial planning is easy when you die young, but we don’t recommend it.

    Here are some suggestions to consider as you approach what is traditionally considered retirement age.

    Consider postponing retirement. Delaying retirement until age 70 increases your Social Security benefits and also shortens the time you will be withdrawing from your portfolio. It gives you additional years to save and your portfolio more time to grow. By delaying retirement from age 65 to 70, you may have more than a 50% higher standard of living when you do stop working.

    Or instead of taking a cliff retirement, think about retiring gradually. Move from full-time to 30 hours a week, and then to half-time. With this less hasty transition you can maintain contact with the people and purposes that give your life meaning, and also have the time to develop goals and a network of relationships for your later years.
    Envision your final years not as retirement, but as financial independence. Now that you don’t need to work exclusively for money, make a list of activities where you would like to focus your energies and use your skills and experience.

    Consider developing a health and fitness routine. If work kept your mind and body engaged, you will need to replace that activity with other pursuits. Again, going part-time allows you the luxury of processing the transition and adjusting to a new lifestyle.

    Challenge and reexamine those stereotyped and overly rigid assumptions about retirement. A book on the subject I highly recommend is Retire Inspired by Chris Hogan. One of Chris’ impactful messages is that retirement is not an age, it’s a number. “It’s an amount you need to live the life in retirement that you’ve always dreamed of.” The book is a $24.99 value, but, because I’m on Dave Ramsey’s tax and accounting team, I was able to purchase a few copies at a huge discount. For the first 15 people who ask, I’ll give you a copy. Not an eBook, but a genuine, off the presses hardback copy. Call the office, send me an email or just drop by, but when they’re gone, they’re gone.

     

    Of course crunching the financial numbers is critical as you begin to contemplate retirement, or any kind of financial or tax planning. But your personal calling, support network, and health and well-being are just as important. In the end, a holistic approach to your life is always the best starting place.

  • Mar 4

    Many years ago, Folgers® coffee scored big with a series of ads taking the viewer inside various gourmet restaurants while an announcer whispered “we’re here at such-and-such snooty restaurant, where we’ve secretly replaced the fine coffee they usually serve with Folgers® crystals. Let’s see if anyone can tell the difference.” And they interviewed diners, who expressed shock, and I’m sure no small amount of embarrassment, when they discovered how much they liked the cheap Folgers® Instant instead of the “gourmet” brand they expected. (This was way before Starbucks® elevated our palates and made us all coffee connoisseurs.)

    A few years ago, Walmart® shamelessly ripped off paid homage to Folgers® with their own ad promoting-believe it or not-Walmart® steaks. “We’re here at the famous Golden Ox Steakhouse in Kansas City, where we switched their steak, with Walmart’s choice premium steak…”

    Now, I can’t vouch for the quality of Walmart’s meats, but let me make two points about Walmart® steaks, with lessons for your own business.

    There is a placebo effect. Diners who gear up for a big night out at a fine steakhouse are primed for a great meal. They expect choice ingredients everywhere, and select service from a well-trained staff. And they’ll probably be pretty happy, even if the experience isn’t “objectively” all that great.

    This effect has been proven time and time again. Researchers at Stanford University used MRIs to study Caltech grad students’ brains as they swallowed five red wines priced at $5, $10, $35, $45, and $90 per bottle. They found that as the price of the wine rose, so did the activity in the subjects’ medial orbitofrontal cortices. (Apparently this is the part of the brain that experiences pleasure.) The “catch,” of course, is that the subjects didn’t drink five different wines-they drank three. The wine presented as costing $45 per bottle was really the one costing $5-and the wine presented as costing $90 per bottle really cost just $10.

    The placebo effect won’t work just anywhere. Diners have to really expect a great meal for it to work. Nobody who shows up at the squat-and-gobble all you can eat buffet expects a world-class steak. They are just happy they don’t see marks from where the jockey was hitting it.

    There is also a Walmart® effect. I understand Walmart® steaks are actually perfectly fine beef. They’re USDA “choice,” which is the same cut you find it mid-priced steakhouses like Outback® or Longhorn®. (The top 3% of beef, with the most marbling is graded “prime.” That’s the stuff you’ll find “dry-aged” at elite steakhouses, often drenched with butter, and sometimes served with a side of Lipitor®. The next 55%, with “slightly abundant marbling,” is graded “choice.” That’s the stuff you grill at home, and it’s really pretty good. Finally, there’s USDA “select,” which usually winds up ground into hamburgers.)

    The problem, of course, is that Walmart® has positioned itself as being the home of discount prices (cheap). And nobody associates “cheap” with “good.” Nobody expects good steaks at Walmart®. So how does Walmart® get around our prejudice?

    Well, here they resort to a classic “dramatic demonstration.” Showing happy diners enjoying Walmart® steaks is a lot like H&R Block® ads showing a stage full of happy clients stepping up to claim surprise refunds. It’s just like “Vince from ShamWow®” telling the camera guy to follow him as his miracle chamois soaks up a spill.

    The downside of this approach is that while Walmart® tells us their steaks are “surprisingly good,” at least some of us still focus on the “surprise” more than the “good.”

    To sum up: 1) the “placebo effect” actually lets us sell downscale stuff at an upscale price; however, 2) the “Walmart® effect” actually keeps us from selling upscale stuff in the downscale environment.

    Still skeptical? Ask yourself this-would you have nearly as hard a time believing steaks from Target® are good?

    The bottom line for your business is this: if you position yourself as a premium provider, clients may not even realize if you occasionally drop the ball. But, if you position yourself as a discounter-if you give yourself a reputation for being cheap-clients will have a hard time believing you’re good!

    You probably didn’t go into business to be the Walmart® of your profession. Let Walmart’s challenge in selling steaks remind you why you should position yourself as high up the food chain as you can!