One of the many benefits of this recession is the deafening silence that I hear from the financial planning industry. For decades they have promoted the fraud of “Freedom 55”---the notion that if you work hard and persistently at the job you hate, save and invest your money, on your 55th birthday you can “retire” to live as you have dreamed of living. You would have all the toys and the money finally enjoy living. Sounds like a good deal, eh? Sacrifice your youth and happiness so as to reap the rewards of delayed gratification. Of course, at 55 you will feel the same vigor and good health you did at 25, and will be guaranteed to feel that way for another 30 years. Or at least, that is the assumption that we are induced to make by the dour puritanical certainties that the industry hawks. Trouble is, there are no guarantees of healthy longevity.
Cases in point: My friend Bob was svelt and fit, ran 5 miles a day at the Y, skied and biked. He died of cancer of the bone marrow at 50. Cousin Pete was similarly strong and slim. He retired at 55 and then became extremely forgetful some 3 months later. Encroaching Alzeheimer’s? No, an inoperable brain tumour. He fell into a coma and died months after that. My brother Al was a non-drinker and non-smoker. He was robust and active, and ate well too. His cancer appeared when he was 56. He was dead 18 months later. But Al was different. He was one of those rare people who quit his well-paying job and promising career to live his dream at age 28. He built a 42 foot boat on his property, launched it a half mile from his home, moved his family to it, and sailed it to BC’s North Gulf Islands, where lived rent free moored in quiet inlets. He fished, and did odd carpentry work, and most everything he wanted to do---for three decades—until he died so prematurely. No savings, no pension, no excuses. Just a life of doing it “his way”. That was his “Freedom 28”. Moral of the story? Read this:
A Mexican village
A boat docked in a tiny Mexican village. A tourist complimented the Mexican fisherman on the quality of his fish and asked how long it took him to catch them.
"Not very long," answered the Mexican.
"But then, why didn't you stay out longer and catch more?" asked the tourist.
The Mexican explained that his small catch was sufficient to meet his needs and those of his family.
"But what do you do with the rest of your time?"
"I sleep late, fish a little, play with my children, and take a siesta with my wife. In the evenings, I go into the village to see my friends, have a few drinks, play the guitar, and sing a few songs. I have a full life."
"Now listen," the tourist interrupted, "I have an MBA from Harvard and I can help you! You should start by fishing longer every day. You can then sell the extra fish you catch. With the extra revenue, you can buy a bigger boat."
And after that?" asked the Mexican.
"With the extra money the larger boat will bring, you can buy a second one and a third one and so on until you have an entire fleet of trawlers. Instead of selling your fish to a middle man, you can then negotiate directly with the processing plants and maybe even open your own plant. You can then leave this little village and move to Mexico City, Los Angeles, or even London! From there you can direct your huge new enterprise."
"How long would that take?" asked the Mexican.
"Twenty, perhaps twenty-five years," replied the tourist.
"And after that?"
"Afterwards? Well my Friend, That's when it gets really interesting,"
answered the tourist, laughing. "When your business gets really big, you can start selling stocks and make millions!"
"Millions? Really? And after that?" asked the Mexican.
"After that you'll be able to retire, live in a tiny village near the coast, sleep late, play with your children, catch a few fish, take a siesta with your wife and spend your evenings drinking and enjoying your friends."