Father's Time

 As Father’s Day approaches, I’ve been thinking about my dad, the life he led, the choices he made, and his legacy.

Mind you, I’m not talking about money. In fact, I didn’t learn anything about finance from my dad.  Not that our family’s income provided a lot of “room,”—but Dad avoided big purchases with the fervor of Ebenezer Scrooge. However, he’d spend that much (and more) on small things (mostly books, which remain in jaw-dropping abundance in my mother’s home 18 years after his passing!).

My dad was a man of few words—spoken words, anyway. At 6’ 5”, he was an imposing figure, all the more so behind the pulpit from which he’d speak three times each week. He was a good speaker, though not a natural one.

He worked hard at it, studied his subject matter (hence the books), and practiced his presentation relentlessly each and every week. I always thought it odd that such a quiet, introverted man would choose that career, but it was something he felt called to do at an early age, though it couldn’t have been easy.

He had opinions but didn’t seek to impose them on others. Indeed, wresting opinions from him was difficult (and sometimes frustrating). Significantly, he walked his “talk”—his faith, his love and respect for all people, even those with whom he disagreed—and those were attributes in short supply, even then. He was always a voice of reason and tolerance.

Though I talked about my work several times over the years, for much of my working life, I don’t think my dad ever really understood what I “did.” Oh, he knew I worked for banks (when I did), figured that being a “senior vice president” had to be a good thing, knew that it had something to do with pensions (though he didn’t have one), and (eventually) grasped that it also had something to do with something called a 401(k).

But as for understanding what I actually did every day, well, he mainly cared that I enjoyed the work, that I found meaning in my chosen field, and that I was able—or felt I was able—to make a difference.

While Dad touched many people with his ministry, he touched thousands more with a random, almost accidental opportunity. Back in 1972, he was asked by a friend to write 13 guest columns in a denominational newspaper—an “opportunity” that went on for more than three decades (alongside his “day job”).

In fact, one of the great joys of my life came when 20 years into my retirement industry career, I was also presented with an “opportunity” to begin writing for a living—and my dad, though he surely didn’t always understand what I was writing about, could appreciate that I was eventually following in his (writing) footsteps. 

His impact on me and my life notwithstanding, I’m a different person than my dad, though his example is never very far from my thoughts. As a former child, I’ve tried to avoid repeating the “mistakes” my parents made—some of which, admittedly, in the fullness of time, weren’t mistakes at all.

As a parent, I’ve tried to share with my kids the lessons I’ve learned (and continue to learn), tried to spare them the pain that came with some of those, but also tried to give them the room they need—and deserve—to learn their own on the life path(s) they chose—though doing so is a life lesson of its own, and one with which I still struggle (just ask my kids).

I’ve tried to share with them some sense of money and its management, the thrill of having work that gives you joy (even if the where and who you do it with don’t always), the importance of having the right life partner…

Along the way, I’ve tried to make a point of telling them regularly how proud I am of them. But mostly, I try to tell them and show them how much I love them and do so as often as possible.

In this business, we tend to focus on things like bequests and legacies, the financial “leftovers” that are passed on to those we love. But those pale in importance and longevity to the legacy we can—and should—leave behind in the experiences and examples we pass on to our kids.

Love you, Dad.

- Nevin E. Adams, JD 

What Happened to the Three-Legged Stool?

Once upon a time, we talked about retirement as having three legs [i]: Social Security, workplace savings/pensions, and personal savings. But to a number of vocal pundits, the full burden has been put …on the 401(k).

But before there was a 401(k)—and even before the advent of ERISA—there was Social Security, a program designed to provide retirement income to working Americans. It remains absolutely integral to even the most rudimentary retirement planning calculation, and with good reason. 

That said, despite a looming financing shortfall—and a fairly widespread notion that those benefits aren't "enough" for a full retirement income replacement, you don't see headlines in the New York Times—or folks going on book tours—proclaiming that program was a "mistake" the way some do about the 401(k). 

The reality is that Social Security­—like the 401(k)—has undergone significant changes in scope, funding, and mission since its 1935 inception.

People are often confused as to the relationship between what they put into it and what they'll receive in benefits (it's a loose connection, at best), but—despite a couple of close calls over the decades, those checks that millions of Americans rely on for a majority of their post-retirement income (at least according to Social Security) have kept coming. 

That said, everyone seems to blithely assume that at some point, some way, someone (else?) will remedy the looming funding issue (if only to have it be another draw on the U.S. Treasury). But a mistake? 

No, despite those funding struggles (even though it's a pretty hefty—and mandatory—reduction of both individual paychecks and that of their employer) —there are (to my ears) no real threats to replace it, no actual condemnation of the mechanics that created the current situation—and nobody calls it a "mistake."

And no wonder—by all accounts, even in its current form, Social Security does a pretty solid job of replacing pre-retirement income levels for lower-income individuals. It might not be a luxurious retirement for them, but it seems to be doing what it was designed to do—even though that design has been allowed to morph/expand over the years to provide more benefits to more individuals. 

Indeed, most recent calls for a defined benefit plan "comeback" seem oblivious to the fact that Social Security provides exactly that type of benefit, adjusted for the cost of living, and not just for the lowest incomes.

So, what about the other two legs of that three-legged stool?

Well, personal savings has always been a challenge for American workers—and for many, the opportunity to save through payroll deduction at work has become their personal savings as well. There's a hazard in that reliance, of course—but many are likely saving more (and, thanks to the company match, gaining more) than they might otherwise.    

As for that third leg, the reality is that the 401(k) actually does a pretty good job of what workplace savings was always designed to do—supplement the foundation that Social Security provides—and yes, even for lower-income individuals. 

It has been—and continues to be—an essential element of retirement security for middle-income workers, for whom Social Security benefits alone likely fall short of their pre-retirement income levels and needs. 

Those of us who help people plan and save for retirement every day know that the 401(k) is, and remains an essential element of retirement security for most American workers.

Yet certain pundits—who seem to have no problem being handed a microphone (even by those who should know better)—continue to dismiss it as a "mistake." 

So, what happened to the three-legged stool? 

It's still very much with us—and we're all better off when we have access and opportunity to lean on them.

The 401(k) alone was never designed to be "enough." While its critical role in retirement security may well have been an accident, it's surely no mistake—and where would we be today without it?

 - Nevin E. Adams, JD

[i] According to Social Security, "the earliest use of this metaphor which we have been able to document was by Reinhard A. Hohaus, an actuary for the Metropolitan Life Insurance Company. Mr. Hohaus, an important private-sector authority on Social Security, used the image in a 1949 speech at a forum on Social Security sponsored by the Ohio Chamber of Commerce. Hohaus, however, had a slightly different "stool" in mind than came to be understood in later years. His three-legged stool consisted of private insurance, group insurance, and Social Security."