Nov 20, 2023

Social Security plus

The U.S. provides diverse retirement options, from 401(k)s to Social Security. This system can work very well, providing even those who have earned a modest income the ability to retire financially secure.

It works especially well for people who understand money and investments enough to make reasonable financial decisions. If you work most of your adult life, save 10% of your income and invest heavily in low-cost indexed equities, you are virtually guaranteed to be able to maintain the lifestyle you had while working.

But life is messy. Even successful people will not save and invest well; they divorce, lose their job or become disabled; and to add insult to injury, they then take Social Security at their first opportunity. But even with the best of planning, one may just outlive their savings.

One of several problems with this system is that it puts too much responsibility on the employee to essentially manage a life-long personal pension plan with some vague promise that with some luck, they will survive.

Often one is asked to estimate how long they will live and what their expenses will be. Yeah, no problem here - my electric bill will be about $4,000 a month and I expect to die at 83, hit by a Greyhound bus. They're mostly ridiculous questions for a thirty year old - or anyone. What happens when one lives another twenty years longer that life-expectancy tables predicted? I guess they're just out of luck.

And if you do it right, you will probably die with a large amount of money for your heirs. Like I said, it's a crazy system.

Today's retirement system faces a fundamental challenge. We've transitioned from employer-managed, risk-bearing defined-benefit plans to employee-controlled defined-contribution plans, requiring that workers fund their own retirement, shouldering most of the associated risks.

For example, today's system provides little opportunity to take your life savings and lock it up so that you can never lose it all. For all its problems, Social Security does just that. Benefits are inflation adjusted and last as long as you live.

My thoughts for fixing at least some of the problems with these defined-contribution plans is that the government establish a voluntary, self-sustaining Social Security-like pension. I call it Social Security plus. It’s not in place of Social Security, but rather an additional saving alternative. Here’s how it might work:

  • Pays out a fixed, inflation-adjusted income for life based on your contributions, a sort of hybrid defined-pension, defined-contribution personal pension plan.
  • Contributions are voluntary and tax-deferred. Employers may choose to match donations, as they often do for 401(k)s.
  • Benefits can only be taken at a high minimum age (I suggest 70) regardless of employment, health or other circumstances, and contributions can never be withdrawn, just as Social Security is today.
  • Independence is critical. The agency receives no government funding and is actuarially sound, similarly to a defined-benefit pension plan. And the agency is free to invest as private pensions do.

It's also critical that the fund can't morph into funding other needs. Organizations struggle to keep their hands off any pot of money, but this system is doomed if if becomes another social equity funding for the latest meme injustice. This is a personal retirement pension savings plan, not a redistribution program.

For those who are comfortable with savings and investments, they may well do better doing it themselves via 401(k)s and IRAs. Remember, there is a lot of good in today's system, such as the ability to maintain control of your savings.

This system has drawbacks, most notably that due to its undefined payout period, its payouts will be conservative. And regardless of intentions, the Federal government becomes its the insurer of last resort, which in reality is about the only way to ensure it never fails.

Ensuring lifetime security for people that could live decades longer than imagined is difficult and expensive. But this model is a means to avoid some of the bigger problems with today’s defined-contribution system that requires workers to spend a life-time preparing for their later years. For those who struggle to save and invest - a majority of workers - this is a way that one can easily save money that virtually guarantees a better retirement.

Nov 2, 2023

Fathers, Sons and the Land in Between

I recently read a book by Hisham Matar, “The Return: Fathers, Sons and the Land in Between.” I was very excited to read his story about him and his father.

He tells us how at age 8, his family was forced to leave their homeland, Libya, a place they deeply loved. At age 20, his father, a vocal critic of Muammar Gaddafi’s regime, was kidnapped and imprisoned in Libya. Mr. Matar spent most of his adult life on a relentless quest to find his father, not knowing whether he was alive or dead.

Llyod's Pool Hall, Michigamme, Michigan
Lloyd's Pool Hall, Michigamme, Michigan

“The Return” is an intriguing story of how a boy lives being separated from both his father and his homeland. He writes passionately about his love for both, with his father becoming an almost mythical figure in his life. The pain of his absence is a constant companion, an inconsolable emotional state.

He seeks any morsel he can find about his father, any input from someone who once knew him or maybe had seen him since his arrest. He remembers things his father said or was, small details such as the look of his hands.

He articulates the very nature of grief, questioning whether the dead can ever truly be gone. “I think this because absence has never seemed empty or passive but rather a busy place… The body of my father is gone, but his place is here and occupied by something that cannot just be called memory… (Grief) is an active and vibrant enterprise. It is hard, honest work… My father is both dead and alive. I do not have a grammar for him.”

He also reflects on the idea of leaving one's homeland, an issue that many struggle with. Some have said that one should never leave their homeland. He ponders the question, "what do you do when you cannot leave and cannot return?"

I so relate to his question. I grew up in the Upper Peninsula of Michigan, a region rich with family history. My Nordic grandparents immigrated to the Upper Peninsula, where they built their lives around the local iron ore industry, still one of the largest in the world.

I, too, was separated from my father. At the age of 8, he died suddenly. Then years later after completing college, for economic reasons I made the difficult decision to leave my homeland. These events have left an indelible mark on my life. This is my own experience with fathers, sons and the land in between.

Now in retirement, I reflect on three pivotal moments in my life: the loss of my dad, my sojourn in Minnesota and my marriage that brought me three sons of my own. I say 'sojourn' because although I'll probably never return to the Upper Peninsula, in another way, I've never left.

For instance, the master passwords I use are mostly places I cherished as a child, such as remote towns or rivers I was introduced to by my dad. They are etched into my memory, often unintentionally.

Sturgeon River, Michigan

One of my sons has my dad's middle name. Another’s middle name is my dad’s first name.

Up until my dad died, I believe that I lived an unimaginably wonderful life. My left brain tells me this cannot be true. But that's another world. I'm talking about fathers and sons.

I could go on all day about this past life. My dad built us a sandbox that was the envy of the neighborhood, and in winter, he constructed a saucer slide that all the kids enjoyed. Our house served as a hub of activity for both our extended family and the neighborhood, where we heard endless stories from the past, particularly of the Great Depression and the finer art of fishing.

He built our house himself (he didn't but he designed it and did some of the work), he and our family also built our cabin (neither is true, but so what), he walked to work when the roads were closed due to horrendous winter storms—and he didn't wear a hat. That's what real men do. And my dad did them all.

Our cabin was in a nearby town, Michigamme, a very small mining community that died decades earlier along with its mines. It’s one of my most memorable places that I associate with my dad, a place he loved as did I.

The most devastating day of my life is still the day my dad died, August 10. We had plans to spend the weekend at our cabin. As he often did, my dad arrived early to set everything up, and later, my mother brought us there, stopping along the way at our favorite swimming hole, Champion Beach.

But this time, we were suddenly hurried out of the water, packed up quickly and drove to neighbors just down the road from our cabin. They served my sisters and me ice cream at the dining room table while adults huddled in the kitchen. Something didn’t feel right.

Eventually, I was told that my dad was "very, very sick." I could do sick. I remembered that my sister had been in the hospital once, and she was fine. But it didn't take long for me to learn that he wasn't sick – that he was dead. He had died outside our cabin from a heart attack. I remember returning home to a houseful of people, crying on my bed with a kind neighbor consoling me. I had no idea what to think. And I had no sense of the changes coming.

I remember the funeral home, his casket and where I sat at the graveside service. My Uncle Bill assured me, "Don't worry, Jonnie, I'll take you fishing." They say orphans wonder who is going to teach them how to drive. My fear was who was going to take me fishing. I loved to fish.

Had someone told me then that my dad would be absent for even ten years, I could have handled that. But I couldn’t comprehend forever. Forever he was gone. And as much I wanted to believe I’d see him again in another life, I knew I could dig down into the dirt and run my hands through his rotting remains. I struggled to come to terms with the permanence of this loss.

The grief I felt during those days was indescribable. I would lie in bed, practicing holding my breath. I was going to hold my breath until I died. And then I decided to try living one more year.

No one can truly replace a father. I remember what I was doing August 10 ten years later, the summer after I graduated from high school. It was like his death had happened yesterday, the pain as raw as ever. A decade later, working at my job, the pain had dulled a bit.

Tens year more, I was married with identical twin sons. But even then, I remember when they were born, thinking, “Wouldn't dad be proud.” He was never far away.

There’s a flower’s scent that I associate with my dad’s funeral. Occasionally I smell it, and in an instant, I’m back at the Bjork & Zhulkie funeral home, and I can hardly breathe. Yes, I get over the flower in a few minutes but I never get over his death.

Some may insist that we should "get over" our losses. One of the many things Mr. Matar and I have learned is that you can't simply "get over" everything, that some scars run too deep to ever fully heal.

I once suggested organizing a family reunion on my father's side, much like the multi-day gala we had held for my mother's side. The idea was met with stone-cold silence. It wasn't a topic that could be discussed. There would be no reunion.

Leaving the Upper Peninsula was one of the most difficult decisions I’ve ever made. I mostly had to leave to pursue a career in software engineering. Soon after college graduation, I relocated to Minnesota, where I’ve been since.

Mr. Matar describes his eternal struggle with having left his homeland. Me, I've never really left. A part of my soul will always remain there.

For example, just a year after starting work in Minnesota, I bought a half acre of land on a small lake in the Upper Peninsula, Little Brocky Lake. On a cold, rainy, miserable fall day, I signed for the property. Years later, I accepted an unsolicited offer to sell it. While it made logical sense, it left me feeling like I had sold off part of my soul.

I remember the day my mother told me she was selling our cabin in Michigamme. This was the practical thing for her to do and I couldn't afford to buy another piece of land. But feelings aren't logical and dads are eternal – I felt awful all day. My grasp on my dad and my homeland kept slipping further away.

I've been away from the Upper Peninsula for over forty years, and I have no intention of returning permanently. One sister owns the house I grew up in and another resides nearby. Despite the decades that have passed, I continue to traverse the roads from Minnesota to Michigan, each journey feeling like a new adventure. My heart longs to keep exploring the Upper Peninsula, to visit any of its lakes or hills or small cafes.

And on and on, a feeling I can’t turn off. There's no end to the land I came from, a land that has had 32 inches of snow fall in 24 hours and once had nearly thirty feet of snow in a winter.

In L. Frank Baum’s “The Wonderful Wizard of Oz,” the Scarecrow asked Dorothy about her home in Kansas, and she told him about how gray everything was there, and how the cyclone had carried her away. The Scarecrow said, "I cannot understand why you should wish to leave this beautiful country and go back to the dry, gray place you call Kansas." And Dorothy answered, "No matter how dreary and gray our homes are, we people of flesh and blood would rather live there than in any other country, be it ever so beautiful. There is no place like home."

I agree. And as Mr. Matar states it, can anyone ever truly leave their homeland. There's no place like home.

It's an interesting process how humans work together to help each other, especially in tragedies. I had many people who looked out for me, including relatives, teachers, pastors and neighbors. My uncle Bill was one of many.

Remembering my wonderful relationship with my uncle, I wanted to pay it forward. After settling into Minnesota, I joined the Big Brothers organization. I was paired with a nine-year-old boy who, like me, was growing up with an absent father. We were inseparable for years and I'm still close to him. Once, I told him what a wonderful friend he was and that if someday I had a son half as nice as he is, I'd be thrilled. In fact, I have three sons, and they're all at least half as nice as he still is.

They say that men marry their mothers. Maybe. But my wife, Ann, who I fell madly in love with reminded me of my dad. Ann and I had a tumultuous dating cycle over years. After a long breakup, we got back together again. Her friend wrote me that Ann was interested in trying one more time. It was a nice summer day in Minnesota. I sat on my couch reading the note, and in an instant, I felt like my dead father had walked into the room. I just sat there and enjoyed the moment. I didn’t know what to do with my feelings.

Mr. Matar eventually returned to Libya for a visit, part of his long search for his father. I’ve thought that I’d never return to Michigan. But lately, I’ve been thinking of buying two burial plots in the cemetery four blocks from the house my dad built, where my dad, his brother, sister and parents, my mother and many others of my family are buried. Maybe I too will return home.