retirement account – BuddhaMoney

Where There’s A Will …

My eleven year-old son, let’s call him Kid Baseball, plays Little League Baseball. His team, the Red Hot Chili Peppers, steamrolled through the season, and were one of six teams to earn a berth in the round robin finals tournament.

In that typical, beautiful kid fashion, he took it all in stride. I suppose that’s to be expected in a league that talks the talk … it’s a game … these are kids … winning is secondary … the primary purpose is having fun … competing respectfully … learning team play … supporting your mates … relishing the experience.

Under the tutelage of a coach who understood the value of letting kids be kids, and at the same time encouraging them to give it their all, the players morphed into a tightknit group of twelve who had a blast playing the game. Regardless of skill level, support was there, camaraderie was on full display: cheering on each teammates turn at bat, playfully razzing the culprit for missing an easy pop fly, manically bouncing up and down and joyfully shouting while joined in a huddle after each game, win or lose.

As for me, I loved being at the games. Because when I’m watching Kid Baseball lap up life, immersed in an experience bigger than him self, contributing to the joy of others, I can’t help but feel sheer happiness for him, and the other kids and their parents. Moments to treasure? Oh ya, moments to treasure alright.

So there I am at the first game of the finals, leaning on chest high wire fence surrounding the field and looking at Kid Baseball who is supposed to be on his toes playing Right Field but instead is flat footed, gazing skyward, imagining clouds into various shapes and figures.

Taking his cue (like Kid Baseball, like father), my mind sets off for a stroll. And I start thinking how amazing this all is, how fortunate Kid Baseball is to play on a grassy field in his spiffy uniform in a peaceful city in a caring neighborhood with supportive parents who brought this league into existence all for the kids (of course, a valid argument may be made that, vicariously, the kids game is as much for some parents). Talk about a field of dreams. And I thought to myself, I did well, to have a hand in giving Kid Baseball this opportunity.

But before I could dwell too long in self-congratulations, my mind tripped over to another direction, one that parents tend to follow come a certain middle age: what happens to Kid Baseball after I’ve checked out of Planet Earth and into the Great Gig in the Sky?

Who Needs One

The musician, Prince, recently died at age 57 without a Will. Poor financial planning? Yup. And this from a guy likely worth several hundred million dollars with access to any estate experts he wanted. Prince should have known better? Sure, but I’m not here to throw more dirt on a guy who’s prematurely six feet under. The thing is, he didn’t bother. So be it.

Without a will, what happens to his assets? Short answer: assets are distributed to his heirs in accordance with governing laws. Unless stories printed in tabloid media rags of long lost heirs and Martian cousins sporting three eyes are true (aren’t they always?!), the man had two siblings, each of whom will share the estate equally. If other family members existed, the pie would be sliced in different proportions. For example, if he was married at the time of death, then the spouse would inherit the estate. If married with children, then the children would be entitled to a portion as well as the spouse.

So if Prince didn’t have a Will, what’s the problem given that laws specify who gets what when a person dies without a will (known as dying ‘intestate’)? Practically speaking, Prince is now jamming on some celestial cloud so it sure isn’t his problem. But, there could be regret on his part. Regret? asks Prince’s ghost as guitar strumming comes to a screeching halt.

Giving Life To Wishes

A Will would have given life to his wishes, allowing him to shape his legacy, sending assets where he wanted and not where or to whom he did not want assets to go. Think about it:

What if he didn’t want his siblings receiving any assets? Was estranged from one sibling and had no intention of leaving her/him a dime? Wanted to donate all or part of his estate to a charity or two or three? Leave some loot for friends? Fund a foundation supporting music?

All that could have been done with a Will, but not without. And by clearly stating who gets what, a Will potentially prevents legal disputes. Too many families are torn apart because of heirs, or people claiming to be heirs, with big eyes and watering mouths who greedily battle over their right to a bigger slice.

Enter Buddha

Greed is a sign of emptiness. When empty, one wishes to stuff one self. Money is a way to stuff one self with things. Fulfillment does not come from things. No matter how much money you have, you may remain unfulfilled, your heart and soul may remain empty.

Gifting Assets Without A Will

There is no need to transfer some assets via Will. Real estate may be jointly owned so, upon death of one of the owners, the property is then owned 100% by the surviving owner (known as ‘joint ownership with right of survivorship’). Bank and Investment accounts may also be owned jointly with right of survivorship.

Similarly, life insurance proceeds and retirement accounts may pass to heirs through beneficiary designation forms filed with your financial institution. BIG CRUCIAL NOTE: it’s important to keep these forms up to date. For example, what if you divorced but still list your former spouse as beneficiary on your retirement accounts? Ka-ching! Jackpot for former spouse, who will be smiling on your passing because they will inherit the retirement account assets. Sure, former spouse could be honorable and say, ‘no, no, there must be some mistake, I could not possibly accept this large sum of money.’ Right. Maybe up on cloud nine but not likely among humans living on the third rock from the sun.

The Grip of Avoidance

Some folks can’t do it. The avoidant type. Maybe it’s too disturbing to consider their own mortality. Maybe death is something that happens to other people. Maybe they don’t want to upset someone, a family member, a friend, who assumes they will inherit the estate or a certain grab bag of goodies but the avoidant type has different plans.

Well, that sort of behavior is plain irresponsible, cowardly and selfish. Here, avoidant type is punting potential controversy down the road for others to deal with.

The cost of not properly preparing for death may come not only in the form of higher estate taxes or failure to protect assets but, more importantly, there’s the emotional toll. Rightful heirs who feel wronged; family squabbles, expensive self-serving court fights, all of which would not happen if avoidant type had the kahunas to express his/her wishes in a Will and to let those wishes be known to heirs before death and while still of sound mind. My guess is that avoidant types lose a whole lot of respect from heirs when they flop in the courage department.

How to Write A Will

A Will could be as simple as taking pen to paper, listing who gets what, dating and signing the paper. What’s better is if you have a witness also sign the Will, a person who could vouch for your authentic signature. Another step even better would be to sign the Will in front of a Notary or a Lawyer, people who are officers of the court and whose word as to authenticity of your signature is unlikely to be successfully challenged. Finally, you could retain an Estates Lawyer and spend a few hundred dollars on preparation of a simple Will. It’s a good idea. Because sometimes we don’t know what we don’t know and, presumably, a lawyer will discuss with you all the issues you would be wise to consider, including those documents that are typically prepared alongside a Will: power of attorney to handle financial matters should you become incapacitated, and a health care proxy allowing someone to make health care decisions on your behalf.

Who is in your life? Who do you want to gift your assets to after the last page of your life is written? Who do you want managing your finances if you are debilitated by disease or accident? Who should tell doctors to continue or stop treatment when you are unable to advocate for yourself? All weighty issues. All issues that should be well thought out. For your benefit and for your heirs.

Willpower Leads to Wealth

This past Saturday, I walked by the storefront of a snazzy high-end furniture retailer that boasts stores across North America and trades on the New York Stock Exchange. On the glass store window, written in large font, was the marketing pitch:

‘WHAT YOU WANT. WHEN YOU WANT. SAVINGS ON EVERYTHING. EVERY DAY.’

Perfect, I thought, on this particular window the universe has delivered to me the subject of my next blog posting, channeled through a ringside announcer’s American southern drawl:

IN ONE CORNER … wearing blue shorts and sporting a smart hairdo … Willpower and Rational EGO

and

IN THE OTHER CORNER … parading in red shorts and unruly mane, Impulsivity and Infantile ID.

Learning from Sigmund

Circa 1920s. Sigmund Freud, famed psychoanalyst, coined the term ‘Pleasure Principle’, i.e., instinctual seeking of pleasure and avoidance of pain.

Want, Want, Want. The Pleasure Principle presumes that, in infancy and early childhood, we seek immediate gratification of needs (such as hunger, thirst and warmth) and wants (playing electronic games, eating more ice cream, pushing to be first in line). In adolescence and beyond, the human animal adds sex and, some would argue, material consumption to ID’s most wanted list. Presto! satisfaction is the consuming selfish yearning. We humans want what we want when we want it. Consequences be damned.

Biology Tamed

Freud also contended that instinctual desire may be wrestled to the ground. How so? By thinking about costs and benefits of our actions. Then, proceeding to act responsibly.

Such behavior would be reflective of a Mature person, says Freud, one whose Ego is subdued by the Reality Principle. i.e., delaying gratification yet still seeking and finding pleasure.

Chewy Bits

Freudology defines ID as the primitive, infantile, instinctive component of personality; the impulsive, chaotic, unreasonable, unconscious part of our psyche that responds directly and immediately to instincts.

EGO develops in order to mediate between the unrealistic ID and the external real world. EGO is responsible for thoughtful decision-making, for working out realistic ways of satisfying ID’s demands. In this regard, EGO considers social realities and norms, etiquette and rules, in deciding how to behave; often compromising or postponing satisfaction to avoid negative consequences.

Sigmund himself said that EGO is ‘like a man on horseback, who has to hold in check the superior strength of the horse.’

Mischel and the Marshmallow

Circa 1960s. Stanford psychology professor, Walter Mischel, undertakes experiments (later known as the Marshmallow Experiment) involving Nursery school children aged 4 to 6.

The Set Up. Each child is led into a private room by a member of Mischel’s research team. The child sits in a chair in front of a table upon which lay one treat, being a marshmallow, pretzel or cookie.

The Deal. Researcher tells the child he will leave the room for about 15 minutes. During this time, the child may choose to eat the treat. The child is told that, if they can wait until the researcher returns, they will be given two treats instead of one.

Results. The children fell into three camps.

Impulsive Izzys, first camp. These little critters wolfed down the treat within seconds of the researcher leaving the room.
Piggly Wigglys, second camp, wiggled, squirmed and bounced about for a few minutes trying to contain themselves before caving to temptation.
Gritty Gooses, third and smallest camp, comprising about 25% of the children, patiently waited to collect their two treats.

Years Later. During the five decades after the original experiments, follow up studies were carried out on some of these same children. The results?

Get this: Gritty Gooses far outperformed Impulsive Izzys and Piggly Wigglys. Those who were able to delay gratification for longer periods of time achieved higher academic results, had more successful careers, earned more money, were healthier, happier, better managed stress and frustration, and were less likely to be obese or suffer from substance abuse.

You’re So Hot! (and you may want to turn down the temperature)

Is it possible for Impulsive Izzy or Piggly Wiggly to switch camps, and join the Gritty Gooses? Of course it is but not without working to make it happen. And that work should first concentrate on understanding our mental processes.

Simply put, two different neurological systems govern our behavior. The limbic system (i.e., Hot / Pleasure focused), is responsible for our emotional responses, pain, appetites and sexual impulses. Impulsive and feverish, the hot system implores the kids to eat the treat, now, now, NOW (the physiological embodiment of ID)!

The ‘Cool System’ is located in the Prefrontal Cortex, an area of the brain controlling cognitive, complex and reflective thought (corresponding to strategic EGO). Chilled and contemplative, the Cool System counsels patience, tactical thinking, and consideration of future rewards such as when Gritty Goose obtained two treats instead of one.

Under stress, the Hot System often overwhelms the Cool System. The outcome being hasty, emotion based decisions that may satisfy our present self but damage our future self.

Says Professor Mischel, ‘the hot system is great when you’re starving in the wild and looking for food. It’s not good when you’re doing retirement planning.’

The Secret to Wealth: A Sexy and Smart Pre-Frontal Cortex

Financial success is largely a psychological game. And the person with little or no debt, growing savings, increasing financial security and, eventually, a well-padded retirement account, sports a generous prefrontal cortex.

Across all cultures, its the Gritty Goose who exhibits self-control, will power, ability to resist siren calls, and wisdom to understand likely consequences flowing from actions. Free from an overheated limbic system, good, smart, rational decisions are consistently made, thereby positively affecting overall life success.

‘Well’, says Hedonist Harry, ‘I’m not a Cool Cat square who surfs the Reality Principle. Not me, man. I’m all about living life here and now, you know, getting what I want and buying what I want today, because you never know what will happen tomorrow and, besides, how can I resist when they’re practically giving stuff away with these low interest rates.’

Okay Harry, I’m with you on the maximizing life bit. Still, we BuddhaMoney folks look at life a bit differently.

We go for a healthy serving of BALANCE when it comes to the life equation. What this means is that we consider our present and future (i.e., self, family, community) when making decisions. In doing so, we live within our financial means, minimize or avoid tapping into credit and paying interest, eliminate impulse purchases, save and invest money knowing that time marches forward and the day will come when we want to stop working or slow it down, suppress gambling instincts, buy fewer toys, be content with what we have and not drool over the newest and latest and greatest updated version of Stuff.

And what happens? We achieve bigger financial account balances AND we achieve the wealth of contentment through lower expenses, greater assets, reduced stress, and a perspective that says, ‘Stuff really isn’t all that important; giving back to my family, friends, and community is what makes my heart smile’. Oh, and not being in debt, wow, talk about a sense of freedom.

The thing is, Harry, Cool Cat digs Pleasure as much as anyone but knows enough not to act without awareness of consequences, financial and otherwise.

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Tag: retirement account

Where There’s A Will …

Willpower Leads to Wealth