There’s a great story in the “Financial Times” entitled “Courtney Love explains why you’ve got to do the math – As part of the FT Financial Literacy and Inclusion Campaign, the musician shares her story about making – and losing – a fortune.” Please read it, it’s no longer behind a paywall: https://on.ft.com/3JwZe8G

My father was an outsider, never a member of the group, he was analytical and skeptical, and I learned his lessons through osmosis. Then again, thinking back, we used to call it “The Morris Lefsetz Philosophy,” when he rendered his financial wisdom, told us how the world worked, they certainly didn’t teach these lessons in school. Then again, they did teach Home Economics, but this was back in the sixties, before girls played Little League and boys took Home Ec. Ergo, I never learned to cook. And my mother was uninterested in cooking, it was an obligation in between her participation in cultural affairs. And my father was a gourmand, we ate out on a regular basis, however mostly in hole-in-the-wall finds that ultimately became a feature of “New York” magazine’s “Underground Gourmet.” So I can order, but I cannot make.

I thought people knew about money, but they don’t.

And conventional wisdom about money is about as good as conventional wisdom about politics. There are authorities, and you should listen to them, not your buddy who pontificates like they know everything. I was just told that this couple made 29% on their money last year. That’s astronomical. But then I asked them what their money was in…stocks, bonds, cash…they had no idea. Some billionaires just told them to invest with this guy and they did. Did this financial advisor ask them whether they wanted high risk or low risk or…? They had no answer to that question. I have a friend who got nearly ten million dollars in a divorce settlement, put it in high risk investments during the first internet run-up, that’s right, before the dot.com crash, and lost all of it, each and every penny, died broke living in her sister’s house.

If you read the Courtney Love article you’ll learn that her mother inherited millions and lost it all in a few years. Managing money is a skill, and most people don’t have it.

Just like they know nothing about Social Security.

On May 9th of last year, “The Wall Street Journal” did a story entitled “The Biggest Mistakes People Make With Social Security – One of the most common and costly: worrying about dying too soon.”: https://on.wsj.com/3pLjFH2

Unfortunately, this article is still behind a paywall. But I pay in excess of $500 a year for the “Wall Street Journal” and read it cover to cover, that’s how I saw it, that’s how I know this. So if I was a zillionaire rock star… But I’m not. That’s what the financially savvy middle class doesn’t realize. Sure, if they made the money of a rock star they wouldn’t blow it, but they could never become a rock star and earn that money! Becoming a rock star involves a plethora of risk. You’re flying without a net. And most people don’t succeed. If you go to college and enter the traditional working world your odds of economic survival are greatly increased, but you will never be a rock star. The choices of the musicians I know, the experiences they’ve had…getting their cars repossessed, getting their stuff stolen without insurance… The list is endless. Bad decisions on parade. Would never happen to me. Then again, I would never take that risk, get it?

So I read this article back in May, and it stuck in my brain, I just Googled and found it. Because I’m constantly having arguments with people saying that Social Security is their money, and if they die early the government gets to keep it. As for me… I don’t care if I die with money in the bank, or if I’m upside down on Social Security, I just fear the opposite, running out of money, which I already did once, it’s amazing I survived. If you’re broke all you can think about is money 24/7, you can’t get ahead. As for the concept of the “starving artist”… Let me tell you, most of these people are just starving, they’re not artists, they’re not going anywhere. And I believe we should have a better safety net for these people, but that’s a different topic.

So since this “Wall Street Journal” article is behind a paywall, I’m going to reproduce, for the public benefit, the #1 biggest mistake people make with Social Security:

“1. Worrying about dying too young

Many clients file for Social Security benefits earlier than necessary because they fret about not living long enough to get all their money back from the government program.

They have it all backward, according to Boston University economist Laurence Kotlikoff, who heads a firm that sells Maximize My Social Security software, which helps people determine when to start collecting their benefit.

Social Security is longevity insurance, he says. That is, it offers protection against running out of money as we age. People don’t do break-even calculations when they buy home insurance, because they are protecting themselves against a catastrophic event like a fire. They shouldn’t do them with Social Security either, he says.

‘We can’t determine when we’re going to die,’ he says, ‘We have to focus first and foremost on the worst case, as if we’re going to live forever. Living a long time is a financial disaster. It may be good personally.’

That message is getting through to more Americans. The percentage taking Social Security as soon as they are eligible—at age 62—has roughly halved in the past 15 years, to about 25% in 2019. Even so, only about 6% of Americans claiming Social Security in 2017 were age 70, according to the Center for Retirement Research.”

I could amplify the foregoing, but I think it’s clear on its surface.

As for Social Security, I can’t believe I’m even writing about it. It’s for old people, but now all the baby boomers are old. And unlike their parents, most weren’t responsible, they didn’t put money away for retirement. Or else they had unforeseen financial hardship. In any event, it’s a rare person I know who is prepared for their retirement years. They think they can work forever, but they don’t want to, and the dirty little secret is you can tell people you feel like forty all day long but your body doesn’t know that. Do you know old people? They’re not perfect health specimens. Their bodies creak, they’re in pain and then there’s the third rail, mental impairment/decline. I hung with Freddy Moore every day for two years. He was one of the most happening people in the L.A. music scene of the late seventies and early eighties, with his bands the Kats/Nu-Kats and Boy and… Freddy’s just 71, but he’s got dementia, he’s in a facility. Could happen to you. So please live life to the fullest, don’t say no when you can say yes. However, just the opposite may be true. You could live to a hundred, clear-headed. Then what? Do you have enough cash to live on? The rule of thumb is to live on 4% of your retirement assets. Actually, recently advisors are talking about 3%. So stay within your means, don’t blow it all on frivolous items. Like a depreciating asset, like a car.

As for what other people are doing… That was another thing my father always said… “If everybody else is jumping off a bridge, should you?” That other person might be wealthy. They might not have a job but inherited cash. Or they might be living far beyond their means and the crash is just around the corner. You’d be stunned who was rich and famous in the past who is living in a one bedroom apartment today, struggling. Fame doesn’t mean you’re rich, and it certainly doesn’t mean you’re smart with your money.

My father died at 70. The Big C got him. He dotted all the i’s and t’s but it made no difference. Meanwhile, our closest family friend did not. Was saved at the last minute by medical miracles again and again. But he and his wife lived past ninety. He’d had a good job, he’d gone to Harvard for graduate school. Thank god their kids did well enough to shtup them money to survive.

And then there was another friend, who went to Harvard undergrad. Who owned his own pharmacy. He and his wife got a reverse mortgage, and then they outlived their money and survived on the cash of their children.

I don’t have any children, whether they’d take care of me or not.

And everybody’s situation is unique. But one thing’s for sure, you’ve got no idea when you’re gonna die, hell, the Who sang about dying before they got old and now Roger and Pete are over seventy. It’s great to live in the moment, but the future keeps coming, please be prepared.