Life can get in the way of your best intentions

Last week we held a survivor party of sorts for a financial magazine I used to work for. The magazine had folded a decade ago, and this was the first time everyone had gotten together since.

While it is always interesting to see what the people whom you have lost touch with have been up to—and see who still has hair and can still see their toes when they look down—there was one person in particular I wanted to see again: a former editor who had an interesting approach to financial planning—at least for someone who worked for a financial magazine.

He didn’t do any—at least not in the traditional sense.

Even though he had a couple of very bright kids, and a wife who didn’t work outside the house, “George” deliberately didn’t allocate a penny toward college or his retirement (outside of contributing to the company 401 (k), which matched his contribution with company stock.)

His thinking, he would tell us, was simple and twofold:

1. The 401 (k) would cover his retirement needs—how could it not. (We were a very hot company when he made the prediction.)
2. He was a real estate genius. He bought his very nice home in a very nice New York City suburb at the bottom of the market in the early 1990s and consistent appreciation was a lock.

Given these two “strategies,” he was planning on retiring early. And when it came time to pay for college, he’d take out a home equity loan against his very nice home on Long Island.

Well, as John Lennon was fond of saying, “life is what happens while you’re busy making other plans.”

In the interim, not only had our magazine folded, but so had another one George worked on. The result? Not only was there very little retirement money, now there wasn’t even any equity to draw on. (He had maxed out his home equity lines to pay the bills between jobs.)

The kids are now commuting to a local state school. A fine place to be sure, but they could have done better. George’s early retirement plans (he is now 61) are a thing of the past, and in fact he spent most of the time at the reunion hitting everyone up for freelancing gigs.

The moral: Real planning is important, no matter how smart you are.