Cinemorphosis

Tag: personal-finance

  • You Can’t Take the 403(b) With You

    You Can’t Take the 403(b) With You

    Jean Chatzky is concerned about retired money hoarders, people who have amassed a considerable sum and are terrified of watching it dwindle. They have spent decades baking a magnificent chocolate cake. Why eat it when it looks so beautiful sitting untouched in the windowsill?

    But this is folly. The money was saved for a reason: to enjoy life, fulfill bucket lists, and eventually circulate back into the economy. Citing the University of Michigan Health and Retirement Study in her essay “Americans Aren’t Spending Their Retirement Savings,” Chatzky identifies a “retirement consumption gap”: many retirees spend considerably less than they could while remaining financially secure for the rest of their lives. She puts the gap at about 8 percent for middle-income retirees and as high as 53 percent for the wealthy. The result is an enormous reservoir of money sitting in retirement accounts rather than being used by the people who spent their lives accumulating it.

    This reluctance to spend isn’t merely bad for the economy. It can be bad for the spirit. Chatzky argues that retirees may be better off spending more of their assets in exchange for a higher quality of life. The goal, after all, was never to die with the largest possible account balance. The money was supposed to finance the life.

    Her argument is persuasive, but it doesn’t fully address one deep psychological reason for hoarding money: a large portfolio can sustain the fantasy that we aren’t going to die. The money becomes a chimera of immortality. It whispers, “Look how big I am. As long as I remain intact, I will protect you. But let my numbers dwindle, and perhaps your remaining years will dwindle with them.”

    This condition has a name: Symbolic Immortality. Accumulated wealth becomes something that psychologically transcends mortality, and the retiree begins treating the endurance of the portfolio as evidence for the endurance of the self. More broadly, symbolic immortality appears whenever we invest an object, achievement, institution, or legacy with the hope that some representation of us will survive our biological death. Ernest Becker’s work and later Terror Management Theory explore this human impulse. We live through our children, our art and writing, our careers, buildings bearing our names, and, of course, our money. We dignify these things with grand words such as “legacy,” but lurking underneath the grandeur is something more primitive: we are terrified of disappearing.

    There is nothing inherently wrong with leaving something behind. Children, books, charitable gifts, institutions, and inheritances can extend our influence beyond our lifetimes. The trouble begins when the symbol stops serving life and life begins serving the symbol. The portfolio that was supposed to provide freedom becomes something its owner must protect. The chocolate cake was baked to be eaten, but eating it now feels like destroying it.

    That is why we should take Chatzky’s warning seriously. A large retirement balance can represent prudence and security, but hoarding money merely because spending it makes mortality feel more real is something else entirely. At that point, preserving the money has become more important than living the life the money was accumulated to support.

    Eat the cake.

  • Meet the Stranger Who Is About to Become You

    Meet the Stranger Who Is About to Become You

    You do not know who you will become when you retire.

    This is an irritating fact because retirement planning encourages the opposite assumption. You sit at your desk while still employed and confidently construct the future version of yourself. He will exercise four times a week. He will read difficult books. He will write every morning. He will travel. He will maintain friendships. He will practice Expansive Leisure and avoid the Retirement Larval State. He will be disciplined, curious, physically vigorous, socially engaged, and spiritually alert.

    This man sounds magnificent.

    Unfortunately, he does not exist.

    The person making these plans is still embedded in the structures that have defined him for forty years. He has a job, a title, colleagues, students, deadlines, routines, and an institution that tells him where to be and when to be there. He knows himself under these conditions and therefore assumes he will remain essentially the same person after the conditions disappear.

    Why would he?

    This is the Stranger-Self Principle: the person planning your retirement has never experienced retirement and therefore cannot reliably predict the behavior of the person who will actually live it.

    Working You and Retired You have never met.

    Working You wakes at five and imagines that Retired You will continue waking at five because this is simply the kind of disciplined fellow you are. Perhaps. Or perhaps Retired You will wake at seven-thirty, shuffle into the kitchen wearing Hawaiian tank tops and flip-flops, eat breakfast, inspect the internet, and conclude that the morning’s intellectual work should begin immediately after a brief restorative lie-down.

    Working You has no idea.

    Retirement removes too many variables for confident prediction. Your work-based social life disappears. Your professional identity weakens. The automatic encounters vanish. Nobody waits outside your office. Nobody expects you in a classroom. Nobody sends an email asking whether you can attend a meeting Thursday at two, thereby providing the unexpected pleasure of declining it.

    You have crossed the Rubicon. The old shore is behind you, and the maps become increasingly speculative.

    You can study other retirees, of course. You can read Steve Lopez’s personal retirement journey. You can consult psychologists, financial advisers, longevity experts, philosophers, theologians, and seventy-eight-year-old men with magnificent calves who walk six miles every morning. Everyone has a roadmap. Maintain purpose. Cultivate friendships. Exercise. Volunteer. Travel. Learn Italian. Join a pickleball league. Buy resistance bands.

    Excellent advice.

    Retired You may tell all of them to go to hell.

    Welcome to the Stranger-Self Principle. Retirement isn’t merely a new circumstance imposed upon an established personality. The circumstance may alter the personality itself. The man who spent forty years craving free time may discover that unlimited free time terrifies him. The introvert who dreamed of being left alone may discover that solitude loses some of its charm around the fourth consecutive Tuesday. The professor who swore he would never miss teaching may find himself constructing a syllabus for imaginary students at five in the morning.

    You don’t know.

    This uncertainty exposes an even more embarrassing human tendency: the Retrospective-Wisdom Principle. We improvise our way through life and afterward invent elegant explanations for what we have done.

    We prefer to imagine ourselves as architects following blueprints. In reality, much of the time we are raccoons trapped in a garage, knocking things over in the darkness until we accidentally find the pet door.

    Later, naturally, we write a book about our methodology.

    We take the accident, the compromise, the lucky encounter, the failure we survived, and the decision we made because every other option looked worse, and transform it into a Principle. Suddenly the crooked path becomes a journey. The improvisation becomes wisdom. The scar becomes evidence that we knew where we were going all along.

    I should be particularly suspicious of this tendency because I have spent considerable time naming retirement principles. I have principles for walking, principles for exercise, principles for leisure, principles for bureaucracy, principles for mortality, principles for maintaining vitality, and principles explaining why I need to get off my reinforced couch.

    At this rate, by the time I retire I will possess enough principles to govern Switzerland.

    What I will not possess is certainty.

    Perhaps that is the useful realization. Human beings know considerably less than they pretend to know, particularly about themselves. We construct identities, announce convictions, establish routines, and declare that we have finally figured things out. Then circumstances change and expose how much of our supposedly permanent character depended upon the scaffolding surrounding it.

    Retirement removes a considerable portion of that scaffolding.

    Then you meet the stranger underneath.

    Perhaps he will exercise, write, travel, cultivate friendships, and become Radiant Man. Perhaps he will spend three consecutive afternoons comparing laptops he doesn’t need while eating red grapes on a camping mattress installed permanently atop his couch.

    Probably both.

    So I am entering retirement without pretending that I possess the master plan. I have some useful principles. I have people I love. I have things I want to do. I can see occasional shards of light in the distance, and for now that is enough to establish a direction.

    The rest I will make up as I go along.

    Just like everybody else.

    Although I would prefer to make it up while driving a brand-new eggshell-white Honda Accord Hybrid.

    God knows I need excellent gas mileage for the two-mile expedition to Costco every other Wednesday.

  • Your Pension Is Safe, Provided You Know the Secret Handshake 

    Your Pension Is Safe, Provided You Know the Secret Handshake 

    Do not assume that when you apply for retirement there are bureaucratic safeguards protecting your money. There are no guardrails, no kindly pension shepherd watching over your flock, no government employee in Sacramento studying your file at midnight and whispering, “We’d better make sure this fellow gets every dollar he earned.” You have entered the Wild West. Think of yourself as a rancher guarding a herd from rustlers, wolves, coyotes, and anyone else who has noticed that cattle are valuable and ranchers occasionally fall asleep.

    Consider what happens when you spend seven years working at a university covered by CalPERS and then move to a college covered by CalSTRS. A reasonable person might assume that your retirement benefits would somehow follow you. After all, you are still you. You have merely changed employers. Both pension systems operate in California. Computers exist. Databases exist. The state knows your Social Security number, your salary, your address, your employment history, and probably what you had for breakfast. Surely CalPERS and CalSTRS can figure out that the person who worked at the university is the same person who now works at the college.

    That assumption reveals a touching faith in civilization.

    Your CalPERS pension remains in CalPERS. Your CalSTRS pension accumulates separately in CalSTRS. The two systems do not simply merge because doing so would be convenient for you. Convenience, after all, is the natural enemy of bureaucracy. Efficiency eliminates procedures. Eliminated procedures eliminate departments. Eliminated departments eliminate jobs. Bureaucracies therefore possess an evolutionary interest in complexity.

    Call this the Bureaucratic Self-Preservation Principle: the tendency of administrative systems to resist simplification because every eliminated procedure, redundant department, and overlapping jurisdiction diminishes the bureaucracy’s reason for existing. Efficiency solves problems. Bureaucracy survives by administering them.

    Unfortunately, the Bureaucratic Self-Preservation Principle is not aligned with your quest for a smooth retirement. It is a noose around your neck.

    You discover this when you finally decide to retire and learn that your two pension systems must be coordinated according to something called reciprocity and concurrent retirement. At first, the rules can leave you with the impression that you must notify CalPERS and CalSTRS at precisely the same atomic second or a trapdoor will open beneath your pension, the government will seize your house, and you will spend your golden years living beneath an overpass eating beans from a can.

    This is not technically true.

    It merely feels true.

    What you have actually encountered is the exquisite bureaucratic pas de deux known as the Laws of Reciprocity and Concurrence. Because you have benefits in both CalPERS and CalSTRS, you cannot simply retire, an act you may have naively imagined consisted of ceasing to work. You must coordinate your departure with two enormous pension systems that have developed different terminology for related arrangements. CalPERS speaks of reciprocity. CalSTRS speaks of concurrent retirement. Each maintains its own applications, regulations, representatives, websites, definitions, deadlines, and little administrative tripwires hidden beneath the leaves.

    Yet somehow you must make these two bureaucratic kingdoms acknowledge that the same human being is retiring from both.

    The safest approach is generally to coordinate the effective retirement dates, ordinarily using the same retirement date, although CalSTRS permits different dates under certain circumstances if you perform no creditable service between them. Apparently even the date on which you stop working requires interpretive scholarship.

    The penalty for getting this wrong is not necessarily that a tactical unit of pension officers arrives before dawn, kicks down your front door, and confiscates your retirement, although by this stage of the process you may find such a scenario psychologically plausible. The actual danger is less cinematic and therefore more frightening: you may lose financial advantages available through proper coordination, including potentially favorable treatment of your final compensation. After decades of accumulating pension benefits, you arrive at a point where an incorrectly chosen date or misunderstood rule can affect money you expected to receive for the rest of your life.

    Call this the Reciprocity Paradox: two retirement systems agree to recognize each other, provided you possess sufficient administrative competence to make them recognize each other.

    And here is the part nobody explains when you begin dreaming about retirement. No sheriff rides onto your ranch to announce the Reciprocity Paradox. No pension guardian appears at your door with a checklist and says, “I noticed you worked under two retirement systems. Before you file anything, we need to talk.” You have to discover the danger yourself, preferably before you make the mistake the rules were apparently designed to punish.

    This is one of the central lessons of retirement: the closer you get to never working again, the more terrified you become of making a clerical error.

    So put on your hat and climb onto your horse. You are the cowboy on the pension frontier. Take out your binoculars and scan the horizon. Look for predators. Look for contradictions. Look for deadlines. Look for the form that generates another form. Look for the rule buried on page forty-seven of a PDF that contradicts what you thought you read on the website. Count your cattle. Mend your fences. Check them again.

    You’re on your own, my friend.

    Welcome to retirement.

  • How the Bureaucratic Self-Preservation Principle Hijacks Your Retirement

    How the Bureaucratic Self-Preservation Principle Hijacks Your Retirement

    Do not assume that when you apply for retirement there are bureaucratic safeguards protecting your money. There are no guardrails, no kindly pension shepherd watching over your flock, no government employee in Sacramento studying your file at midnight and whispering, “We’d better make sure this fellow gets every dollar he earned.” You have entered the Wild West. Think of yourself as a rancher guarding a herd from rustlers, wolves, coyotes, and anyone else who has noticed that cattle are valuable and ranchers occasionally fall asleep.

    Consider what happens when you spend seven years working at a university covered by CalPERS and then move to a college covered by CalSTRS. A reasonable person might assume that your retirement benefits would somehow follow you. After all, you are still you. You have merely changed employers. Both pension systems operate in California. Computers exist. Databases exist. The state knows your Social Security number, your salary, your address, your employment history, and probably what you had for breakfast. Surely CalPERS and CalSTRS can figure out that the person who worked at the university is the same person who now works at the college.

    That assumption reveals a touching faith in civilization.

    Your CalPERS pension remains in CalPERS. Your CalSTRS pension accumulates separately in CalSTRS. The two systems do not simply merge because doing so would be convenient for you. Convenience, after all, is the natural enemy of bureaucracy. Efficiency eliminates procedures. Eliminated procedures eliminate departments. Eliminated departments eliminate jobs. Bureaucracies therefore possess an evolutionary interest in complexity.

    Call this the Bureaucratic Self-Preservation Principle: the tendency of administrative systems to resist simplification because every eliminated procedure, redundant department, and overlapping jurisdiction diminishes the bureaucracy’s reason for existing. Efficiency solves problems. Bureaucracy survives by administering them.

    Unfortunately, the Bureaucratic Self-Preservation Principle is not aligned with your quest for a smooth retirement. It is a noose around your neck.

    You discover this when you finally decide to retire and learn that your two pension systems must be coordinated according to something called reciprocity and concurrent retirement. At first, the rules can leave you with the impression that you must notify CalPERS and CalSTRS at precisely the same atomic second or a trapdoor will open beneath your pension, the government will seize your house, and you will spend your golden years living beneath an overpass eating beans from a can.

    This is not technically true.

    It merely feels true.

    What you have actually encountered is the exquisite bureaucratic pas de deux known as the Laws of Reciprocity and Concurrence. Because you have benefits in both CalPERS and CalSTRS, you cannot simply retire, an act you may have naively imagined consisted of ceasing to work. You must coordinate your departure with two enormous pension systems that have developed different terminology for related arrangements. CalPERS speaks of reciprocity. CalSTRS speaks of concurrent retirement. Each maintains its own applications, regulations, representatives, websites, definitions, deadlines, and little administrative tripwires hidden beneath the leaves.

    Yet somehow you must make these two bureaucratic kingdoms acknowledge that the same human being is retiring from both.

    The safest approach is generally to coordinate the effective retirement dates, ordinarily using the same retirement date, although CalSTRS permits different dates under certain circumstances if you perform no creditable service between them. Apparently even the date on which you stop working requires interpretive scholarship.

    The penalty for getting this wrong is not necessarily that a tactical unit of pension officers arrives before dawn, kicks down your front door, and confiscates your retirement, although by this stage of the process you may find such a scenario psychologically plausible. The actual danger is less cinematic and therefore more frightening: you may lose financial advantages available through proper coordination, including potentially favorable treatment of your final compensation. After decades of accumulating pension benefits, you arrive at a point where an incorrectly chosen date or misunderstood rule can affect money you expected to receive for the rest of your life.

    Call this the Reciprocity Paradox: two retirement systems agree to recognize each other, provided you possess sufficient administrative competence to make them recognize each other.

    And here is the part nobody explains when you begin dreaming about retirement. No sheriff rides onto your ranch to announce the Reciprocity Paradox. No pension guardian appears at your door with a checklist and says, “I noticed you worked under two retirement systems. Before you file anything, we need to talk.” You have to discover the danger yourself, preferably before you make the mistake the rules were apparently designed to punish.

    This is one of the central lessons of retirement: the closer you get to never working again, the more terrified you become of making a clerical error.

    So put on your hat and climb onto your horse. You are the cowboy on the pension frontier. Take out your binoculars and scan the horizon. Look for predators. Look for contradictions. Look for deadlines. Look for the form that generates another form. Look for the rule buried on page forty-seven of a PDF that contradicts what you thought you read on the website. Count your cattle. Mend your fences. Check them again.

    You’re on your own, my friend.

    Welcome to retirement.

  • Magical Thinking #1: The Wealth Proximity Effect  

    Magical Thinking #1: The Wealth Proximity Effect  

    (or, The Idiot’s Guide to Getting Rich by Osmosis)  

    The Delusions That Keep Us Broke: A Field Guide to Magical Thinking  

    Magical thinking is humanity’s favorite self-inflicted mind trick. We all do it. Why? Because it gives us the illusion of progress without requiring any real effort. It lets us believe we are inching closer to our dreams when, in reality, we are standing still, luxuriating in fantasy while time slithers past.  

    At its core, magical thinking is the belief that wanting something badly enough makes it true. Another term for this is wishcasting—a term as ridiculous as the behavior it describes. And wishcasting comes in many flavors, but let’s start with a classic:  

    Magical Thinking #1: The Wealth Proximity Effect  

    (or, The Idiot’s Guide to Getting Rich by Osmosis)  

    There exists a particularly intoxicating delusion that simply hanging out with rich people will, by some mysterious process, turn you into one of them. Like a low-budget fairytale, this belief holds that being in the presence of wealth allows its golden aura to absorb into your pores, triggering a financial metamorphosis.  

    According to this theory, the very air surrounding the wealthy is infused with prosperity particles. One need only breathe deeply in their presence, and voilà—greatness is imminent. Just be patient. Success is coming. Any day now.  

    This explains why some people strategically position themselves near wealth, convinced that proximity equals inevitability. They take jobs in luxury-adjacent fields—selling overpriced real estate, running high-end boutiques, caddying at exclusive golf courses—believing that if they orbit enough millionaires, one of them will eventually fling a golden opportunity their way.  

    It rarely happens.  

    Instead, they spend years rubbing elbows with the elite, never quite realizing they are the hired help in someone else’s fantasy. They stand in expensive rooms, shake hands with power brokers, sip cocktails at galas—and still leave every night in the same used Honda, wondering when their “big break” is coming. Spoiler alert: it’s not.  

    And then there are the hangers-on, the social parasites who aren’t rich, but know people who are, and assume this entitles them to special treatment. Ask any service worker who their most obnoxious customers are, and they won’t tell you actual celebrities. No, the worst offenders are friends of celebrities’ relatives, those barely-adjacent nobodies who wield their flimsy connection to fame like a scepter. They are not rich, nor famous—but, God help you, they believe they should be treated as if they were.  

    I know real estate agents and mortgage lenders who are constantly broke, yet radiate the delusional confidence of future billionaires simply because they play golf with rich people. They engage in high-energy wealth cosplay, convinced that their friendships with actual millionaires mean they are so close to striking it big.  

    They never do.  

    But that’s the power of magical thinking—it keeps them perpetually convinced that success is just around the corner, even as they sink deeper into the quicksand of reality.