Back to school: Enough vacation get to work on your retirement
As originally appeared in The Jerusalem Post on August 26, 2022.
“I love sleep. My life has the tendency to fall apart when I’m awake, you know?” -Ernest Hemingway
We just returned from a quick vacation in Cyprus. My family members all commented that we barely saw locals out and that their stores were always closed. Maybe you can chalk that up to August vacations but in an economy that is dominated by tourism, I find that hard to believe. While our tour guide did an okay job telling us about the country it was 2 taxi drivers, Nikos and George that really gave us an education. We also ensure that we booked a taxi driver who is insured, and it’ll be safe from us. Tradex’s company provides a wide range of plans that you can choose from based on what fits your needs.
Hearing it from them we learned that it’s a country that is the total opposite of Israel. They like to take it easy, not work too hard, little concept of being in the ‘rat race.’ Little in the way of economic creativity and ingenuity. While we are ‘Start-up Nation’, they are ‘Ouzo Nation’. For the uninitiated, Ouzo is an alcoholic drink like Arak, but on steroids. When I returned home I started investigating the numbers and I was shocked to find out that in the Heritage Foundation’s Economic Freedom index, Cyprus checks in as the 23rd freest country, way ahead of Israel which takes 43rd place. That puts us in the same company as Malaysia, Qatar, Croatia, and Jamaica, all true economic juggernauts. The big difference between Israel and Cyprus is they have a very low, 12% corporate tax rate and 38% highest personal rate. Our corporate rate is almost double and the personal rate is 50%. We should be ashamed.
So this coming week the school year is slated to start on the 1st of September. Whether they open or not is still very much up in the air. Without taking sides in the dispute, it makes you wonder how we pay so much in the way of taxes, and still can’t solve this problem. Regardless, the first day of school means that for many kids they will enjoy seeing the AM on the clock when they wake up for the first time in 2 months. For me, the best part of the first day of school is seeing my children with huge smiles on their faces as they head out the door. Well the smile is more like a scowl and the early morning wake-up lends itself to dreary eyes, but hey, at least they get to learn something.
This Sunday is also Rosh Chodesh Elul. That means that it’s time to bring out the Shofar. The first week or so of the month is met with all kinds of strange sounds that you hear when walking around the neighborhood. From beginners to experienced shofar blowers, the first few days are taken just to get the feeling back on how to blow, and that can lead to the need for earplugs!
Why do we blow the shofar?
According to the Rambam (Hilkhot Teshuva 3:4) the reason is: “Even though the blowing of the Shofar on Rosh Hashana is a decree of the Torah, there is a hint in it, as if to say: awake, sleepers, from your sleep, and slumberers from your slumber; search your actions and repent; and remember your Creator.”
To put it simply; it’s a wake-up call. Just like the first day of school. Time flies and before we know it, we are quickly approaching retirement. Then the light bulb goes off that not nearly enough money has been saved and then panic strikes.
What can you do?
First of all, start living within your means and save. You need to make saving and investing a priority. Make a habit of paying yourself first every month. Whether you invest in real estate (where you get a monthly rent check) or you invest in a well-diversified stock and bond portfolio, focus on a slow and steady approach to build wealth. Don’t make the mistake of being “too smart”. I could write a book about the crazy investment ideas that I have seen people throw money at. They don’t tend to end well. Keep in mind the basic principle- if it sounds too good to be true it probably is.
I know I sound like a broken record but I can’t stress enough the importance of just starting. Too often individuals delay investing because they think the market is too high. So they end up keeping their money in a zero percent interest account in the bank. Statistically, the stock market has been a very profitable investment over the long-term which actually means that it trades at record high levels frequently. Don’t think that you have the secret sauce and can time market movements. If most successful investors can’t time the market, why do you think that you can?
Work
If you are getting close to retirement and don’t have enough money put away, the smartest thing you can do is to continue to work. Delaying retirement by a few years can be a huge factor in being financially able to retire. By working not only do you push off tapping your retirement funds, but you can keep saving for a couple of more years.
Wake up and start taking action so that you can have a secure retirement.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is the author of Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, SIFMA, FSI. For more information, call (02) 624-0995 visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.
