Tales & Trails of a Traveling Wiseguy

Over the past several years I've made a habit of using New Year's as a time to reflect on, and take stock of, the year just finished. It's time for the 2025 edition, looking back on 2024.

It's always a question how to title these annual reflections. Last year I struggled for weeks over how to frame the malaise that dominated 2023, the sense of doom about to arrive that never did yet made it hard to appreciate the good things that happened. What I came up with then was 2023: The Year That Was. Alas, 2024 felt like more of the same. There were some good things in there, some moments of near greatness even, but most of them were coupled with setbacks and worry about the future. Thus I'll title it 2024: Another Year That Was.

Travel & Experiences: Positive

As I break it down to understand what was good or bad about 2024, one aspect of 2024— like in 2023— that I feel warm about is travel and experiences. 2024 was another strong year for going places and having fun. In 2024:

• We visited New Zealand on a two week trip, spending time on both main islands. It was our first trip to NZ. Heck, it was our first two week trip anywhere. I hope this is a sign of more things to come, soon.


• We visited Panama for 8-9 days. There were many frustrations on that trip, but I try to think of it as overall a positive experience overall. Certainly I'm happier having gone, however far from perfect it turned out to be, than staying home or traveling anywhere domestically.


• We had a mostly expenses paid trip to Mexico for Club. We stayed in two nice hotels— so nice that we didn't even want to leave our rooms.


• We dropped our pace on weekend trips during the summer. That's on us. Though we did pick up toward the end of the summer again with Friday Night Halfway trips.

Friends & Family: Slightly Negative

2024 was another year of seeing my count of family and friends dwindle. It's not as severe as 2023 when I had to fire a few people from the position of being friends. I did lose one elderly relative, my Aunt Carol, to the infirmities of old age. She was 87.

One of the side effects of getting older is that most of your relatives and friends get older, too. Those who were the elders when I was young, my grandparents' generation: they're long gone already. Now many of my parents' generation are gone, too. Well, I still have my mom, though she's got many issues. And my wife still has both her parents. But for how long.

Finances: Positive, despite a Setback

2024 was another good year financially. Our savings for (early) retirement grew by about 16% due to market improvement, plus we continued to save aggressively to grow our portfolio even bigger. Our savings rate was less aggressive than the past few years, though, as Hawk lost her job early in the year. If not for that, and her difficulty in finding a suitable new job (she's been job-searching for 9 months), we might be at our early retirement goal already.

I do need to point out that, under the heading of money, 2024 has felt like a Dickensian situation of, "It was the best of times, it was the worst of times." In 2023, widespread belief that an economic recession was perpetually just 3-6 months away overshadowed positive actual economic figures, creating social anxiety about the economy. In 2024 widespread anxiety continued, though the bogeyman changed from an expected recession that never came to concern over inflation. A few years of elevated inflation after a historic 10+ year run of near zero inflation has people freaking out— somewhat rightly— about the future if prices continue to rise like that.

One of the aspects of "It was the best of times, it was the worst of times" is that not everybody experienced the pain of inflation or benefits of the rising market equally. In 2024 the rich got richer, the extremely rich got way richer, and everybody else got squeezed. 2024 is hardly the first time that's happened, of course. In fact in the US it's pretty much par for the course.

Which camp am I in? Honestly I've got one foot in each. I'm well off enough after years of working hard and saving prudently that I benefited from the growth of the stock market in 2024. But I'm also still close enough to the working class / middle class my wife and I grew up in that we're very well aware of the struggle of people lower down the ladder than us. And we feel the pains, too, of seeing our health care costs, for example, grow by more than $20k year-over-year as health insurers find ever more ways to cut back on what they cover. At least we can afford that $20k increase without it forcing a dilemma of, "Do we see the doctor or buy groceries this week?"

Career: Mostly Negative

I enjoyed a bit of job recognition early in the year when I won nomination to president's club at my company. That provided a fun vacation to Mexico but alas not the stepping stone in my career I was looking for. I.e., I've been angling for a substantial increase in job title, to recognize the level of skill and capability I demonstrate, but that didn't come. And with yet-again new leaders in my department since then I've now actually fallen backward a few steps yet-again as the new managers yet-again expect me to start over at square one in proving myself.

New management is also frustrating in other ways. I won't elaborate specifics here as I'm keeping this blog open, but let's just say multiple signs are telling me it's past time to leave. Hint: the sacking of the whole rest of my team earlier this week is one example. That's sad because I've been with this company for over 7 years and have had some good times and done some great work here.

The notion of it being time to find a new job is complicated by the fact I'm looking to retire soon. I really don't want to start a new job just to work it for a short period of time. When I decide I'm done here, am I done-done? As in ready to retire?

I've been holding on in this deteriorating job for a few years now, telling myself I'm on a glide path. I've swallowed my frustration at numerous things for a few years, telling myself I've just got to keep gliding a little longer. Early in 2024 I thought I was ready to walk over management bullshit. The glow I enjoyed from telling off my boss died a few days later when Hawk and I learned that her job was being eliminated. So I've held onto my job a bit longer. How much longer now? I'd like to say this is the final year, perhaps even the final 4 months, but I'm not sure. Meanwhile the frustrations mount.

A few weeks ago I read an article about some of the wisdom of Charlie Munger. Munger, who died last year at age 99, was famously the vice-chairman of Berkshire Hathaway, the corporate conglomerate controlled by the legendary Warren Buffett. In an article on Moneywise, ‘Who in the hell needs a Rolex watch?’: Why Charlie Munger warned Americans against ‘pretentious expenditures, the authors tell how Munger criticized people buying status symbols and yearning to have as much as the (wealthier) people around them. “I have conquered envy in my own life,” Munger famously said.

While I have great respect for Munger's business prowess, reading this article made me think, "Wealthy aging billionaire is out of touch with the 99.99%." I could quickly think of two reasons far better than tongue-clucking about envy why people— people who aren't billionaires— yearn for more and buy status symbols.

But first, Rolex watches? Okay, Boomer. 🤣 Seriously, affluent younger people are not buying Rolex. It's like your grandfather's Buick. Other brands lead mindshare among affluent people in their 30s and 40s, even some in their 50s, today.

Now, here are the two reasons other than "envy" that immediately came to mind for why people in the middle class, and especially the upper middle, strive for more:

1. Financial Security

The main reason I see why those of us who enjoy a certain degree of comfort today, i.e,, those of us who are middle class & upper middle class, keep striving for more is that we are trying to create financial security. Or, to put that in terms of another of Munger's aphorisms— to structure your planning around things you want to avoid—the imperative here is Don't die in poverty.

Building wealth in our working years has become critical to  avoid living old age in poverty. Older generations had retirement plans and confidence in Social Security. In Gen X we saw retirement plans largely disappear from the private sector when we were starting our careers. Union membership was trending down, as well. Today it's at 10% in the US– and half of that is in the public sector. Union membership in the private sector is 3%. We also saw from back in the early 1990s the upcoming demographic crunch in Social Security that will force significant benefit cuts by the time we reach retirement age. At the same time, medical costs have been spiraling ever higher. Lots of retirees with only modest nest eggs are being bankrupted by health costs. My cohort and I thus internalized from our early 20s, and have seen only further proof with every passing year, that when it comes to living in retirement, we're on our own to avoid poverty.

Even the Moneywise article points out that Munger's tongue-clicking about envy came as he was sitting on a multi-billion dollar pile of assets. Yeah, Richie Rich, you've got yours, 100 times over. You don't have to worry about a damn thing, and haven't for at least 50 years. Stop being a shit to those of us still trying to build even one one-hundredth of your wealth.

2. The Needs of Networking

Why do people "Keep up with the Joneses?" Sure, one reason is envy. But there's another reason, too. It's more subtle. Not everyone gets it. I sure didn't when I was younger and had a very STEM/academic mindset. As I've matured in my career in business, though, it's become very obvious. To get ahead in business you need the support of people with power and wealth. And to get that support from the powerful and wealthy, you need to meet them where they're at.

Where are they at? For one, they're playing golf. To climb the ladder in business you need to play golf— because golf is very much a sport of powerful in business, and lots of business networking happens on the golf course. Now, golf is expensive. You may need a membership in a club. Maybe a country club? That's actually not a bad idea because wealthy people networks are centered around country clubs. People you meet and can get introduced there can make the difference between your business ideas being embraced and funded, versus you being like the proverbial Hollywood waiter with a script nobody cares about.

Oh, and while you're driving to the golf course, or the country club, or even the sailing club— another place where the demographic of business leaders hangs out— you'll need to roll up in the right kind of car. And the right shoes, watch, etc. Yes, people make snap judgments about you in the first few seconds based on your appearance. Even the wealthy do that. If you roll up in a Toyota Camry, most of this demographic is not going to admire your fiscal sensibility. They're going to look right past you. You need not just a statement watch but a statement car.

Oh, and are your kids going to public schools? Ha ha ha, the wealthy and powerful people's kids are not. If you want to bond with them over your shared love of your kids, you need to send your kids to the same schools. Y'know, the ones that cost $50,000 a year. Per kid. And we're not talking Harvard, here. We're talking elementary school.

"But didn't Munger climb the business ladder without such expenses?" you might ask. Yes, he did. But one counter-example does not disprove a general fact. Munger was lucky enough to meet a fellow thrifty contrarian, Warren Buffett, early in his career. Very few of us ever get the chance to be hired by a unicorn like Buffett. I also note Munger also benefited from network connections in a different way— through family privilege. For example, when he was rejected from Harvard law school, a friend of his father's called up the dean of the school— the dean— and told him to admit Munger. Did Munger get through law school on his own merits? Yes; he graduated magna cum laude. But the challenge with succeeding on merit alone is that there are also more worthy applicants, whether it's for school or a promotion or a business investment, then there are spots for acceptance. The one whose worthy application gets accepted is the one that gets shuffled to the top of the pile by networking connections. And unless you're born into them, they cost money to build.

It's like a case of "Ask, and ye shall receive." After I posted earlier today about the increasing number of 401(k) millionaires and noted that that widely-reported news story only describes the top 2% of the population and doesn't say anything about how well the average American is saving for retirement, I see another article pop up in my newsfeed— this one also from Yahoo! Finance— about the median 401(k) balance (29 Feb 2024). This article shares data from another big brokerage, Vanguard, about the mean and median retirement account balances in 2023, broken down by age range:

Age	Average Account Balance	Median Account Balance
Under 25	$5,236	$1,948
25-34	$30,017	$11,357
35-44	$76,354	$28,318
45-54	$142,069	$48,301
55-64	$207,874	$71,168
65+	$232,710	$70,620

* I've copied the numbers directly from the Yahoo! Finance article cited above and cleaned up the formatting with a table

These figures, especially the median figure, are much more insightful into how the average American is saving for retirement. (As an aside, it's not surprising that the mean average is much higher than the median. I've noted before that mean and median are often very different when discussing wealth.) The news is way different from any kind of champagne cork popping about how many 401(k) millionaires there are. In these numbers we see that ordinary Americans at or near retirement age lack even one-tenth that much wealth.

Friday midday I walked out on a meeting with my boss and a colleague. The colleague was being disrespectful toward me, even after I told him I found his behavior disrespectful and asked him to stop. My boss had acknowledged the problem beforehand (it's part of a widening pattern) and offered to help address it. But in the meeting he did nothing as it happened again. I told both of them, "I'm done with this [disrespect] for today. Find someone else for this task if you have to," and then walked out. I took a few minutes to convince myself I'd done the right thing with some help from my spouse then circled back around to talk to my boss 1:1 to tell him I need to see significant improvement soon. I didn't explicitly say "Or I will quit" but IMO only a fool would fail to see that was clearly implied.

After that I left for the airport. I had been in Austin for a day and a half of technical training. I was glad I had a built-in excuse not to have to be around my offending colleague or my boss... though I did see my boss briefly outside while we were both waiting for Ubers. I remarked on something he said among a group of us who were waiting there that was unrelated to personnel issues. He didn't engage with me. That made it seem more awkward. Thus I was glad I would have some alone time for the next few hours to process things.

It turned out I had more processing time than I expected. The wifi on my flight back to SJC was busted. With little entertainment to occupy my mind I found myself mulling the situation over again and again. Like I wrote in my previous blog, it was a case of "shots fired". A shot, once fired, can't be taken back. And the shots I fired basically put me on a path of having to leave this company soon. As I considered the prospect of leaving this job in a messy breakup after almost 7 years together I found myself... surprisingly at peace with the situation.

I've written for years now that I've been planning an early retirement. The goal line to cross to get there hasn't been a date but rather a target amount of money in my portfolio. I'm not at my target yet— among other reasons, I've moved the goalposts twice due to inflation— but I'm getting close. And while leaving my job on a sour note isn't how I envisioned starting retirement, neither is having a totally upbeat going-away party with cake and streamers and everybody clapping. Walking out the door by myself while singing the chorus to "Take This Job and Shove It" (Wikipedia link) is perfectly adequate.

Realizing that I already have a post-job (or at least post-this-job) mentality was striking. And it was striking how refreshed I felt. Suddenly none of the things that have been bothering me about the job for... frankly, years... bothered me anymore. Even the most recent problems suddenly stopped bothering me.

• I won't be prepared to deliver an in-person seminar on Wednesday because it was scheduled too soon against my recommendation and the material isn't ready? Fuck it, I don't care if I stand up there and look like an idiot as things fall apart around me. Soon it won't be my problem.


• Getting pushed into starting an evaluation project with a customer prematurely, with expected delivery dates I've advised are almost impossible to meet but have been ignored repeatedly on? Fuck it, I don't care either if the sale slips and people yell at me.


• Another (really weak) deal slips further out because coworkers keep trying to go around me instead of listening to me and believing me when I say what technical things we need to do? Fuck that, too. Their success is no longer my concern.

It's amazing how many problems just roll off like water on a duck's back when you just don't fucking care anymore.

I saw an interesting article about saving money the other day. "A couple who retired early with $4.3 million says the FIRE lifestyle is wearing thin: ‘We don't want to just keep throwing money on the pile and keep being cheap.’" The story has been picked up by a number of news outlets. Here's a Yahoo! article link (25 Jun 2023) because it's the least likely to disappear behind a paywall. The story tells of a couple, Mindy and Carl, who are multi-millionaires but spend too much time and emotional energy agonizing over small purchases. Their habit of extreme frugality has made it hard for them to enjoy the fruits of their labor.

Let me offer a definition here for those who are wondering. "FIRE" is Financial Independence/Retire Early. The term was coined in 1992, in the book Your Money or Your Life. The FIRE movement, as it's often called, has gotten closer to the mainstream in recent years as bloggers and influencers have popularized it with younger generations of adults getting an early start on planning ahead for retirement.

The idea of FIRE is simple: you save aggressively, and invest your money wisely, building a portfolio of assets big enough to make you financially independent (FI-), enabling you to quit your job and retire early (-RE). How big is "big enough"? Big enough that the cash flow you earn from your investments basically replaces your need for salaries. And how aggressive is "save aggressively"? Ah, there's the rub.

Typical FIRE success stories tell of couples who worked well-paying professional jobs for as little as 10 years, saved every penny they could, and retired by age 40. Common in these stories is financial self-denial. People take their upper-middle class incomes from jobs as software developers, finance pros, and lawyers and budget themselves like starving grad students. They live in small, plain apartments or houses, even leeching off generous parents if they can to avoid paying for housing, stint on travel and material goods, and eat meals of cheap foodstuffs like rice and beans.

Let me emphasize, people who live in shared housing, or buy cheap groceries and rarely eat out, or own a bicycle instead of a car because they can't afford more are different from FIRE followers. FIRE people typically earn 6 figures, often well into the 6 figures, and save half or more of their pay.

One of my computer-engineer colleagues in the late 1990s was a FIRE adherent. Instead of renting an apartment in pricey Silicon Valley he kept a bedroll under his desk at the office and slept there. He showered at the company gym in an adjoining building and kept a few of his possessions locked in the trunk of his well-used economy car down in the parking garage. "I'm saving an extra $15k a year not paying rent and utilities!" he boasted. Today the figure would be at least double.

Sleeping under your desk and showering at the office to avoid renting an apartment may seem like taking frugality to an extreme, but that's the sort of tradeoff FIRE adherents seriously consider. I've always been a frugal person myself, or at least have always had frugal tendencies— see my example from a few years ago about how long I wore a pair of sandals before spending to replacing them— but to me that's beyond the pale. I decided back in school that as I embarked on a well-paying career I would strike a balance between saving money for the future and enjoying the fruits of my labor in the present.

French President Emmanuel Macron has been pushing proposed changes to the country's retirement system for... well, since his reelection campaign. His proposals have proved deeply unpopular, though. The French parliament made clear it would not enact them, so Macron is using a constitutional loophole to change them through executive order. Protests that have been going on for weeks turned violent late last week.

What's at stake may seem quaint to us Americans. Macron wants to increase the retirement age from 62 to 64. Here in the US the "full" retirement age is already 67 (for people born since 1960). And it's not just we Americans who work longer than the French. In Germany the retirement age is 65 years 7 months. In the UK it's 66.

Macron's reason for pushing the reform is the same as that of various US politicians who've been calling for Social Security reform for decades: the system is unsustainable. While the math is pretty clear that US Social Security will start running short of money as soon as 2033 unless something major is changed, it's not so clear how much financial jeopardy France's retirement system faces. Partly that's because it's funded differently, paid out of general taxes rather than through a separate system of levies. The same demographic realities that imperil the US system, though— longer life expectancy and declining population growth— underlie pension cost increases in France.

Social Security in the US has been called "the electrified third rail of politics", a term popularized by Speaker of the House Tip O'Neill in 1982. The metaphor refers to public safety warnings common at the time about the dangers of touching the high-voltage third rail in many electric railway systems. Touching it is often deadly. Macron may find grabbing that third rail kills his political career.

Over the past several years I've made a habit of using New Year's as a time to reflect on, and take stock of, the year just finished. Recently I've posted a few retrospectives about travel. That's only one part of my life. As I've mentally composed this article about everything else I've wondered what the theme would be. Like, if there's a title for 2022: My Experience, what would it be?

It struck me over lunch today. 2022: Stuck in a Holding Pattern.

Coronavirus: The New Normal

The long shadow that Coronavirus continued to cast over 2022 is part of the feeling of being stuck in a holding pattern. I remember at the end of 2020 I expressed cautious hope that 2021 would be the year we beat Coronavirus. Vaccines with strong trial results were rolling out. It seemed the only challenge was how fast we could get to 90%+ uptake and start seeing the virus basically eradicated as has been done with smallpox and measles.

Alas by mid 2021 it was evident that people's mindsets had hardened along partisan lines, with Republicans denying that the vaccines were necessary or even worked at all. 2022 continued more of the same. There's still a stubborn 30% of the US population who refuse to be vaccinated. There's an even larger portion who oppose common-sense public health precautions like wearing masks in indoors public spaces.

Meanwhile we're seeing that the vaccines are not a "silver bullet". Unlike with smallpox and measles, the Coronavirus mutates just fast enough to work its way around vaccine induced immunity. That's not a reason not to get vaccinated, BTW. The vaccines still help, not only reducing your chances of infection by 2-3x but also reducing chances of severe symptoms by 6x.

It just feels like we never managed to fully turn the corner from 2020. It's like instead of 2020, 2021, and 2022 the years have been, movie title style:

• 2020


• 2020 Won


• 2020, Too

I'd say that 2023 is safe from 2020 homophones... except that it could still be "2020 III".

Health

I left 2022 in the same health I started it. Really I should work on getting healthier, especially losing some of the multiple spare tires I've been lugging around for years. I'm not sure when I'll break out of that holding pattern.

One upside of 2022 being same-same for me is that I didn't get Covid. Partly that's preparation: I got fully vaccinated as soon as I reasonable could, and I've gotten all the boosters available. Partly it's caution: I've continued to wear a mask in indoors public spaces and avoid the riskiest situations (aside from airports and aircraft when I travel). And partly it's just luck— or at least things I can't take credit for as deliberate choices. For example, when my spouse got Covid this past year I managed to avoid it!

Friends & Family

I'm going to damn 2022 with the same faint praise I damned 2021 with: At least nobody died.

Continuing to manage through The New Normal of the pandemic-turned-endemic meant not having as many chances to socialize with friends and family as in The Before Times. I haven't made any new friends recently that I can think of. Worse, I've chosen to fire a number of people from the position of being my friend. As I explained in Less Patience for Sucky People the forced alone time of the pandemic gave me a clearer perspective on whether people I counted as friends from years ago were still being friends or if they'd dropped down to jerks whose behavior I don't find amusing, or even tolerable, anymore.

Career

My career is definitely a "stuck in a holding pattern" situation. I continue to stick with a job where I'm underemployed and am being given no support to develop or advance meaningfully. Yes, I've requested it. A few times. Yes, I could push on it even harder— or just find a better job. But like I noted a year ago, I'm pretty much out of fucks to give. I'm being paid reasonably well, even if it is 25-40% less than I'd be making if my career hadn't been stalled the past 10 years. I believe I can retire in a few years. More on that below. Why scratch and claw to get ahead when I can relax on a glide path? There are some benefits to being in a holding pattern.

Finances

2022 has not been a great year financially. The S&P 500 was down 19% in 2022; some indexes were down even more. The silver lining to this cloud is that I actually beat the index in the non-retirement accounts I manage. I finished 2022 down only 6% there. In our retirement accounts we lost 15-16% for the year. I have less control over investing that money. At least we still beat the market there.

I track our investments closely because they're key to us being able to retire soon. What's "soon"? Several years ago I said to myself and my wife: Five Good Years. All we'd need is five good years, then we'd have enough to retire.

I knew when I made the mantra Five Good Years that it wouldn't be just 5 years on the calendar. Markets go down some years. I figured 5 good years would actually take about 7 years, allowing for one down market cycle in the period. How's that worked out? Well, across the past 7 years we've only had three good years, financially. We still need two more good years.

UPDATE: I forgot to explain why I'm overall satisfied with our financial situation at the end of 2022. It's not just, "Ooh, we lost less than the market." Silver-lining-to-a-dark-cloud is never satisfying. What's positive about our finances in 2022 is that we continued to save money, bigly. We set another new record for money saved in 2022. Basically we're living on one salary and saving the other. ...Actually we're living on less than one salary and saving the rest. Aggressive savings has been part of my Five Good Years calculation since the beginning. I'm excited we're outperforming even aggressive goals.

The Year Ahead: More Holding Pattern?

I don't have strong expectations for 2023. I mean, I'd love to think that it's going to be a banner year, one of those last remaining Five Good Years, etc. I'd love to think that, but there's no indication it'll happen. Financially speaking, most people are expecting a recession in 2023. Of course, most people were expecting that for a lot of 2022, as well, which is a large part of why the market was down 19%. Expectation of a recession creates a recession. Maybe 2023 will be another year of a holding pattern... or maybe we'll break out the other side of the holding pattern during the year and finish strong. I hope for the latter but prepare for the former.

As I wrote about the contribution limits for 401(k)s rising in 2023 a few weeks ago I was reminded that a lot of people don't understand the benefit of 401(k)s. I mean, I think most American adults understand it at a high level: "Investing money in a 401(k) saves on taxes, so you have more money at the end." But understanding the details of how that works— and how much it benefits them— is squishy. I get it; the math¹ can seem intimidating. Even for many people well educated in math or engineering it's too much to figure out. That leads to a lot of people not participating in 401(k) programs when they should. For example, many of my colleagues. 😳

I'll walk you through the math with a simple illustration. This will show you how much you can gain by investing through a 401(k) instead of an ordinary account. I call it the Tax-Deferred Advantage.

Here are five basic assumptions for my example:

1. Let's suppose you invest your money in company XYZ, which enjoys stock price appreciation averaging 7% a year over the course of many years. To keep this example simple let's assume XYZ does not pay a dividend or distribution. This is a little unusual as most companies, over 80% of the names in the S&P 500 index, pay dividends; and virtually all mutual funds pay distributions. This assumption keeps the tax calculations simple.


2. Let's suppose your overall marginal tax bracket is 28%. This includes both federal and state/local taxes, so think of it as 22% federal plus 6% state/local, or 24% federal plus 4% state/local, etc.


3. You start with $10,000, pre-tax, to invest.


4. You "buy and hold" XYZ — no trading until you're ready to withdraw. (This also keeps the example simpler.)


5. We'll look at the totals after 20 years.

Case A: You invest via traditional investment account. You start by paying taxes on that $10k. Your investment in XYZ is thus $7,200 ($10k less 28% combined tax). Twenty years later your account value is $27,862. (This is $7.2k x 1.07^20.) When you withdraw the money you pay tax... but only on the gain of $20,662. Your net after taxes is $22,076.

Case B: You invest via a 401(k). You pay no taxes on the $10k up front because it's tax-deferred. All $10 goes into buying shares of XYZ company. Twenty years later it's worth $38,697. When you withdraw the money you pay taxes on the whole amount. After taxes you net $27,862.

So, how did we do? The 401(k) gave us 26% more money ($27,862 vs. $22,076) after 20 years. That's the Tax-Deferred Advantage!

And BTW, the advantage gets even bigger when you change some of the model's assumptions. For example, if your investment pays dividends or distributions, the advantage is even bigger. If your tax bracket is lower in retirement than your working years, the advantage is bigger, too. I'll show examples of these in a later blog as the math gets more complicated.

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1: Insert curmudgeonly math joke: "That's not even math, it's arithmetic. If it were math it'd have letters!"

Hawaii April Travelog #22
Kailua-Kona - Tue, 12 Apr, 2022, 9pm

This evening we met up with friends over dinner in Kailua-Kona, 30 miles south of our condo in Waikoloa. Dave and his wife, "Lila" own a condo down there and are part time residents. They made reservations for the four of us at Magic's Beach Grill, an unassuming looking place on the ground floor of a small hotel overlooking the rocky coast and a nearby beach. Though the decor and service were casual the food was excellent. And the views were pretty good, too, especially because Dave and Lila have been there enough times to know not to reserve a table on the outdoors deck. Wind-whipped showers in the early evening tend to soak them!

Over dinner we talked about retirement, particularly about how Dave and Lila stay busy. They've got a combination of low-key activities they do together plus a few hobbies they enjoy individually.

One of the challenges with living on the island of Hawaii is that in many respects it's country living. Lila noted that the island is the size of Connecticut with a population of only 200,000. There aren't lots of stores— or restaurants. (They made our dinner reservation well in advance. 😅) There also isn't enough medical care. That's part of why they're part time residents. ...Not that they have crazy health needs. Just getting a general dental appointment involves an insane wait.

Another challenge of living on any island is "island fever". Even the Big Island is a small place, and you can get bored of it quickly. Let alone the island of Oahu, which is physically smaller even though it has a population of nearly 1 million. Anyone thinking of retiring, or even just relocating, to Hawaii needs to plan in their budget travel to other places. ...And that travel means flying a minimum of 2,500 miles east or 4,000 miles west to reach practically anything else.

We split up around 8 or 8:30. Hawk and I were getting tired, and Lila had to pack for a trip in the morning... she's returning to the Bay Area for a few weeks to catch up with friends, see some shows, etc.

Kona so White

One interesting thing Hawk and I noticed before, during, and after dinner today is that the island of Hawaii doesn't look like Oahu, demographically. On Oahu there are a lot of ethnic Hawaiians. Even in the tourist areas like Waikiki you see a lot of ethnic Hawaiians: they're working most of the jobs in all the hotels, restaurants, and stores. And outside Waikiki, in the more residential areas, the locals are predominantly Hawaiian.

Here on the Big Island, especially on the Kona side (west coast), it's different. You see ethnic Hawaiians working in the tourist industry but they're only about half of the workforce. There are a lot of White Americans here, too. And residential areas are full of White Americans, particularly older White Americans. This part of the state feels like a combination tourist/ex-pat retiree area.

My company has finally instituted a 401(k) match! A lot of people take these for granted, but in smaller companies— which I've worked at since 2004— they're uncommon. In fact I haven't had one at any of the small companies I've worked at until now.

The deal is a 100% match on the first $4,000 contributed annually. Oddly the matching starts with the first payroll in November. I mean, hey, the sooner the better.... But starting it late in the year is a rough fit for me because I've been funding my 401(k) to hit the maximum contribution for the year. I don't have $4,000 of eligible contributions left with which to max out my company's match.

I'm determined to get as much as I can, though. I stopped my contributions a few weeks ago, as soon as I was told about the benefit change. I planning to restart 401(k) contributions in November, when matching begins. If all goes well I'll be able to get about $3,000 of matching money in what's left of 2021 and then the full $4k next year.