Being of Northern European heritage (primarily), and more importantly, having good relationships with my cousins in Norway, and my wife’s in Denmark, I’ve had a lot of first hand opportunity to observe how relaxed, sane and happy these people are. They’ve traveled here to visit us, and we’ve been overseas to be with them, and I think I’ve come to some conclusions about them.
Now this probably doesn’t surprise you. You’ve seen the happiness surveys, consistently revealing how European, particularly Northern European, and more specifically Nordic people are the happiest.
The usual reasons why are explained, as they are here by CNN, but I’m a financial planner, concerned with not only financial success for my American clients, but also the psychological and emotional enjoyment of life. In short, I want my clients to be relaxed, confident and calm. What good is a successful financial life if you’re stressed out all the time?
So here’s my observation (from a Financial Planner’s point of view) of why my Nordic cousins are so happy.
- Guaranteed retirement
- Guaranteed health care
- Guaranteed income in the case of disability
- Guaranteed income if unemployed
See the one word in common for each of those reasons? Guaranteed. Because of the guarantees they have, they don’t worry about unemployment, getting sick, being broke in retirement or becoming too sick or hurt to work. Guaranteed, guaranteed, guaranteed.
Now I don’t think the guarantees themselves account for everything. Surely what they choose to DO with those guarantees has something to do with it, right? So what do they do (according to my unscientific observations)? Travel, spend time with family, learn about and enjoy good food and wine, and learn about the world and it’s cultures. Sounds pretty enjoyable.
It’s makes me wonder: How would life change if YOU had more guarantees? How can you replicate, at least to some degree the sense of security the Nordics have, such that YOU would enjoy life more like they do, and be happier?
Which leads me to some of the most un-sexy, least appreciated and most maligned group of financial products on the market.
Whole Life Insurance: Derided as “expensive” (nonsense) and “commission heavy” (also nonsense), they in fact offer guaranteed premium rate, guaranteed death benefit, guaranteed cash values and guaranteed growth thereon. Obviously serves as protection in the event of death, but also can provide ready cash, education funds, or a supplemental retirement income.
As I write, the markets are melting down and assets are seeing large price decreases worldwide. I’m sure glad I own some of this stuff, which is contractually guaranteed never to lose value.
Income Annuities: A guaranteed paycheck every month for as long as you like. An opportunity to add onto Social Security payments, or to replicate that friend’s pension you’re so jealous of. All my clients who are preparing for retirement are shown what income annuities do. They’re fairly simple. They look at your gender and age and determine how long an “average” person like you will live. Then they ascribe some interest to the numbers, and pay you for as LONG as you like, and even beyond your death (if you want to get funky). Yes, yes, I know “what if I die early and don’t get all my money back?”. There’s a provision to return all the unused money if you want. Guaranteed :-).
*Caution: do NOT confuse income annuities with “Variable Annuities” or “Indexed Annuities” with income riders and bells and whistles. These are the complex, difficult to understand, and expensive annuities you have heard of. They should be dealt with carefully. But they are NOT what I’m talking about there.
Disability Insurance: First of all, know what you’ll get if you get disabled. If you think Social Security will pay you, read the fine print. You have to be totally f—-d up to get any of that. Also, your company plan may suck. I recently reviewed plans for a lawyer at a big-time law firm in NYC, and a Co-President of a major TV production company in LA, and their plans are horrendous. In both cases they have the “McDonald’s drive thru” definition of disability after on year. Meaning if you are capable of sitting in your wheelchair and taking orders at Mickey D’s, they won’t pay you anymore. Anyway, make sure you have coverage, and GOOD coverage. Get a personal, private insurance plan if necessary. They have the best provisions. Once you know you’re covered in this regard, you’ll be more relaxed.
Yes, this and Whole Life cost money. So put your big boy/girl pants on and take care of it. You’ll learn to live without the money you’re contributing to enhance your happiness.
Let’s do it!