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"The Payoff is Huge": Jonathan Clements’ Final Initiative to Empower Lifelong Savers - 532
00:20:00
Imagine being told you only have 12 months to live. What would you do with your time? Today on Your Money, Your Wealth podcast number 532, Big Al Clopine, CPA and Executive Producer Andi Last are thrilled to welcome Jonathan Clements back for his...
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- [00:01]
Host
Imagine being told you only have 12 months to live. What would you do with your time? Today on youn Money, you, wealth podcast number 532, we are thrilled to welcome our friend Jonathan Clements back for his fourth appearance. For 30 years, Jonathan has been known for his personal finance writing in his column Getting Going, which appeared in the Wall street journal over 1,000 times starting in 1994, on his website, humbledollar.com, and in his many acclaimed books. About a year ago, Jonathan Clements was diagnosed with a rare form of lung cancer and told he only had about a year to live. Today, we're celebrating the fact that he is still here with us, and we're inspired by his decision to use his precious time to launch the Jonathan Clements Getting Going on Savings initiative. Stay with us to find out how you can get a free Kindle copy of Jonathan's new book and how you can help Jonathan pay it forward for the next generation. Jonathan Clements, we are so grateful to you for spending some of your precious time with us today. How are you feeling?
- [01:00]
Jonathan Clements
I'm feeling okay. You know, as. As you mentioned, I'm 12 months into this cancer diagnosis. You know, I did make the year, and I think I got a little bit more time left in me, but, you know, 12 months of chemotherapy and 12 months of recurring cancer growth does take its toll. My back is pretty short. I've. I've had. Have it shored up with something called bone cement. I've also had multiple radiation treatments, not only on my spine, but also on my brain. I go for chemo every three weeks. I'm about to try a new treatment plan because my current treatment plan is no longer proving effective. It's a journey, as they say.
- [01:43]
Host
It's a lot. It's a lot. And the fact that you are dedicating your time and efforts to this initiative is just above and beyond. I mean, you're not just focusing on your family or your friends or anything like that. You're focusing on the next generation.
- [01:56]
Jonathan Clements
Well, I think we all want our lives to matter. And with what little time I have left, I want to be able to continue to contribute to the conversation. And the conversation that I've spent my adult life being part of is the financial conversation, trying to help people get their personal finances head in the right direction. This one last effort, I hope, will bear fruit.
- [02:18]
Co-Host
Well, Jonathan, welcome to our show. We're really pleased to have you. It kind of hits home to me. I just lost my mom last week, and she.
- [02:27]
Jonathan Clements
I'm so sorry to hear that.
- [02:28]
Co-Host
Well, thank you. And she lived her life to the fullest to the end. She was suffering with a disease, but she didn't complain very much and she made the most of what she had. And I can congratulate you for doing the same because not everyone makes that decision. And I think you're a great person for doing that.
- [02:50]
Jonathan Clements
Well, thank you.
- [02:52]
Co-Host
So you've got this book. This is kind of what you want to be, your final legacy in terms of what you'd like to be known for. Tell us about the book, tell us why it's important or how this came to be.
- [03:06]
Jonathan Clements
So I don't want to take too much credit for this. It all started with a group of friends essentially coming to me and saying, you know, we'd like to launch a journalism prize in your honor. And I was like, the world does not need another journalism award. You know, if you're going to do something, let's do something that, that will really help people. And the idea that I had was, how about we help kids, young adults from, you know, less privileged families get started as investors and do that by donating, say, $1,000 so they could open a Roth IRA? I just sort of threw it out there without giving it much thought beyond that. But this group of friends, professional friends, people I've known, all of whom had some association with the John C. Bogle center for Financial Literacy, took it and ran with it and essentially left me alone. I didn't have to sit through any committee meetings, thank goodness. I didn't have to get involved in the nitty gritty details. Instead of this group of individuals worked out all the details. And a pilot program for the savings initiative will start this summer. The connection with the book is this. The funds raised by selling the book will all go towards supporting this savings initiative that you can also donate directly. From what I gather, there have been a fair amount of donations so far. The book seems to be selling really quite well. The book itself consists of 60 plus of my columns from my Wall Street Journal days. I did have a hand in selecting the articles that are included and I did some editing on them. But even the production of the book was handled by this group of friends. Many listeners may know Bill Bernstein, Jason Zweig from the Wall Street Journal, Christine Bend from Morningstar, Mike Piper, who's a well known blogger and book author, and Karen d' Amato who has been my friend for many years and used to be at me with me at the Wall Street Journal. They've all been heavily involved in this. And then they've been working with some outside organizations to make the initiative happen.
- [05:23]
Co-Host
Yeah, good for you. And so tell us about the initiative. So this is thousand dollar Roth IRAs being set up for individuals, is that correct?
- [05:33]
Jonathan Clements
That's correct. So of course, to put $1,000 into a Roth, you need $1,000 of earned income. So the first thing to do is to make sure that these kids have some sort of summer job where they earn $1,000. So in the first instance, as part of a pilot program that will launch this summer, the city of Boston, they have a summer work program. They're working with the initiative to help put these kids into jobs. And then these kids will receive some financial counseling. They'll be talked talk about the virtues of investing and so on. And this is a serious research program. So only some of the kids are going to get $1,000 and some will not, but all will receive financial counseling and sort of advice on how to open a Roth ira, you know, what their investment options might look like and so on. And the notion is to see whether if you seed accounts with $1,000, whether that will have a different outcome than if you just received the counseling. And it's up to you to put the money in. So what they hope is to have some serious research findings that may guide future initiatives like this. Will it work? I certainly hope so, but you never know, right? I mean, I remember being, you know, 21 and, you know, getting, I think it was 150 pounds from my paternal grandparents in a savings account. And I think it sat in the savings account for about three months before I spent it. I didn't receive any financial counseling. But maybe these kids, if they receive the financial counseling, if they understand the virtues of long term investing, maybe at least some of them will stick with it. And if they do and they become lifelong savers and investors, I mean, the payoff is huge. How great would it be if we could get every young adult in America interest in the financial markets and saving regularly from an early age? I mean, think about the, not only the reduction in poverty at a later age, but also the sense of financial security that people would have throughout their lives. We know that money doesn't always buy happiness, but the one way money is shorted by happiness is if we don't spend it, we don't spend money and we leave it in the bank. And we have that sense of financial security that money in the bank can bring that can greatly boost our happiness. And that, I think is what I would wish more than anything for these kids.
- [07:56]
Co-Host
Yeah, so and 100% agree with you that, you know, when you think about saving, I mean, you know as well as I do that sooner you save, the better. I mean, a lot of people get to their 40s and 50s, even 60s with very little or even no savings. And if we can get people starting earlier, it makes such a difference. I mean, rule of 72, if you get roughly a 7% rate of return in 10 years, it's going to double. Every 10 years it's going to double. That's without adding extra money. But you add extra money, it can grow exponentially. And you know, you start saving in your 50s, it's a lot different than if you start saving in your 20s as to what your final savings will be going into retirement.
- [08:38]
Jonathan Clements
No, you're absolutely right. But the key is to get those savings habits set early. With my kids, you know, I made huge efforts to get them started. As investors know, I opened financial accounts for them not just to pay for college, but also to help them with their first house down payment. I funded Roth IRAs for them and so on and so on. And you know, you know, because they knew that, you know, I probably, you know, disinherit them if they didn't. They all, they, they all became good savers and investors. And today, you know, in their 30s, they're, you know, they don't have enough to retire, but they are, you know, financially comfortable. They, they, they understand the virtues of frugality, they understand the virtues of long term investing. But not everybody, you know, has the good fortune, maybe the mixed fortune, but the good fortune to have a parent who is a, you know, Wall Street Journal reporter. A lot of people grow up in households where money simply isn't discussed in this way. I mean, the stock market is an alien being. And so if we can get that as part of the conversation early on, has the potential to transform lives.
- [09:44]
Host
And one thing I wanted to point out was the fact that this isn't just any old research study. This is being done by the J. PAL North America center, which is part of mit. So it's a randomized controlled trial to measure the impacts of grants like this and to evaluate whether they're an effective tool to help young adults to see whether or not this makes a difference, if it helps these folks longer term. So will they be followed throughout their lives to see what happens, you know, 10, 20 years from now?
- [10:13]
Jonathan Clements
I don't know how far forward they're going to take the study, but I know certainly they're going to be following them in the short term and seeing what, you know, the money gets spent and so on. And I would imagine that the design of the program will change over the top over time. I certainly hope it will as they have learnings from, you know, this initial crop of kids who are part of it. And, you know, who knows, maybe, maybe this is not the way to go, but I have have an inkling that maybe if you really take kids and don't just, you know, give them, you know, a personal finance class in high school, if you actually take them and help them get invested in the financial markets with real money and they get to see how that works, perhaps, you know, the lessons will really sink in. One of the things that we know about, you know, teaching kids about money is that the knowledge tends to degrade very quickly. You know, if you take a personal finance class, within 18 months to two years, most of it is forgotten. Instead, what they talk about is having, just in time, financial education, you know, giving people, you know, lessons on the different aspects of having a mortgage when they're taking out a mortgage so that the information is immediately relevant. So in this case, the information they get will be immediately relevant. And with any luck, you know, that will mean that it sticks and that they continue with it. You know, I have, I. I'm not, you know, I'm not here in La la land. I know that some significant portion of the kids will cash out the money, you know, just. Just as I did with the savings account from my grandparents. But if we get half the kids to stick with it and then they start and some of them add to those accounts every time, that would be a huge win.
- [11:57]
Co-Host
Yeah, I think you're right. I think education is great and critical, but education with the money in the account, that actually makes it real. If you just give money without the education, we know, that's pretty much doomed. So I think the combination, I mean, I go back myself, I was of all things, a sociology major in college, and I graduated, unsure what to do, and I decided to go into accounting and finance. I took my accounting courses at night and I was actually working as an accounting clerk with a company. And the stuff I learned the night before, I was applying the next day, and boy, what a difference for me it made in that Education or the.
- [12:44]
Jonathan Clements
Notion of risk tolerance, which is a notion even at this late stage, I find fascinating. There are these quizzes you can take to assess your risk tolerance and so on. There's the old stupid would you skydive question, as if that is relevant to how much stock market risk you're willing to take. But we know that the best way to learn about your risk tolerance is to live through a bear market. That's when you'll know. And right now, I think a lot of people are discovering what their risk tolerance is for the first time. It's easy to be big and brave when the market is up. It's a lot harder when we get these wild swings in share prices. It is real life. That is the best teacher. Yeah, but it's still the best teacher.
- [13:28]
Co-Host
Yeah. And we really, we haven't had that much volatility in the past decade or more. So I think people are getting educated right now. So let's talk about the John C. Bogle center for Financial Literacy. They're taking donations on behalf of your initiative. So let's talk about that.
- [13:46]
Jonathan Clements
As I said, all the hard work on this was done by various people involved with the, the Bogle center for Financial Literacy. You know, I had some involvement with the book. I have had no involvement with the technicalities of how this program was put together. But yes, you know, if you have a donor advised fund, you know, this is a great way to use part of the money that you've accumulated there. You can do direct channel contributions. One of the best ways for any older listeners is to do a qualified charitable distribution from your IRA that's available to people who are 70 and a half and older. That way you actually essentially ensure that your contribution is tax deductible. Unfortunately for a lot of people these days, given that the standard deduction is so high, their contributions are not going to be tax deductible. But with a qualified charitable distribution from your ira, it is effectively tax deductible.
- [14:39]
Host
Fantastic. And then of course, the other way to contribute to the Getting Going On Savings initiative is to get a copy of the brand new book, the Best of Jonathan Clements classic columns on money and Life. And it's available on Amazon in paperback for $21.99. Or you can get the Kindle copy, which is $9.99. And for listeners to youo Money, you, Wealth and viewers to youo Money, you, Wealth. Right now, if you are a Kindle user, we have 100 copies of Jonathan Clement's new book and it will be available to the first 100 people to email infoorefinancial.com that's inf. Purefinancial.com we will send you the Kindle copy of this book. And those 100 copies of the book that are going out will actually help to fund one of those $1,000 Roth contributions for IRAs for low income family young adults who are taking part in this initiative. So email infourfinancial.com if you would like a copy of the Best of Jonathan Clements Yours free from your money, you wealth to support the Jonathan Clements Getting Going on Savings initiative. So Jonathan, one more thing while we have the opportunity to talk about it. You and I have talked about the fact that cancer support raising, awareness and advocacy is something that's near and dear to my heart. So I'd like to do a little bit of awareness raising for those who are wondering, how does a healthy, active, 62 year old non smoker end up living with stage four lung cancer?
- [16:04]
Jonathan Clements
Well, it was a little bit of a surprise. In fact, it was almost exactly a year ago that I discovered that I was a little unsteady on my feet. And you know, I thought that I might have some sort of sinus infection. You know, it's allergy season. You know, maybe that was the reason. Maybe I had some blockage in my ears. And this went on for five or six days and eventually I, I wandered into an urgent care clinic. Within 12 hours I was in hospital. And you know, after a whole bunch of testing, they discovered that, you know, I had a tumor growing in my lungs and I also had lesions on my brain. That was the reason that the imbalance that I was feeling and all of this was the result of a defective gene. I have a defective gene that caused the lung cancer. For those who are inclined to put stuff into Google, it's called EGFR, Exon20. It's relatively obscure among the genetic defects causing cancer. I think There are only 3,500 people who are diagnosed with this each year in the U.S. but what it means is one, because it's a defective gene, this is not going to affect my kids, it's not going to affect my siblings. And in fact, in the case of my defective gene, the people who are most likely to get it are women and people of Asian origin. So, you know, it's the fact that I ended up with it might seem a little strange, but just shows how random it is. And I think the warnings to people who are listening to this is, you know, anybody can get something like this. There is nothing I know of that I did that warranted, you know, getting this, this particular version of cancer. In fact, there, there's very little history of cancer in my family. Just, this just came out of the blue.
- [18:02]
Co-Host
Well, Jonathan, we really appreciate the time you've given us this. This has been amazing. You are looking good my friend. I would like to have this conversation a year from now and we'll see how this is going because you're an inspiration to all of us. So again, thanks for joining us.
- [18:19]
Host
You're here.
- [18:20]
Jonathan Clements
I appreciate you having me on. It's been fun. Thank you.
- [18:23]
Host
Thank you very much. That is Jonathan Clements, former Wall Street Journal personal finance columnist. You can find out more about him@humbledollar.com and of course you can contribute to the Getting going on Savings Jonathan Clements brand new initiative by either getting yourself a copy of his book, making a donation through the John C. Bogle center for Financial Literacy, and of course you can also email infourfinancial.com to get a copy of of the book on Kindle. Jonathan Clements, thank you so much.
- [18:51]
Jonathan Clements
Thank you.
- [18:52]
Host
Pure Financial Advisors is a registered investment advisor. This show does not intend to provide personalized investment advice through this podcast and does not represent that the securities or services discussed are suitable for any investor. As rules and regulations change, podcast content may become outdated. Investors are advised not to rely on any information contained in the podcast in the process of making a full and informed investment decision. Jonathan Clement's views and opinions are solely his own. See his bio for more information about him and his professional designations. Neither Pure Financial Advisors nor Jonathan Clements are affiliated or endorsed by the Internal Revenue Service or affiliated with the United States Government or any other governmental agency. This content is provided for informational purposes only pursuant to IRS Circular 230. It is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market or recommend any tax plan or arrangement. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation. The information contained within this presentation is based on current tax rules and policies and is subject to change in the future. Pure Financial Advisors, LLC is not affiliated with or endorsed by any nonprofit organizations.