The musings of a physician who served the community for over six decades
367 Topics
Downtown A discussion about downtown area in Philadelphia and connections from today with its historical past.
West of Broad A collection of articles about the area west of Broad Street, Philadelphia, Pennsylvania.
Delaware (State of) Originally the "lower counties" of Pennsylvania, and thus one of three Quaker colonies founded by William Penn, Delaware has developed its own set of traditions and history.
Religious Philadelphia William Penn wanted a colony with religious freedom. A considerable number, if not the majority, of American religious denominations were founded in this city. The main misconception about religious Philadelphia is that it is Quaker-dominated. But the broader misconception is that it is not Quaker-dominated.
Particular Sights to See:Center City Taxi drivers tell tourists that Center City is a "shining city on a hill". During the Industrial Era, the city almost urbanized out to the county line, and then retreated. Right now, the urban center is surrounded by a semi-deserted ring of former factories.
Philadelphia's Middle Urban Ring Philadelphia grew rapidly for seventy years after the Civil War, then gradually lost population. Skyscrapers drain population upwards, suburbs beckon outwards. The result: a ring around center city, mixed prosperous and dilapidated. Future in doubt.
Historical Motor Excursion North of Philadelphia The narrow waist of New Jersey was the upper border of William Penn's vast land holdings, and the outer edge of Quaker influence. In 1776-77, Lord Howe made this strip the main highway of his attempt to subjugate the Colonies.
Land Tour Around Delaware Bay Start in Philadelphia, take two days to tour around Delaware Bay. Down the New Jersey side to Cape May, ferry over to Lewes, tour up to Dover and New Castle, visit Winterthur, Longwood Gardens, Brandywine Battlefield and art museum, then back to Philadelphia. Try it!
Tourist Trips Around Philadelphia and the Quaker Colonies The states of Pennsylvania, Delaware, and southern New Jersey all belonged to William Penn the Quaker. He was the largest private landholder in American history. Using explicit directions, comprehensive touring of the Quaker Colonies takes seven full days. Local residents would need a couple dozen one-day trips to get up to speed.
Touring Philadelphia's Western Regions Philadelpia County had two hundred farms in 1950, but is now thickly settled in all directions. Western regions along the Schuylkill are still spread out somewhat; with many historic estates.
Up the King's High Way New Jersey has a narrow waistline, with New York harbor at one end, and Delaware Bay on the other. Traffic and history travelled the Kings Highway along this path between New York and Philadelphia.
Arch Street: from Sixth to Second When the large meeting house at Fourth and Arch was built, many Quakers moved their houses to the area. At that time, "North of Market" implied the Quaker region of town.
Up Market Street to Sixth and Walnut Millions of eye patients have been asked to read the passage from Franklin's autobiography, "I walked up Market Street, etc." which is commonly printed on eye-test cards. Here's your chance to do it.
Sixth and Walnut over to Broad and Sansom In 1751, the Pennsylvania Hospital at 8th and Spruce was 'way out in the country. Now it is in the center of a city, but the area still remains dominated by medical institutions.
Montgomery and Bucks Counties The Philadelphia metropolitan region has five Pennsylvania counties, four New Jersey counties, one northern county in the state of Delaware. Here are the four Pennsylvania suburban ones.
Northern Overland Escape Path of the Philadelphia Tories 1 of 1 (16) Grievances provoking the American Revolutionary War left many Philadelphians unprovoked. Loyalists often fled to Canada, especially Kingston, Ontario. Decades later the flow of dissidents reversed, Canadian anti-royalists taking refuge south of the border.
City Hall to Chestnut Hill There are lots of ways to go from City Hall to Chestnut Hill, including the train from Suburban Station, or from 11th and Market. This tour imagines your driving your car out the Ben Franklin Parkway to Kelly Drive, and then up the Wissahickon.
Philadelphia Reflections is a history of the area around Philadelphia, PA
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Philadelphia Revelations
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George R. Fisher, III, M.D.
Obituary
George R. Fisher, III, M.D.
Age: 97 of Philadelphia, formerly of Haddonfield
Dr. George Ross Fisher of Philadelphia died on March 9, 2023, surrounded by his loving family.
Born in 1925 in Erie, Pennsylvania, to two teachers, George and Margaret Fisher, he grew up in Pittsburgh, later attending The Lawrenceville School and Yale University (graduating early because of the war). He was very proud of the fact that he was the only person who ever graduated from Yale with a Bachelor of Science in English Literature. He attended Columbia University’s College of Physicians and Surgeons where he met the love of his life, fellow medical student, and future renowned Philadelphia radiologist Mary Stuart Blakely. While dating, they entertained themselves by dressing up in evening attire and crashing fancy Manhattan weddings. They married in 1950 and were each other’s true loves, mutual admirers, and life partners until Mary Stuart passed away in 2006. A Columbia faculty member wrote of him, “This young man’s personality is way off the beaten track, and cannot be evaluated by the customary methods.”
After training at the Pennsylvania Hospital in Philadelphia where he was Chief Resident in Medicine, and spending a year at the NIH, he opened a practice in Endocrinology on Spruce Street where he practiced for sixty years. He also consulted regularly for the employees of Strawbridge and Clothier as well as the Hospital for the Mentally Retarded at Stockley, Delaware. He was beloved by his patients, his guiding philosophy being the adage, “Listen to your patient – he’s telling you his diagnosis.” His patients also told him their stories which gave him an education in all things Philadelphia, the city he passionately loved and which he went on to chronicle in this online blog. Many of these blogs were adapted into a history-oriented tour book, Philadelphia Revelations: Twenty Tours of the Delaware Valley.
He was a true Renaissance Man, interested in everything and everyone, remembering everything he read or heard in complete detail, and endowed with a penetrating intellect which cut to the heart of whatever was being discussed, whether it be medicine, history, literature, economics, investments, politics, science or even lawn care for his home in Haddonfield, NJ where he and his wife raised their four children. He was an “early adopter.” Memories of his children from the 1960s include being taken to visit his colleagues working on the UNIVAC computer at Penn; the air-mail version of the London Economist on the dining room table; and his work on developing a proprietary medical office software using Fortran. His dedication to patients and to his profession extended to his many years representing Pennsylvania to the American Medical Association.
After retiring from his practice in 2003, he started his pioneering “just-in-time” Ross & Perry publishing company, which printed more than 300 new and reprint titles, ranging from Flight Manual for the SR-71 Blackbird Spy Plane (his best seller!) to Terse Verse, a collection of a hundred mostly humorous haikus. He authored four books. In 2013 at age 88, he ran as a Republican for New Jersey Assemblyman for the 6th district (he lost).
A gregarious extrovert, he loved meeting his fellow Philadelphians well into his nineties at the Shakespeare Society, the Global Interdependence Center, the College of Physicians, the Right Angle Club, the Union League, the Haddonfield 65 Club, and the Franklin Inn. He faithfully attended Quaker Meeting in Haddonfield NJ for over 60 years. Later in life he was fortunate to be joined in his life, travels, and adventures by his dear friend Dr. Janice Gordon.
He passed away peacefully, held in the Light and surrounded by his family as they sang to him and read aloud the love letters that he and his wife penned throughout their courtship. In addition to his children – George, Miriam, Margaret, and Stuart – he leaves his three children-in-law, eight grandchildren, three great-grandchildren, and his younger brother, John.
A memorial service, followed by a reception, will be held at the Friends Meeting in Haddonfield New Jersey on April 1 at one in the afternoon. Memorial contributions may be sent to Haddonfield Friends Meeting, 47 Friends Avenue, Haddonfield, NJ 08033.
Recall for a moment, the two Republican idols, economists Milton Friedman and Arthur Laffer. Friedman won a Nobel Prize by observing that inflation is "always and everywhere" caused by too much money in circulation. Thus, a potential remedy for inflation was suggested: central banks (i.e. the Federal Reserve) can restrain that by raising short-term interest rates at the first sign of inflation. It certainly seemed to work; by doing so, Federal Reserve Chairman Alan Greenspan was able to avoid inflation for eighteen years.
Arthur Laffer offered a second idea for Presidents to test. Laffer maintained that if taxes were too high, you would paradoxically collect more taxes by lowering tax rates. The younger George Bush took him up on it, reasoning that if tax collections did rise after tax rates were cut, it would be proof that taxes had been too high all along. The appeal to tax technicians in the Treasury Department was that, by observing tax collections, all changes in tax rates up or down might lead to the identification of the most efficient possible tax rates. So, although President Reagan had felt warm about Laffer, while the senior George Bush rudely dismissed such ideas, George W. was eager to test his gut feeling that tax rates were too high. Each year during his presidency, George W cut taxes. Gratifyingly, each year total tax revenue (adjusted for GDP) increased. Eight years are not the same as eighteen, but it certainly looks as though W proved that taxes had indeed been too high. If some future Congress has the courage to raise taxes, and then tax collections go down, the Bush legacy would seem pretty secure. Two iron laws of national economics would be enshrined: The tax rate should be whatever maximizes tax revenue. Interest rates should be whatever restrains inflation. Live with it.
True, none of this insight casts much light on how to cope with wars and depressions. Raising interest rates seemingly defeats inflation, but lowering interest rates has not always cured recessions. Furthermore, the fiscal and monetary direction of the country may have to be altered when we face war, famine, weather disasters, and demographic shifts. But at least we seem to know how to determine the optimum level of (overnight, interbank) interest rates and taxes, so have a compass for return to those levels after detours around uncertain events. Maybe economists, even Voodoo economists, can suggest some other principles which politicians can test in the real economy. And political science can then start to have some true scientific method in it; propose a theory, test it, revise the theory and test it again.
But there's one more thing that Art Laffer didn't understand when he was drawing his famous curve on the back of a paper napkin. One of the main reasons tax collections rose spectacularly when George Bush finally had the nerve to try lowering taxes -- was that the underground, tax-evading, economy was a great deal larger than anyone had suspected. Laffer made crooks into honest people.
In 1789 while arguing for the establishment of a National Bank, Alexander Hamilton made one of the most famous counter-intuitive assertions of his controversial career. "A national debt, if it is not excessive, will be to us a national blessing".
The very suggestion of such an idea enraged Thomas Jefferson and his Calvinist adviser, Albert Gallatin. James Madison, ever the political schemer, immediately recognized a new bargaining chip in his move to relocate the national capital to Virginia. Political parties were promptly invented to mobilize votes on both sides, and the national bank remained a divisive issue for half a century afterward. Neither a borrower nor a lender is; how could anyone, then or now, say the debt was a blessing?
Indeed, that's evidently how the leaders of Singapore, Malaysia, Australia, China, and several other prosperous states still feel about it. While not eliminating taxes, these countries accumulated surpluses and created sovereign-wealth funds. Having paid off the national debt, and still finding a national surplus, what else are you going to do with it?
Gallatin
These countries hired investment advisers to buy stock for the funds, evidently feeling American stocks were the safest bet; it's hard to criticize that conclusion. In the present credit crunch, they are investing five and ten billion per transaction in the equity of America's premier investment banks. So far, they only acquire 5 or 10 percent ownership, but then the credit crisis may not be over yet. For them eventually to acquire 51% controlling ownership somewhere is not at all inconceivable. An ominous sign of where that might lead is found in our own captive pension funds. The state employee pension funds have quickly become captive to unions with their own agenda, with the result that the prosperity of the companies in the portfolio could be sacrificed to the benefit of interest groups. And yet, it wouldn't be so hard for America to do the same thing. If Congress had adopted the Bush proposal of three years ago to create an investment fund for Social Security, we ourselves would soon have what amounts to the largest sovereign wealth fund in the world. Could this be a solution to the weakness of the Federal Reserve in controlling the currency with bank debt? Could we somehow create a common world currency based on a common fund of sovereign wealth funds and with that, create a new definition of wealth based on equity rather than debt? The technical answer to the potential corruption issue would probably lie in stripping the voting power from such shares and then submerging them in a world index fund. The United Nations sound of it nevertheless still boggles the mind. Are people who oppose an equity-based world currency going to be forced like Gallatin to eat their own dusty words when the reality of debt-based currency sinks in? How many of the ambassadors of ideas about such suggestions, both pro, and con, would eventually surface as sneaky connivers like Madison, with a hidden side-agenda? After all, in a democracy, everyone is expected to marshal every argument, weak or strong, for his own self-interest.
Federal Reserve
The loss of banks as a tool for the Federal Reserve would undermine the way the Fed does its job. A deeper reality is that many governments really don't want the job to be done perfectly and independently. The European common currency, the Euro, is already irking the French and other national governments who sometimes hanker to inflate away their debts or deflate their way out of the subsequent inflation. A perfectly automatic currency regulation threatens an important ingredient of the sovereignty of nations, thus the whole concept of nationhood. Somehow, the desire of markets to enhance wealth must come to terms with the desire of governments to re-elect themselves.
It will take more than the present crisis to provide credibility for ideas as wild as substituting equity-based currency for the present debt-based one. Unless someone devises a better-sounding scheme, it seems more likely that financial Jacobins will propose sacrificing the unwelcome intruder. Derivatives, whatever that means, started this mess. Maybe we should make them illegal.
For the moment, the broadly unanticipated behavior of world bond markets remains a conundrum.
Alan Greenspan, Feb.16, 2005
In early August, 2007 the stock market was sailing along nicely. A great many people were on vacation. September is traditionally the month for severe market reversals, but this year in early August there was not much sign of an impending jolt. The stock market's Dow Jones Industrial Average had reached an all-time peak over 14,000. Long term interest rates were abnormally low, it is true, but that anomaly had gone on uneventfully for years; anyway, even Alan Greenspan said he didn't understand it. Suddenly, the Dow Jones Industrial Average dropped 400 points in ten minutes, on heavy volume. It takes a big volume of sales to move the market that much, that quickly. Somebody knows something, but I don't know what it is, was the thought at ten thousand trading desks watching computer screens, worldwide. A quick check with networked friends showed that nobody else seemed to know what was stirring things up, either. In retrospect, we still don't know who did the first heavy selling, but it soon spread to hedge funds. Hedge funds have a lot of money, and vast banks of computers to do their selling. When the computers of heavy traders detect sudden selling volume, they are programmed to sell, too. Don't ask questions; somebody must know something, so get out, get out the door without a backward look. Not only was someone selling big, but probably selling short. The commentators on cable TV started jumping up and down, talking all at once.
Graph: Prices of 10-yr Bonds
About a day later, someone made a shrewd guess. The problem seemed to center on those low-interest rates for long-term bonds because those low rates were abruptly going higher. In the language of the market, the "spread" between short-term and long term rates was widening or at least returning to normal. Not knowing why the spread had narrowed, no one knew why it had stopped being narrow; but it was nevertheless a clue where the problem might be centered. About a month later, rising interest rates seemed even more central when clues to many other suggested culprits had proved false. The selling concentrated on blue-chip stocks, but there was nothing the matter with blue chips. They had been sold because other markets were frozen with fear; if someone needed cash, there was nothing else the market would buy. The "quants", the traders who programmed computers to react without thinking, had merely reacted in sports jargon, to a 'head fake' in the blue chips. Meanwhile, interest rates continued to spread apart; someone big was selling a lot of long-term bonds, and was really serious about it.
Alan Greenspan
Come to think of it, if long-term interest rates were returning to normal because someone was selling bonds, then, of course, they had been too low for years because someone else was buying too many bonds. Maybe the Middle East oil barons had a hand in it, but more likely it was the Chinese government, who were known to hold a trillion dollars of U.S. Treasury bonds. Some years ago, Chairman Alan Greenspan of the Federal Reserve worried out loud that by historical standards, public markets [in this case, the Chinese government] were agreeing to accept interest rates for long term debt that seemed much too low for the risks undertaken in loaning it. Worse still, the reasons were unclear. Greenspan called it -- a conundrum. Home mortgages are long term debt, and here's maybe another clue. For political reasons, tax laws had effectively made mortgages the cheapest way to borrow. For another, the reverse mortgage, or home equity loan innovation, transformed home mortgages into the equivalent of ATM machines. A great many young people who might have been better off renting a place to live were persuaded that owning a house was essential to improving 18% credit card interest into 6% mortgages, and tax-sheltered 6% at that. Hidden in this borrowing revolution was the unrecognized temptation to maintain far less owner investment in the house that had been true in the past. It became cheaper to borrow, riskier to loan. American homebuyers were subsidized to borrow, and for whatever reason, Chinese were inclined to lend.
If interest rates go up, the value of bonds with low coupons goes down. Plenty of non-Chinese owned bonds, mainly American banks, and insurance companies. If these bonds had been purchased as long-term investments, there was no sense in selling them, and it was merely annoying that stock market prices for bank and insurance stocks dropped to reflect this lessened value of their holdings. If the banks and insurance companies merely held the bonds to maturity as they had always planned to do, bond values would return to their original price. True, there were rumors that bonds related to California and Florida real estate were in an unsound bubble. But if every one of those bonds became worthless, which was unlikely, it would only amount to $100 billion in losses. That's, of course, a lot of money, but easily absorbed by a big economy. Many of those bonds were insured, and at least half of real estate value is usually recovered in mortgage foreclosure. A lot of people would be inconvenienced by markets frozen with fear, and panic selling of various sorts would make the markets volatile. But this was mainly a liquidity crisis, roughly equivalent to a man with a $20 bill who was temporarily unable to get a candy bar out of a dispensing machine.
Supported by such talk, the stock market went down moderately but steadily. After a year, it was down two thousand points, or perhaps 15%. We seemed likely to have a recession, but periodic recessions are a healthy way to correct irrational exuberance. Most Americans do not own Florida and California real estate, don't use the banks and insurance companies in those regions, and have a reserved opinion about those who do. Somehow, it was overlooked that the very first banks to collapse in this upheaval had been in Germany, France and England.
Benjamin Franklin was able to retire from the printing business at the age of 42. His partners bought him out in eighteen yearly installments. In the Eighteenth century, it was unusual to live past the age of 60, so Ben felt pretty well fixed. Unfortunately for this planning, he lived to be 82, so when he did reach the age of 60 he was forced to look around for postmasterships and other ways to survive, for what proved to be 22 more years.
This is the other side of a coin; on one side is written, "Protect your family in case you die young". On the opposite side is written, "Be careful not to outlive your savings", relying on the old Quaker maxim that the best way to have enough--is to have a little too much. For centuries, life insurance was sold to people who mainly feared the first, commonest, possibility, but never completely addressed the opposite contingency, which was growing steadily commoner. Annuity insurance ordinarily is sold for a fixed number of years, so insurance commissioners ordinarily require what is most probable. Unfortunately, this response shifts the risk of guessing wrong onto the subscribers' shoulders. Since science has unexpectedly lengthened average life expectancy (by thirty years since 1900, or by five years in the last ten), experience rather like Ben Franklin's has become a commonplace, but rather poor business judgment. The business remains solvent only as long as the decision to drop the policy is later than the life expectancy.
Retirement Saving Debt
There may exist insurance policies to address this issue, but few companies offer it. We will briefly describe this sort of policy, in case it becomes more widely available, but it is primarily described here to illustrate the issues to consider. If you can get it for a reasonable price, or if you can get it at all, the outline of the policy would be to set a premium and promise to pay 6% for the rest of your life. Underneath the promise is the reality of paying 6% for eighteen years as a non-taxable return of principal. Following that, you don't need to get a postmastership, you are paid a taxable 6% until you die. Presumably, the insurance company has actuaries to help with the math, so the company makes money if you live less than your life expectancy, and loses money if you live longer. If life expectancy suddenly extends much longer (let's imagine a cure for cancer appears), the insurance company is going to go broke. That's why insurance commissioners are uncomfortable with the concept, even though it is obvious how desirable it might be. So that's why annuity insurance typically states a fixed number of guaranteed years and expects the subscriber to shoulder outlier risk.
Any insurance has an administrative cost, so everyone must consider some non-insurance solution to the whole problem. Therefore, we propose you re-examine the old saw about "never dip into principal". If you don't have enough money, you can't do very much except depending on the government, your family, or your fairy godmother to help you out, although it must be obvious that all Americans would be wise to consider retiring five or ten years later than they hoped. Very likely, the government is going to have a difficult time sustaining even the present tax exemption of retirement funds, medical insurance, and social security. Those are called entitlements, but if the government eventually can't afford them, it won't matter what you call them. If entitlements keep getting extended, we can expect our nation to resemble the ancient Chinese and Indian nations -- able to build palaces in their golden era, but eventually crumbling into a gigantic slum in centuries afterward. So please, if you are able to do it, try to keep gainfully employed for a few extra years. If you do it (and some people can't) you may be able to realize the American Dream.
Inheritance Tax
The traditional American dream was to accumulate enough money to live off the income from it indefinitely, never touching principal, and then exposing the principal to destructive estate taxes after you finally die. Unless you are unusually wealthy, there isn't much left for the next generation after estate and inheritance taxes and expenses. It's a little inefficient to accumulate more than you actually need, but the government gravitates toward the least painful methods of collecting taxes. By confiscating this safety surplus, however, it declares that "Every ship (generation) must sail on its own bottom." And therefore it must acknowledge responsibility for what inheritances ordinarily pay for, like charity and good works. But there remains a quirk to this.
If Ben Franklin's partners had arranged to invest the money until he needed it, they could at least have afforded to finance two or three extra years. After inflation and expenses have eaten away at your retirement income, your principal may not generate enough income to last forever, but it is still big enough to pay for several years of retirement, which may in fact be longer than you are destined to live. Remember two things: 1) a principal sum, big enough to support you indefinitely, must be roughly eighteen times your yearly expenses. If it is only big enough to support you for fifteen years, it will seem too small until you realize you are probably actually going to live, say, five years. And 2) as far as leaving an inheritance to your children is concerned, there is a realistic probability that the government will consume most of the estate before it ever gets to the kids. These fundamental truths are presently obscured by the Federal Reserve artificially forcing interest rates to less than 1%. But if you can just hold out for a few years, it seems entirely likely that interest rates will return to 6% (meaning your principal will once again produce eighteen equal installments). But such a return of interest rates to normal levels will force the government to pay a comparable amount as interest on its bond debts (meaning it will get hungrier to escalate your estate taxes.) This isn't nearly as satisfactory a solution to the life expectancy quandary as retiring five years later than you once expected to, but you can't say we didn't warn you.
And as for what happened to Ben Franklin, you can read his will. He died a very rich man as a result of shrewd investments, later in his life. Ben left eight or nine houses, several thousand acres in several states, a gold-handled cane, and a portrait of the King of France surrounded by hundreds of diamonds. But it would not seem wise for the rest of us to count on accumulating that much new wealth, after attaining the age of sixty. The way things are going, once you attain your life expectancy, everyone should have some non-insurance plan for supporting himself for two or three extra years.
There is scarcely any need to list the uncertainties of planning for retirement. To make a precise number, you would have to know how long you expect to live, how much you need to spend, how much cash flow is assured, how much your stock portfolio will be worth, what the rate of inflation will be, and so forth, and so forth. When you get done listing all the things you have to know, the general tendency is to assume the task is impossible. It's hard, but it isn't impossible if you know a single number: the average growth rate you need to achieve, if you are going to be in exactly the same financial position on your 100th birthday, as you are today. In my own case, the answer is 1.5%. I have arranged my own affairs in such a way that if my stock portfolio maintains a 1.5% growth rate until I reach my 100th birthday, it should be worth the same as it is today, on that happy occasion in the future. So, having the magic number of 1.5%, let's work with it. By the way, that's net, net -- net of inflation , net of taxes.
Inflation is supposed to be targeted by the Federal Reserve at 2% per year. It wouldn't be wise to count on that, but taken at face value, I can still break even if the nominal portfolio growth rate averages 3.5%, a conservative figure net of taxes. Remember however, you have to pay taxes on any taxable investment expenses. If you sell appreciated stock to have cash for portfolio re-balancing, you probably must pay capital gains taxes, if you take a lot of dividend income you will have to pay standard income taxes on it, if you get a new investment advisor who charges a lot you will probably have to pay him extra for his alleged expertise. In other words, if you get careless in your investment choices, you could find it will require an increased average growth rate, possibly one that is impossible to achieve. But that's your problem, which in my case is 1.5% plus actual inflation, plus investment carelessness about advisors and taxes. Or personal carelessness about housing costs, travel, fancy automobiles, or fancy friends. it means I could achieve a more likely growth rate of 4.5% a year, keep it up until I'm a hundred, and still be approximately where I am today. It seems achievable.
In fact, as you grow older it is less important to preserve every bit of your assets for the inheritance tax bite on the day you happen to die; particularly since inheritance taxes can go as high as 50%, and you can tell yourself you are spending fifty-cent dollars. Estate tax issues are not today's topic, however. For retirement planning, you could take the ancient advice to "spend your last dollar on the day you die." To entertain this illusion for a moment, you can see how much extra you could afford to spend, by dividing your assets by your life expectancy. You can consider that your safety net, but many people would have to consider it a reality, so this is the rough calculation. If you can't afford to retire on that amount, you probably can't afford to retire. This last calculation gets pretty inaccurate unless you are within five, or at most ten, years of retirement.
So all you need for scaring yourself, or sinking back into complacency, is to calculate that growth factor. Please remember the assumptions you made, in compiling it. Essentially, you total up a year's expenses and a year's income; and subtract to determine how much you are saving, or drawing down your reserves. It seems best to list all of the expenses and income on scratch paper, since at first you will want to go over the whole list to see if the year you picked was truly representative. The first step is to purify the list of one-time or odd-ball expenses and income. The second step is to pick out the expenses which are truly frivolous, which you would quickly eliminate in an emergency of some sort; what are the core expenses, what is truly frivolous, and what is desirable but expendable in a pinch. On the income side, there are pensions and annuities which assure you of cash flow, no matter what. There may be a job you plan to quit, or a pension which won't start for a few years. These are the tools you can use, but the main thing is to get that number, the amount could easily be saving, or the amount you must draw down your assets. Notice that we are essentially ignoring how much your assets happen to be, disregarding whether they happen to be a lucky high number, or an ominously small one. Your goal is to see how much you are either adding to them or subtracting from them; the purpose is to try to project where that will go in the future. In addition, you might also project the gain in your portfolio, but it would require several years to be certain about that, and for now we can get along without it.
Now, project that net gain (or loss) to your hundredth birthday. You may live longer than that, but it isn't likely; and you might live less than that, but you won't care if there is money left over for your estate. You might use a computer program to do it, but computers work by a process of "iteration", which means doing the same calculation, over and over again. For this simple purpose, it will suffice to do it with a pencil and paper, because the chances are good that you can project some future events which will interrupt the smooth flow of estimating one year's income from investment, and adding it to the running total. You soon get to 100, even using the crudest arithmetic, and you soon arrive at the net annual gain or loss in your portfolio at age 100, assuming the present rate of growth. If you do this for a few years, your projection will get more and more precise. You now take this number and re-calculate it with a differing growth rate of the portfolio. Start with 6%, and calculate up and down, 8%, then 4%, then 10%, then 2%, then 12%, etc. You vary the growth rate in a systematic way, and watch to see what growth rate of your portfolio will leave you at age 100, with exactly what you have, today. That's the magic number you want to get, the gross break-even growth rate. If it's a positive number, it tells you what growth you have to achieve in your portfolio, and if it's a negative number, it tells you how much you could afford to squander, you lucky person, over and above your present standard of living.
But now you have to see what could upset your applecart, like inflation. Our Federal Reserve has an announced target of 2% inflation, per year. If that happens, which I rather doubt, I need to add 2% to my 1.5%, getting a "real" target of 3.5% growth in my portfolio per year. That's an approximation of how much my portfolio has to grow, just to stay where it is. In my opinion it's achievable, but events may prove otherwise. Investments which promise less than 3.5% are for me not likely to seem safe, they are losers. Investments which pay more than 3.5% are likely to generate funds I cannot live to spend, so they will only generate inheritance costs approaching 50%. So in that happy case, I could consider giving some away, to my heirs, or charities, or whatnot. On the other hand, some young fellow who is projected to need a portfolio growth of 20%, had better consider getting an extra job, or cutting down his expenses--because the history of investments shows that 20% is either totally unachievable, or else involves so much risk that you better not gamble on it.
There's one other thing you can do if you are old, or sick. You can divide what you have by the number of years in your life expectancy, and spend it down. The goal is to spend the last dollar on the last day of your life. I hope everyone understands how unlikely you are to pull that stunt off, but sometimes it has to be considered. Somewhat more realistic is to adjust your life expectancy in this calculation, from 100 down to whatever age seems more likely. And maybe you have to reduce your lifestyle. Otherwise, your best salvation is not from an investment advisor, but from a social worker.
Try it out. Estimate your required net portfolio growth rate, and then add in "what if". What if the stock market collapses, what if inflation goes to 25%, what if social security gets reduced or increased, what if you suddenly acquire a new dependent. The older you are, and the longer you accumulate your own personal financial data, the more accurate the calculation will be. But at any age and in almost any financial circumstances, fixing your attention on that single number will be a North Star, to navigate by.
109 Volumes
Philadephia: America's Capital, 1774-1800 The Continental Congress met in Philadelphia from 1774 to 1788. Next, the new republic had its capital here from 1790 to 1800. Thoroughly Quaker Philadelphia was in the center of the founding twenty-five years when, and where, the enduring political institutions of America emerged.
Philadelphia: Decline and Fall (1900-2060) The world's richest industrial city in 1900, was defeated and dejected by 1950. Why? Digby Baltzell blamed it on the Quakers. Others blame the Erie Canal, and Andrew Jackson, or maybe Martin van Buren. Some say the city-county consolidation of 1858. Others blame the unions. We rather favor the decline of family business and the rise of the modern corporation in its place.
Originally the "lower counties" of Pennsylvania, and thus one of three Quaker colonies founded by William Penn, Delaware has developed its own set of traditions and history.
Start in Philadelphia, take two days to tour around Delaware Bay. Down the New Jersey side to Cape May, ferry over to Lewes, tour up to Dover and New Castle, visit Winterthur, Longwood Gardens, Brandywine Battlefield and art museum, then back to Philadelphia. Try it!
Millions of eye patients have been asked to read the passage from Franklin's autobiography, "I walked up Market Street, etc." which is commonly printed on eye-test cards. Here's your chance to do it.
In 1751, the Pennsylvania Hospital at 8th and Spruce was 'way out in the country. Now it is in the center of a city, but the area still remains dominated by medical institutions.
Grievances provoking the American Revolutionary War left many Philadelphians unprovoked. Loyalists often fled to Canada, especially Kingston, Ontario. Decades later the flow of dissidents reversed, Canadian anti-royalists taking refuge south of the border.
