Miracles Not Part of a Realistic Financial Plan

This is the season of Hanukkah. It is a celebration by the Jews of a miracle that occurred between the time of the Old and New Testaments. The Greeks held Jerusalem and occupied and desecrated the Temple. Jewish resistance fighters rose up and took it back.
 
The miracle occurred after the victory when they were rededicating the temple. They wanted to light the temple lamps for eight days. Problem was, they only had enough oil for one day. They lit it anyway and the Miracle began: two days, three days, five days, eight days…the lamps lasted.
 
People of faith learn to understand the power, the reality, and the truth of miracles. However, they also learn that miracles are not something to expect, not something to demand, and they are certainly not the norm. (Cowboys football fans learn this as well.)
 
When we begin depending on miracles, expecting the unexpected just because of our wishes, it becomes dangerous.
 
Take a couple starting retirement. They have a nice nest-egg from their 401(k) plans, IRAs, and whatnot. I might look at the total they have saved up and let them know that a reasonable monthly income stream that their investments can produce with only a small risk of the money running out is around $2000 per month. “$2000 is not enough, we are counting on drawing $4000 out each month,” they reply. Well, I’ll admit that there are good arguments by very wise and prudent investment professionals that might calculate a slightly higher sustainable withdrawal rate…but not double. Not anywhere near double. “We’ll just have to hope it lasts,” is a common reply. But what are they hoping for?
 
I knew a young couple that had calculated an exponential growth in their business. They figured their sales would double. Every month. The details are a bit complicated, but it assumed that their initial success in getting paid referrals would continue forever, that whenever they went to refill an order, all of the product would have been be used and the customers left wanting for more. As a result, they would be earning well over $1 million annually within just a couple years: And they were starting to make life-plans based on this.
 
What they needed was a miracle. What they got was competition that forced them out of many businesses, unanticipated malfunctions and thefts, a lot of product past its expiration date, and a cold dose of reality.
 
Many people, purposely or through their actions indicate that they expect reality to stand aside and allow them to pass unscathed. Hoping for a one-in-a-thousand chance to come through is fine if it is your only course of action.  But more often than not people who are relying on miracles reach that point because of greed, laziness, or lack of planning. Not because they don’t have a choice.
 
I do believe in miracles…both the old that we celebrate this time of year and the new ones we experience. I just don’t think that they have a place in your financial plan.
 
This article was published under the title "Plan Shouldn't rely on miracles" in the Wichita Falls Times Record News on December 16, 2012.