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The American Dream Is Not Dead
But It May Be Harder To Achieve Today
By David Peckenpaugh
Learn more about David Peckenpaugh by visiting his bio page.
It has become more fashionable of late to say that you can’t get a square deal anymore in the United States. Whether from the political left or right, the message seems to be the same. If you work hard, play by the rules, pay your taxes, live within your means, invest for the future – in other words if you do everything right – you still may not be able to achieve the American dream.
The left likes to blame the one percenters. The right seems to suggest that somehow the entire system is rigged. Their message is that the odds are stacked against you, so why even try? The political candidates say, in so many words, vote for me and my party and we’ll fix it for you. We’ll give you back the dream. But do you really trust the government with your financial future?
The other element to this theme is that somehow Wall Street and big business are the problem. Some people like to create a contrast between Wall Street and Main Street, the haves and the have-nots. They seem to say: if you are from Main Street you can no longer trust Wall Street, or anyone in the investment business for that matter.
Owning a home no longer seems to be a key part of the dream following the collapse in prices experienced during the financial crisis. The value of a college education has been challenged by some, as the costs seem to exceed the benefits and the level of student loan debt is staggering. It seems unlikely that much of it can be repaid. Many people no longer believe that they can trust the stock market to reach their financial goals. With interest rates so low, savings accounts and bond investments aren’t the answer.
I will be the first to admit that achieving the American Dream is now more complex. It may require you to take more risk than it has in the past. Yet, I am not willing to concede that the dream is dead. It may not be easy, but then again I don’t believe it ever was easy. But is it possible? Absolutely yes. Over the years we have helped many clients put a strategy in place to help them achieve their goals. Almost 40 years ago I met a man who lived this dream about as well as any I have seen. I’d like to tell you his story.
How Do You Define The American Dream?
To me, the American Dream is a vision for the future. For most people, this vision involves having sufficient resources to live their desired lifestyle. It also means that they have the opportunity to build a financial foundation that will meet their future needs and provide for their loved ones. For most people, the American Dream is about their family.
When I listen to people talk about the future they want to live, while each situation is different, it usually involves many of these elements. They want to:
- Be completely debt-free.
- To have a comfortable lifestyle including a nice primary home and possibly a vacation home.
- To have a substantial investment portfolio that will comfortably fund their future needs.
- To be healthy and live without worries about the future.
- To be able to help support children, grandchildren and even great grandchildren’s major financial life events like college, weddings and first-home purchases.
- To ensure that their wealth passes to the ones they love and is protected from the situations that might cause their wealth to go to other sources.
- To ensure that all of their major assets are properly insured.
- To see that the results from their hard work, discipline and focus were worth the effort and that they succeeded in what they set out to achieve as a young family.
For many clients, these are the goals they want to realize and for them, having the freedom and opportunities to do so is the American Dream.
A True Story
I mentioned a moment ago that I know a man whom I believe realized the American Dream. I would like to briefly tell you about him.
He was orphaned at a very young age in Massachusetts, in the early part of the last century. He grew up in foster homes. The town librarian where he lived, a woman named Miriam Putnam, took a particular interest in him. She fostered in this boy a life-long love of reading and learning. He was quite fascinated with aviation and loved books about pilots, flying and airplanes.
After he graduated from high school, he determined to make a life for himself in the aviation business. So with only 68 cents in his pocket, he travelled from the East Coast to California where he applied for a job as a sheet metal worker in the Douglas Aircraft Plant. He worked hard and learned a lot.
During the second world war, he trained pilots for the Army Air Corps. He met a beautiful young woman at a dance sponsored by Ohio State University. After the war, he returned to Ohio and they married. After graduation from college, he worked in her father’s business, the Miller Engine Company. From there he became a civilian employee at Wright Patterson Air Force base and rose through the ranks.
After some time, he became the Chief Contracting Officer on the high-profile F111 project. As it turns out, the decision made by the secretary of defense to award General Dynamics this contract, rather than Boeing, would be a cause of some very real turmoil in his life. With other colleagues, he was questioned incessantly by Congress who wanted to know specific details behind this decision.
This withering questioning sent one of his colleagues to the hospital and caused another to have a nervous breakdown. But not this man. He had already faced much of the adversity that life can throw at people, having been orphaned and penniless as a boy. He answered their questions, explained his reasoning and then got on with the project.
This man went on to purchase a home and raise two wonderful children. They each had children and grandchildren in whom he took great delight. He also loved his dog Charlie. He was married to the same woman for 62 years.
By the later years of his life, he was debt-free and healthy. He skied well into his eighties and loved wood-working and being outdoors. He also had a very nice-sized portfolio later in his life after many years of working, saving and living within his means.
In turn he was able to pass along funds to the ones he loved to help them achieve their dreams in life. This included a gift he made at the birth of each of his six great-grandchildren, to be invested for their future as a “nest-egg” for them.
You might wonder how I know so much about this man. You see, his name is Warner Wilson and he is my wife’s father. Just recently, he passed away at 93 years of age. He lived a long, full and rich life and was a blessing to all who knew him. You were a lucky person if you got to call Warner your friend.
Is This Possible Today?
In case you were wondering, Warner achieved his financial goals by being disciplined in his spending and by investing. He leveraged Wall Street in the right way. He was willing to take certain risks and unwilling to take others. But underneath it all, he possessed a confidence that was based upon the knowledge he attained by in-depth study. That confidence guided his decisions. He never gave up on his goals.
By the time I began to help him with his financial affairs, I could see that he had already made many wise decisions and that those decisions were paying off for him. But many people feel today that this situation – the self-made man or woman – is no longer viable. I have a different perspective.
The Myth Of The Boot-Strapping Rugged Individualist
During Warner’s life time, the idea of boot-strapping was quite popular. If you had a strong work ethic and were willing to take chances, you could do a lot of things on your own. For instance, one of his foster parents taught him that he needed to begin to save for his retirement rather than counting on the promises of a new program that FDR was introducing called Social Security.
Today you still need a strong work ethic and the discipline to save and invest. But risk-taking has changed quite a lot. Let me explain.
A person trying to realize 7.5% annualized returns today has to take nearly four times the risk they would have taken 20 years ago. The complexity of potential investments has increased greatly and there does seem to be a heightened degree of uncertainty in the world today. This means you have to be much smarter in how to structure an investment portfolio.
This is one of the reasons that, at Whitnell, we’ve established an investment committee. Our committee looks carefully at each investment we make to be certain that it is appropriate for each client’s situation, goals and available resources. I believe investors today must be smarter and more disciplined than at any other time.
This is what our clients count on us to do for them. As Whitnell’s Chief Investment Officer, I take pride in the way our investment advice aligns with our clients’ goals and values.
The other factor that can swing the odds in your favor, if you want to achieve the American Dream, is to start younger. Many people wait until too late in life to start seriously saving and setting aside money for later. My colleague Craig Janus wrote a great article about the impact of starting young.
If you are a parent or grandparent who wants to help your loved ones secure a slice of the American Dream, I encourage you to take a few steps:
- Talk about the values that have allowed you to achieve your dreams.
- Highlight the importance of saving and investing for the future.
- Establish some “seed” accounts for your loved ones to get them started.
- Connect them with one of the members of the Whitnell team so they can start the financial planning process.
While Warner was able to achieve his dreams mostly on his own, he probably could have benefited from some expert advice along the way. That is certainly true for most families today. The systems and processes have become too complex. Take taxation for instance, just one key area to building wealth. The federal and state tax codes in this country are so complex that the average person simply cannot navigate them.
This is why you need a team and the ones you love will also need a team. When I think of the situations of families we serve at Whitnell, I’m reminded of the importance of team work. We serve as our clients’ financial quarterbacks. But we also work with CPAs, estate attorneys and insurance specialists. It takes a team of experts today to help the American Dream come true.
The decisions that my father-in-law made many years ago allowed him and his family to have a certain peace of mind. That is the primary focus and goal that we have for our clients today. If you don’t feel that peace of mind, for you and the ones you love, let’s have a conversation.
The information contained in this article is provided for informational purposes only. No illustration or content in it should be construed as a substitute for informed professional tax, legal, and/or financial advice.