If you live in the Midwest or parts of the South and East coast, you’d have to quite literally be living underground not to have seen, heard or read about the cicada brood X. The insects emerge from underground every 17 years to feed and mate over the final 6 weeks of their life. The anticipation and emergence strike fear in some and excitement and curiosity in others. It got me thinking about the rather random timeframe between cicada visits and what life is like in 17-year windows.
Let’s travel back to the last time the cicadas were here, in the Summer of 2004. I was 18 years old and had just graduated high school. I was in the best shape of my life having just competed in the Kentucky State Track and Field Championship and was on my way to attend Xavier University in the fall. A gallon of gas in June 2004 cost $1.88. The number one song was The Reason by Hoobastank, and you probably listened to it on a car radio, a CD or maybe if you were lucky your brand new iPod Mini. The Lord of the Rings won 11 Oscars that year, but I remember Will Ferrell as Anchorman and Ben Stiller in Dodgeball much better. Every girl I knew at the time engaged in some form of cruel and unusual punishment by going to see The Notebook over and over again – many tears were shed and I still don’t get it. Apparently not much has changed in the sports world over the last 17 years – Phil Mickelson won the 2004 Masters and Tom Brady won the 2004 Super Bowl. George W. Bush was beginning his 2nd term as President. The S&P 500 closed at 1,132.76 on June 1, 2004 (vs. 4,204.11 on May 28, 2021) and the 10-year treasury was yielding 4.71% (vs. 1.58% on May 28, 2021). In 2004, TAAG was celebrating its sweet 16 birthday. Jeannette must have waited until the cicadas of 1987 were gone before founding the company. She and a team of five had office space in Blue Ash in a building they shared with Mercy Health. The business was about a third of the size it is today.
If you’re at or near “financial freedom” age today – I don’t like the word retirement – then you were about 48 years old in 2004, and likely in some of your peak spending years. An investment in global stocks, as represented by the MSCI All Country World Index, would have survived the Great Recession and COVID crash to return 9.16% per year through April 2021. Back then maybe you were focused on putting kids through college, growing your business, or flying across the country for meetings. If you followed a sensible financial plan back then, now you might find yourself in a position to help grandkids with college and enjoy traveling to Michigan or Florida.
Looking back at the past 17 years and thinking about all that has changed in the world and your own personal life can be an interesting, perhaps humbling experience. It’s no doubt an opportunity to reflect and consider what you might learn in the next 17 years. The cicadas spend a literal lifetime underground preparing and planning the perfect time for their “6-week retirement party”. They wait for the opportune time to emerge based on soil temperatures, and they all come out at once to satiate their many predators. Once above ground some succeed in creating a new generation, but most become victims to other wildlife, lawn mowers or excited kids. Fortunately for us, we can control a lot more of the variables than a cicada and increase the probability of successfully reaching our goals.
The world and your life will most certainly look different next time the bugs are out, and your goals may also change. However, developing a plan, will go a long way in determining if you’re in a good position to handle whatever is thrown at you. Here are a few ideas of things you can do now that will pay off over the next cicada cycle and beyond.
- Understand your cash flow. What comes in? Where does it go?
- Document, quantify and monitor your financial goals.
- Save for your financial freedom.
- Save for unexpected or lumpy expenses like healthcare, automotive, and home maintenance.
- Save for other more fun financial goals such as travel, a second home or club membership.
- Pay down debt, especially credit cards, car loans and student loans.
- Understand your risk tolerance.
- Diversify your investments using a systemic and repeatable process.
Next time the brood X cicadas are here will be in 2038. I’ll be 52 years old and will hopefully have 2 kids in college, or something like it. I am planning to have my home paid off and have saved a significant amount toward my own financial freedom. Hopefully, I’ll be recycling some form of this blog post and TAAG will continue to grow and help our clients realize their financial goals – just like the last 33 years. There is no doubt we will need to manage through bear markets and world crisis – maybe an inflationary period, maybe negative impacts of climate change. It’s likely technological improvements from AI, robotics, alternative energy, and biotech will drive economic growth.
It’s impossible to know what will happen and when. However, if you want your financial freedom to last longer than a cicada retirement party a safe bet is to take advantage of a couple cicada cycles worth of compounding returns, and overall good financial decisions to ensure you are set up for success.