Not Waiting To Retire to Live

Written by Peg Downey

Don't wait to be this old to enjoy life. Still, you want to balance your spending with saving for retirement.        

Question: I'm single, age 38, and I have a really good job. I work long hours, but I make enough money to fully fund my 401(k), put $2,000 into an IRA and pay an extra couple hundred bucks a month on my mortgage every year. I've been putting aside 10 percent since I started my first job and I could probably save more. I spend money only on eating out, because I'm too busy working. I don't even do much for vacation because I don't have friends to travel with. I'm hoping all this work will bring me an early retirement so that I can do the things I like. Meanwhile, am I doing all I should?

Answer: NO! Waiting for retirement to do what you like is coming at it backward. It sounds like you have been brought up to focus on earning a good living and saving prudently - excellent traits, by all means. But what about you? The way to really answer your question is to step back and ask what you like about your life and what you want to be different. Money is a tool to accomplish your lifetime goals, your emotional and spiritual goals. Tangibles, like a bank account or a home, may help you approach those goals, but they are probably not ends in their own right.

Wise Quote:
"[The rich] are indeed rather possessed by their money than possessors."
— Robert Burton (1576-1640)
For instance, when you went to purchase your home, you had to decide how much space you wanted and you probably went through a process where you said something like: "I want a garden because I want to be able to grow my own vegetables, I want a garage because I love to tinker with my motorcycle, and there needs to be a good flow in the living areas because I love to entertain." In other words, you wanted a house that facilitated doing what you love to do in life.

It's the same with your investments. You need to have a reason to save. Your life isn't just the future, it is happening right now. Deferring all pleasure for the future isn't much fun.

You sound like the perfect candidate to illustrate that money doesn't buy happiness. Money on its own doesn't do much unless, like Scrooge McDuck, you like playing in piles of gold coins. You may even be earning more than you need. What would it be like to cut back on your hours so you would have time to make friends, and then travel with them?

Chances are you have accumulated significant assets, so you are a good object lesson in the virtue of saving early and regularly. Compare someone who saves a fixed amount each year for 10 years, starting at age 25, and then never saves again. Someone else, who starts saving at age 35, would have to save the same amount each year until retirement, so that they would each have the same amount.

What's interesting about the two object lessons you illustrate is that they seem to contradict each other - and yet both are true! The key is to focus on what's important to you, making sure that you think long term as well as short. If happiness is the goal, money can help us on the path; we must decide what the end point is.

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