It is with heavy heart and overflowing to-do list that I have decided to hang up my Get Rich Slowly writing boots. An expanded role at The Motley Fool (my home planet) and the growing responsibilities of growing kids have led me to make some tough choices. One casualty is contributing to this top-notch blog and sharing my monetary musings (for whatever they’re worth) with you fine folks.
My first post was way back in May of 2009, about attending the Berkshire Hathaway annual meeting. Remember those days, back when the stock market had just begun to bounce back from dropping more than 50 percent? Now it’s at an all-time high.
More than 100 posts later, it’s tough to choose a topic as a swan song. But here’s something I’ve thought about quite a bit lately:
Why bother getting rich?
The reason most people give for saving money is so that they can one day retire. We’ve all seen the studies indicating that the average American isn’t very good at it. So they’ll have to keep working.
This is usually portrayed as a looming crisis. But I wonder: Is it really bad news?
As my Foolish colleague Morgan Housel wrote, “The entire concept of retirement is unique to the late-20th century. Before World War II, most Americans worked until they died.” According to stats from the Bureau of Labor Statistics that Morgan cites, 78 percent of those age 65 and up were in the workforce back in 1880. In 2010, that figure was just 22 percent. Modern Americans stop working earlier than our forebears, yet we’re also living much longer. For someone to save enough resources over four decades of work to pay for two to three decades of retirement is perhaps expecting too much.
After all, there are plenty of other things to pay for. Financial advisor Bob Seawright summed this up pretty well in a post he titled “Realistic Retirement Planning“:
Many alleged experts in retirement planning — and I include myself in this group — are far too willing to offer advice without seeming to recognize the competing interests faced by those hoping to plan well. Much of what is called advice is really hectoring about the need to save more and to save more sooner and does not seem to recognize that alternative choices are not necessarily or entirely wrong.
Seawright explains how he and his wife decided to making saving for their kids’ college educations a priority over their own retirement, with the result being that their nest egg isn’t as big as it could be:
Many retirement planning advisors insist that college assistance should only come after maxing out the 401(k) each and every year, but we were not willing to go that route to the expense of our children’s prospective education. Our priorities were (and are) different. Again, one may disagree with that choice, but it was an entirely plausible one, especially since I do not ask anyone to feel sorry for me or to prop me up financially on account of it.
The retirement expert who won’t retire
The truth is, I don’t plan to fully stop working. I may do something else, such as return to teaching. I may focus on work that is more make-the-world-a-better-place-ish. Maybe I’ll actually go to med school (I was pre-med in college). I think I’d like to work at a coffee shop for a while. But I can’t imagine retiring.
That doesn’t mean I don’t save. I’ve been contributing to IRAs and/or 401(k)s since my mid-20s, and I turn 44 tomorrow. (To celebrate my birthday, 7-Eleven stores will be giving away free Slurpees from 11 a.m. to 7 p.m. The only requirement is that you have to go into the store dancing like this guy.)
Why feed an IRA when I don’t plan to “R”? A few reasons:
- I may be unable to work as long as I want, due to disability, job availability or people finally catching on to my lack of ability.
- I might change my mind and get tired of working.
- In a pinch, it can be used to pay for the offsprings’ college degrees. (We also contribute to 529 plans, even though college can be a total rip-off.)
- I want my wife to be taken care of, since longevity doesn’t run in my family but runs in hers. She should have enough money to live how she chooses, including having the resources to build an addition to any of our kids’ houses as her own little apartment. I’ve already told my kids that they better take care of their mother in her old age or I will haunt them.
That doesn’t mean my wife and I are saving enough to retire whenever we dang well please. But we have other things we want to pay for: gymnastics, summer camps, music lessons, rock climbing, a funky house in the (pricey) D.C. suburbs, etc. So I’m fine with the amount we’re saving, since I’m not sure not sure “retirement” in the traditional sense of the word — that is, goofing off 100 percent of the time — will suit me.
One of the fun things I get to do at my day job is interview various experts. One such person is Ken Dychtwald, author of “The Power Years,” which includes these lines: “It’s not your obligation to go away just because you’re getting older. Nor is it your birthright to cede all responsibility to your community and mankind so that you may lead a life of leisure in retirement.” I asked him how people have reacted to that message, and he said:
It’s like a wake-up call. There’s been this hypnotic spell cast over society where people believe they’re not worth anything anymore when they reach their 55th or 60th birthday or beyond. I think we have to realize that retirement is an experiment, and our moms and dads are the guinea pigs. Throughout most of history, people did not retire…. I’ve studied how happy these people are, how comfortable they are to never be earning again. About half of today’s retirees are jittery. And you’re beginning to see boomers saying they’d like to keep working, but a whole new model. They’re saying, ‘Maybe I can play a useful role. Maybe my best years are ahead of me.’
You don’t have to work forever
I’m lucky. I like my job, and there are others I’d like, so working well into my 70s doesn’t fill me with despair.
But you’re not me (unless you are, in which case you should stop reading this post and get to that overflowing to-do list). You may want to retire someday. Another interview I did was with Akaisha and Billy Kaderli, who retired at age 38 and have lived all over the world on less than $30,000 a year (and are two of the nicest people you could ever cyber-meet). Retirement was the right move for them.
So you have to decide: Do you want to retire? Which is really to ask: Are the things you’re spending money on now — or the other financial goals you’re saving for — more important than having enough to retire?
Your current situation is your Plan A, and it will lead one way. I don’t know what way that will be, and a retirement calculator has many limitations, but doing some math with what you’ve already saved and how much you currently save will provide at least a cloudy picture.
Plan B is what you need to do now to change that future… if you want to. How important is it that you give up some things today to have some things in the future? Are you so far off from having enough to retire that it will take drastic measures? Do you feel like it’s your own personal looming crisis?
If so, could you live without cable, Netflix/Hulu, smartphones or frequent dining out? Would you be willing to drive your car until it has at least 200,000 miles on it? (Interesting recent quote from the new pope: “It hurts me when I see a priest or a nun with the latest model car. A car is necessary to do a lot of work, but please, choose a more humble one. If you like the fancy one, just think about how many children are dying of hunger in the world.”) How about moving to a smaller home or cheaper part of the country? Sticking to a budget?
These are just a few of the many ways that you could cut your expenses and save more money; Get Rich Slowly has thousands of posts with other ideas. It really does depend on how important retirement is to you, and if you can live with the consequences of reaching your 60s without enough resources to kiss the boss good-bye. (And please: Don’t expect other people who are working or have actually saved to prop you up financially. That’s just not fair.)
I’m not saying you shouldn’t save something. Everyone should, in case health problems or the economy prevents people from working as long as they want. But maybe you don’t need to “get rich” in the sense that you need to have enough money to retire in your early 60s.
(As an aside, we on the 401(k) committee at The Motley Fool have decided to implement automatic enrollment, but we’re debating the default savings rate. Some advocate 8 percent since that will allow employees to take full advantage of the match. Others think that’s too high. If you’re middle age or older, take this survey and let us know if you wish you were defaulted into saving 8 percent when you were younger.)
It’s been a real pleasure
Since this is my last missive, it isn’t just sucking up to say that one of the most enjoyable aspects of writing for you folks is reading all your comments to my posts. One regret I have is that I didn’t participate more in the discussions. Get Rich Slowly is such a helpful, educational, collegial site because so many smart, thoughtful readers take the time to offer their own advice, personal stories, and, yes, criticisms.
Best of luck to y’all, and may you “get rich” in whatever way is most important to you.
Finally, I’ll close with links to five of my favorite posts:
- My GRS bio (it’s sorta funny)
- The Cost of Being a Better Parent
- Professional Sports: A Waste of Time, Money, and Energy?
- Are Universities Immoral?
- How I Lost 25 Pounds – And How It Can Help Your Finances (which led to an interview on Marketplace)
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