How Much is Enough?

This is my fourth post on finances — which means this is an important topic in my mind.

I live in an affluent community, and so finances, deals, stocks, IPOs and such can easily turn up in a conversation.  Much of this musing is just that, so be assured that I don’t receive brilliant stock tips every week, nor every year for that matter.  Would be nice, but tisn’t the case.  And I most assuredly don’t receive insider information, so please don’t send the Feds my way!

What does come up from time to time is a discussion of “how much is enough?”  This is generally amongst folks in their 50s or 60s, at or near the peak earning power of their long career.  And the question is over how long their (usually pretty consuming) effort will be needed in order to have enough to enjoy life (and perhaps a Tapas Life) after their long career without money problems.  The layer under this is a desire to not run out of money during one’s life and, especially, not to become a burden to one’s adult offspring.  This is quite understandable, to be sure.

It’s hard to know the answer to “how much is enough?”  You’re free to have a peek at some of my earlier finance-related posts or any of a host of websites attempting to help you with this question.  I won’t try to tackle that here.

What I do see, is that often, the goal line keeps moving.  At first, X is enough.  Then as that is approaching, 1.5X, maybe 2X.  Maybe 10X!  To be sure, for some this might merely be the result of an underestimation that became clearer over time.  On the other hand, it seems that, for some, this is a necessary goal to keep alive, a raison d’être, a tool for continuing one’s work identity indefinitely.  If one were to declare the goal met, that would be admitting that work was now for pleasure and enjoyment, and no longer a needed source of funds;  or because that is the only identity one has.  Or one might simply decide to end their long career.  But this brings with it an armload of uncertainty compared with the predictability of going to work every day — especially after having done that for 30-40 years.  This entire blog routinely talks about the many aspects of this post-long-career life, and how new and different they can be, how much thought, experimentation, and effort they may take;  as well as the terrific opportunities that abound.  It might be easier, for some, just to raise the “how much is enough” target.

Money, it turns out, is only especially gratifying up to the point where one is comfortable and free of worry.  After that, it doesn’t improve one’s happiness.  What improves one’s happiness beyond this point, is social connection (friends and family) and doing something meaningful.  Plain and simple.

Something to consider as the “how much is enough” vortex swirls.



Thinking About Finances

While I’m living my Tapas Life and loving it, it doesn’t necessarily result in much income.  Sure, my Life Coaching Tapa may bring in something like $6K/year.  My little startup could turn into real money.  Or not.  My board work could turn into some income after a couple years.  Or not.  Sometimes the time I invest in investing pays off.  Sometimes the results are more akin to a kennel…  Eventually, I’ll have some Social Security income (even though the media would have us all believe none of us will ever get our SocSec payments, I’m guessing guys my age (60) won’t be significantly impacted by the trimming that will eventually be needed), but when I push the numbers on that, it looks like waiting ’til I’m 67 makes excellent sense.  Unless I figure I’m going to live ’til I’m 86 or older, in which case waiting until I’m 70 makes more sense.  But that’s all 7-10 years from now.

I didn’t assemble my Tapas Life with making money in mind.  I saved well while I was the worker-bee and my very talented and hard-working wife earns well now that I’m not.  So I have the luxury of not having to include an income goal in my particular Tapas Life.  Hey, at least I cut back my wine purchase dollars by about 90% from prior years, since I figure we’ve got enough in the cellar to last us until we’re dead and gone.

When I think about my wife someday leaving the workforce, I get very focused on our investments and, in particular, our self-directed IRA investments.  The simple fact will one day be that if those investments do decently, we will be living very nicely.  And if they don’t,  we’ll either have to dig into savings or cut back our lifestyle or both.  It’s a little scary to think about that, especially with us both out of the workforce.  To be sure, we could probably earn a few dibs here and there (especially my wife), but we might both be living the Tapas Life by then, and that would at a minimum be disruptive.  First world problem, I suppose.

At our age, the usual advice is to start moving some of our savings into less risky investments.  These days, that means “investments with no income,” unless you count a fraction of a percent up to a few percent as appreciable income when compared to the inflation rate.  How does one make that work?  Not sure.  In today’s world it’s a quandary.  On the other hand, I think that that advice for people 60-ish was based on the notion of life ending at 78, rather than 88, so perhaps sticking with somewhat higher risk/reward investments for another decade isn’t such a bad idea.  At least I hope it’s not!

These are my musings on finance at present.  Perhaps the useful takeaway for readers of this blog is simply that financial planning for one’s post-long-career life is a complex matter, continues changing as the world changes, and because of its impact on your later years merits your attention greatly.

More on Finances — Addendum

I forgot in my last post, More on Finances, to include two things.

First, in looking at your income in the future, be sure to count the Minimum Required Distributions you will have from your IRA/401(k) accounts.  Once you get to 70.5 years of age, at the latest, you will have to take out a chunk of these retirement accounts each year, as prescribed by IRS mortality or life expectancy tables.  Alternatively, you can start taking distributions as early as 59.5 years of age.

Second, you may have noticed that this blog is about the Tapas Life!  What on earth is detailed financial rumination doing in a blog about the Tapas Life??  It turns out that for the rest of the Tapas Life to work out well, one must make Finances a Tapa.  Unless one’s name is Buffett or Gates or Jobs or such…