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“ENOUGH” IS a powerful notion. Unfortunately, it’s largely absent from financial conversations.
The concept is rooted in deep self-awareness. It asks the question, how much do I really need to be happy? I believe we should ask this more often because, if we don’t, culture will fill in the blank—and the default answer will be “more.”
Enough has two dimensions. The first dimension is about spending. Too often, we succumb to the hedonic treadmill—the endless pursuit of the next thrilling purchase, only to find our level of happiness unchanged. How’s that been working for you?
The second dimension is about saving and investing. I’m guessing that HumbleDollar readers may grapple more with this aspect of enough. I certainly do. I’m talking about knowing when we’ve saved enough and reached our financial goals. In short, when is enough really enough? If we lack a concept of enough, we’ll end up constantly moving the goal posts farther downfield.
The great enemy of enough is comparison. There will always be someone with more. If we allow it, comparison can be a killjoy. Making comparisons is a deeply ingrained human trait, but that doesn’t mean we can’t overcome it.
Below is a far-from-exhaustive list of benefits that come with knowing what “enough” means to you. When you decide what constitutes enough:
I am 73 and widowed. My question is how much is enough for me so that I can begin giving the excess away to family and friends. I have 1.45 million in a 403b and I draw $2200 month from social security. My very lean budget is $4000 a month and does not account for inflation. My portfolio earns 3-4% a year which is less than my RMDs each month. It sounds like I am rich but I know my wealth would only translate into a $7500 per month annuity/pension payment. However, I would like to leave an inheritance so an annuity is not enticing even if it would make planning easier. Also, I am a child of the 70’s and I am terrified of inflation. How much is enough when planning for a drawdown of 20-30 years?
Based on a 4% withdrawal rate, you could withdraw $58,000 a year, or $4,833 a month, from a $1.45 million portfolio. It seems like you’re in good shape.
I believe that your answer is too simplistic to a complicated problem. It ignores my desire to leave and inheritance and it also ignores inflation. It does not seem to be an adequate solution for me. Thank you for your response.
Might I suggest you begin giving away some money to your heirs now, when you can share in their joy?
It seems paradoxical, but I’ve discovered that giving away money can increase your joy while loosening the grip that money has on our psyches.