FREE NEWSLETTER
DEEP DOWN INSIDE, I want to be the richest person in the graveyard.
I retired at age 62, confident in our financial plan to survive market fluctuations. We saved over 25% of our income for nearly three decades. Perhaps a bit too much, but we lived well and always had sufficient funds to raise a family, maintain our household, and put our children through postgraduate education.
If anything, our retirement spending level is conservative, based on a 40 year time frame for both my wife and I. We have a slightly nuanced financial plan. Suffice to say it is reassuring to know that we are beyond financial security if we simply maintain an inflation adjusted 4% withdrawal rate. Indeed, calculations suggested we could double our pre-retirement budget, with no worries or loss of sleep. Risk be damned!
Slowly, we made a conscious decision to spend more. At first it was tough to break old habits. I mean, frugality runs deep in my immediate family. You could use my brother and I as chromosomal templates in a genetic search to discover the frugality gene.
My wife and I now go out for coffee without blinking an eye at paying nearly 6 bucks for a cup of Joe (plus tip). We don’t hesitate to escape the Houston heat by scarfing 5 dollar a scoop ice cream. We no longer plan our restaurant outings according to Happy Hour schedules or local senior discounts.
Even so, three years into retirement, our annual spending remains well below what our financial plan says we can safely afford.
Time to up the ante. We bought season tickets to the symphony and added a dinner date before the performance. We took international vacations twice a year, exploring new countries and cultures. We drove to national parks and treated ourselves to overnights in hotels instead of motels. We gifted our children, with hopes they would bolster their own long-term savings. Gosh, we even made significant charitable gifts to institutions we only previously dreamed of supporting.
Spending is easy. Spending wisely is a challenge. Ironically, the strong stock market since our retirement has made it remarkably difficult to spend our money as initially planned. It sounds counter intuitive, but let me explain.
Our retirement portfolio allocation has a stock to bond ratio of 75:25. The stock component primarily matches total market returns. Specifically, our stock component has grown more than 65% since we retired. Because of this, we put aside 10 years of safer funds (bonds and cash equivalents) to weather any potential market storm. We successfully navigated the immediate sequence of return risk (SORR) hurdle, that pesky danger of facing a poor investment market performance in earliest years of retirement.
We feel both blessed and safe. We sleep well at night.
Our financial calculators now indicate that we can spend even more than original predictions. Yet that realization is causing me angst. After all, we spent a lifetime saving, scrimping and sacrificing to reach this point. Indeed, we value the concepts of avoiding excess, of seeking value and purpose in purchases. Our goals were never to impress the neighbors, but rather be content and grateful with what we have.
I want people to know I had a choice about how I spent my accumulated dollars. I chose a life of frugality, questioning everything I purchased. Do I really need that new phone? My current one makes calls, surfs the web, and navigates when I need directions. Do I need a new car? My dented 11 year old Honda gets me safely to my destinations. Shall I purchase the kayak I’ve been eyeing, or simply rent one for the two times a year I brave the waters?
Perhaps the real measure of a successful retirement is not how much money remains at the end, but whether those resources were used in ways that enriched the lives of others and brought meaning to our own. Financial independence now gives us choices, and a freedom after decades of disciplined saving. It is okay if I leave this world with more than enough funds still in the bank. There are values I learned along the way; those of prudence, generosity, gratitude, and the quiet confidence that comes from living well below one’s means. In the end, wealth is simply a tool; character is the true legacy.
Perhaps the goal isn’t to die with the largest portfolio, but to know that every dollar reflected the values by which we chose to live. Therefore, if I can’t spend it all according to my values, I guess I’m okay with being the one of the richest men in the graveyard.
Jeffrey K. Actor, PhD, was a professor at a major medical school in Houston for more than 25 years, serving as an academic researcher with interests in how immune responses function to fight pathogenic diseases. Jeff’s retirement goals are to write short science fiction stories, volunteer in the community and spend time in his garden. Check out his earlier articles.
Thank you Jeff for a thoughtful article. I read your other articles as well.
Your contributions and responses to questions are very much appreciated!
V – Thanks for the note. Hope you got a chuckle or two from my literary past posts!
Jeff –
Thanks for your well written and thought provoking article. I’m hoping you would expand on this sentence: “We gifted our children, with hopes they would bolster their own long-term savings. “
Some questions begged:
Were your children following you and your wife’s example of investing 25% of your income before your gifts?
After your gift(s) are they hitting that level of investing?
Have you shared your thoughts as to how you and your wife have invested — and if so, how was that advice received?
What percentage of your retirement investments were made into traditional 401(k) or 403(b) or IRAs, what percentage were made into the Roth accounts, and what percentage were made into a non-qualified brokerage account and have you talked with your children about these different accounts?
Finally, and not directly related to the sentence quoted above, if you’re OK “being one of the richest men in the graveyard” what have you done with regard to your estate plan? How involved is your wife in managing your wealth should you pre-decease her? And finally, to what extent are your adult children aware of and part of (as perhaps attorneys in fact) with managing your estate?
Dave – I answered with a detailed response, but the answer may have been too long to post as a comment. Let me simply point you towards two previously published HD articles, which partially addresses your questions. Regarding the kids: Go Big Early. Regarding plans if I pass away before my spouse: No So Simple.
Jeff – Excellent. Thanks very much.
Dave – Excellent questions, albeit quite personal. I wrote a HD article that describes the financial experience with our twins. Take a look at “Go Big Early” published two years ago. Now that they are working adults, they are maxing out their retirement savings, and putting extra away in taxable accounts (my guess is near to 15-20% total of their salary is put into some kind of savings). Yes, it helps that we gift, but it is at a modest level (less than a quarter of the maximum allowed). We have a plan that will ramp up those gifts over time.
My wife and I maxed our retirement each year, aggressiely front loading the year into retirement accounts first to take advantage of time in the market; after that bucket was filled, the rest went into a taxable fund. It is only post retirement that we started Roth conversions.
We have plans in place for our estate. They are very simple. Wills and benefactors are set. Funds are committed to charity directly through wills and life insurance. Our children are aware of our finances, and I update them once or twice a year (just did it in August). We trust them explicitly. They know where all documents and passwords are located.
Finally, I wrote another HD article that explains the challenges for my wife if I die early. See “Not So Simple”. It is an ongoing challenge.
Jeff –
Very much appreciated. Thank you.
Yes, do the correct things in the building stage so you can do the correct things in the dispersion stage of life. It’s nice to not have to look at prices and, if there’s a need you can be the one who takes care of the problem. I follow Matthew Chap 6 verse 1-3 and do things on the sly.
It just feels so good!
Frugal? I have an iPhone XR I purchased in 2020. But I must admit, I am starting to envy my wife’s ability to use her wide, and telephoto lenses on her 16 while we are on vacation in the UK now.
HOWEVER, I still can’t leave my discipline gene by the wayside and continue the plan of only having a charge for the purchase of one phone on our bill at a time. So it’s only 16 more months until my new phone, but who’s counting?
Enjoy your UK trip David. Was it the Braemar Highland Gathering you came to experience?
Pitlochry this coming Saturday the 12th.
Jeff, I’ve always appreciated your articles–plenty of good sense humor. After a lifetime of frugality, and nearly three decades of compounded savings, I’m finally finding enjoyment in spending a little, and sometimes a little more. But, as you say, the choices money buys are the sweetest fruit.
Ed, thanks!
Well done. Your article describes our situation as well. I retired six years ago after decades of saving for the future during a working career. It has definitely been a challenge to flip the switch to spending more freely, even though money is available. My wife and I are both musicians. When an excess of frugality causes me to pause pulling the trigger on vacation plans or a purchase she reminds me that our retirement is not a rehearsal—it’s the performance! It’s time for us to get onstage, so to speak, and perform while we can.
Love your line “…our retirement is not a rehearsal—it’s the performance!” Good advice to live by.
We were similarly frugal. Raised 3 sons, helped with college (my oldest got a full ride AF ROTC scholarship). 2 kids with advanced degrees.We are about 7 years into retirement, have yet to touch our retirement accounts. We live well on SS and a modest pension. Though we are still frugal, we are learning to let go occasionally. Just got back from Peru and Ecuador, A month in Europe next spring, and then Iceland late summer. But our day to day lives are pretty frugal. My tightwad sensibilities were challenged last night by my oldest son. He and his wife go on weekly “date nights”, and with a 3 and 5 year old I think a great investment in their relationship. But he told me they went to a very upscale steakhouse and he dropped $175 on a Wagyu(?) 6 ounce steak. Total bill for night was $350. Now they are doing fine, saving a decent percentage so they can afford the occasional splurge. But I could NEVER pay that much for a steak! I swallowed hard and said, well, I hope you really enjoyed it!
Sometimes we just need to lead by good example, and let our kids make their own choices so they can learn for themselves.
Jeff, enjoyed reading your article – thanks!. It is very relatable to perhaps many HD readers. I especially liked how you ended “In the end, wealth is simply a tool; character is the true legacy!”.
I would also suggest to HD readers the book: “Die with Zero”, by Bill Perkins. He argues that the goal of personal finance is not to accumulate maximum wealth, but to maximize “total life fulfillment”, by converting your time and money into memorable experiences BEFORE you die (this also includes charity to family and other causes that are important to you)
I agree with the book recommendation — not to wholeheartedly follow his principles, but rather as a different point of view to consider in how we spend, save, and value experiences.
Jeff, I can identify with your mindset. We have similarly saved, invested and lived a little below our means for decades. I am likewise naturally frugal and it bothers me to spend more than necessary or not get good value with every purchase.
Now, in retirement and with the benefit of all those disciplined years, it’s nevertheless impossible, for me at least, to suddenly throw a switch and become a spendthrift.
But as you suggest, gradual modifications are possible while still being mindful about how you spend. And I find our increased charitable giving (hurray for QCDs) is easier and more satisfying than increases in self indulgence.
Jeffrey, I think your financial life sort of offers a blueprint for young people starting out. You write that “ We saved over 25% of our income for nearly three decades. Perhaps a bit too much, but we lived well…” This sounds like my own philosophy, which is basically, save for your retirement but don’t forget to have some fun along the way in case you don’t make it that far.
Your transformation from saver to spender also sounds a bit like what we have experienced.
Glad to see you contributing again. Keep ‘em coming.
Enjoyed your article, keep them coming. Overall my philosophy was to never spend more than we had, while always taking advantage of any free money, and to save a best we could and still enjoy the journey. Luckily for me it all worked out, and now I am willing to splurge. Actually, I try to maximize my RMD just to the level of not increasing taxes. Based on trends so far, my children will receive a lot of leftovers.
It’s an interesting internal conflict, Jeffrey. In the same paragraph you talk about contentment and angst from the same cause, having more than enough money.
When you used the word “angst” I thought of this Schopenhauer quote: “Money is human happiness in the abstract.”
Good comment. I’v always felt a little bit of angst keeps me sharp and somewhat on my toes.
Jeffrey,
Thank you for your excellent, thought provoking post!
I’m with you Jeff. Grew up lower middle class. Retired at 66, 5 years ago. Paid for Ivy League educations (3 children) and Law School and one with PhD. WIll contribute to home purchase for daughter, etc. Rather see the family enjoy my financial success while I am alive than passing it on when I am cold in the ground. We spend wisely, but don’t fret over dining out or updating the paid off house. My Bronx roots still make me cautious about spending- I like to see my reassuring numbers.
Just curious if employer benefits or contributions factored into your ability to accumulate as you did?
It was just one piece of the puzzle. A piece that began in my late thirties. So I had 25 years of modest matching into a retirement plan.
If only more young people and couples (and many older ones too) would emulate what you and your wife did. Treat your cumulative future career net income as a finite amount, and figure out how to make it last a lifetime. Choose an acceptable standard of living that you can comfortably afford while investing heavily for long term financial security, i.e., living below your means. And now that you are retired and have a surplus, your same skills can guide you in having fun spending and gifting some of it. Congratulations to you both.
Solid advice for everyone!
Jeffrey, congratulations on your retirement. Thanks for a well-written and thought-provoking article. Your last 2 paragraphs give us much to consider.
Thanks Rick. Glad I could engage your mental muscles. Looking forward to continue submitting articles again to the HD community.
Gee Jeffrey, well done.
I can’t help but think what the reaction would be if I wrote this story. Save 25% for decades, put children through graduate school. Retire at 62, no pension and now living comfortably on 4% inflation adjusted withdrawals.
I guess it is all possible if one puts their mind and effort to it. You’ve surpassed anything I accomplished.
” all possible if one puts their mind and effort to it”—not really. I would add “if one puts enough money into it”. Having more (in this case, much more) money than you need to live during your working years makes it possible to set aside 25% for 30 years. That adds up.
Yes and no. Our family salary was only a bit more than the median for most of our working years. Rather, the trick was to be disciplined early, stick to the plan, and trust the markets will provide long term support.
Dick, thanks for the comment. While I don’t always agree with how your posts are phrased, I always respect your point of view. Gosh, I probably agree with you more often than I care to admit 😉!
My thoughts:
https://401kspecialistmag.com/maximize-outcomes-not-incomes-die-with-zero/
Here I confirm:
“… Yet, “acquiring memories” may not be right for everyone. If the author reviewed my life and finances, he’d surely confirm I’ve failed, over and over. I certainly flunked his form of life optimization—as my employment has now continued into my 70s. He’d confirm that I have “squandered a considerable portion of my life energy,” that I won’t be able to “spend my accumulated savings before I die,” and that I have worked too long, saved too much, and missed too many opportunities for grand life experiences. …”
Good comment. Everyone makes personal choices. Hopefully happiness is the outcome. We always tried to experience life to its fullest, only we likely did so more frugally than most.
I rather like your idea of adding more layers of spending over time. You don’t have to go from a frugal saver to an enthusiastic spender overnight.
Heidi, adaptation and intentional spending is key. It is indeed a transition.
What can I (or anyone) say? If that makes you happy and content then great for you!
Being prudent and frugal in your spending during your working/ earning years got you to this point of comfort. You can’t go back and “re-live” those years differently. Enjoy what you have today in the ways you describe and do as much as you can now while you have the time, money and health to enjoy it!
…
Being prudent and frugal along the way never felt like a sacrifice or chore. It was simply a choice which became part of our value system. We adapted, and never wanted for anything. We “enjoyed” the journey to retirement, as much as we are enjoying our retirement journey.
Free Newsletter
Arrives weekly.