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I’ve always been a saver. From my first job singing in the church choir, I stashed earnings in a snap-top Band-Aid box. I added to my savings by sweeping the patio of a family friend.
Sometimes, I’d shake my savings onto my bedspread and count it. It gave me a great feeling to find that I had $10.50 or $15.65. The stacks of silver quarters gave me a sense of security as a child.
That’s why it’s been a bit of a letdown to start withdrawals from my 401(k). No, they’re not required. Required distributions don’t kick in for me for four more years. No, the reason to automate monthly withdrawals is simple. Five years into retirement, I can see the bottom of my liquid savings.
I’m lucky, however. With the U.S. stock market at new heights, my assets have grown slightly in retirement, not shrunk. If I don’t spend money, some of it might evaporate in a correction.
But subtracting from my 401(k) feels like I’m entering the downslope of life. Franco Modigliani won the Nobel Prize for his life cycle hypothesis of human consumption. When we are vigorous and young, we save money for old age. When we are retired—and presumably tired—we withdraw the money to live without labor.
This transition to withdrawals is not easy for lifelong savers like me. You may have experienced it, too. Spending money can feel irresponsible. I’ve worked hard to postpone consumption, unless the money was for someone else.
This summer, for example, I tried to coax one more year out of an old Electrolux, which only started intermittently. I’ve got old sheets, old books, an old house, and an old boat that requires daily bailing.
Being a thrifty Yankee is a time-honored role here in Maine. If I’m honest with myself, however, I realize that maintaining all these geriatric possessions is getting in my way. I don’t work as hard at everyday chores as I have, and some jobs are beyond my skills. Thoughts of deferred maintenance keeps me up at night.
I’m going to change. I started with a small step today. I threw away the old Electrolux. I could have taken it to the repairman again, but honestly, it’s a relief to be rid of the old contraption. I want to spend more time on the water, not in the shop.
Being a saver was fed to with mother’s milk. My parents were Holocaust survivors. They always said put a penny to a penny and it will become more. They worked very, very hard in a luncheonette. Frugal does not even begin to describe how we lived. To make a very long story short, I am a saver, big time and how. I am 77, a widow and have way more (thank G-D) than I likely will every spend. I was born in Germany, came to USA as a little one, settled in Brooklyn and never went anywhere since. They say grow where you are planted–well, I still live in the same house since I was 12!. Spend, you say, how do I even begin??
LOL! I feel your pain. My wife and I have been savers all our lives and managed to retire debt free. However, once the paychecks stopped, we had to start spending our own money which was a difficult transition. Even though I had used a Monte Carlo simulation tool to test whether our savings was likely to last (it was), it was still a difficult transition. 15 years post retirement we have more than we started with and have been able to spend what we wanted along the way. A lifetime savings habit is not easy to shed and you’ll probably start conservatively as you begin retirement, but hopefully will gain confidence as time goes by.
Well, you just met someone a lot like you, I did all those things in my youth and always waned to work at an early age to put money in my pocket. At age 10, I earned 50¢ for working all day Saturday to deliver meat from my Uncle’s Butcher shop. The real earnings came from the customers, maybe up to $5 tips or more on a Saturday, the only workday. I would take on any job to earn money, because I liked to have money in my pocket, and Mom said always have enough for a bus ride home, 10¢. Anyway, I have made it, because of my savings over 50 years, allows me to no longer have a budget. After 70, I learned it was OK, to spend more than I took in. And now after 57 years of marriage we also found the way to work our finances, with no squabbles. For sure spending more is difficult, but I assure you now is the time to make your life SIMPLER as you grow older, and to use your saving to do it is AOK. Best to your Freedom Future.
Absolutely Greg, I’ve been the same frugal guy all along, until I left the job and now, it’s great to not compare by looking at prices.
I did my ‘growth’ for over 50 years and now can simply enjoy what I’ve done. A fellow with a radio show mentions ‘You can be outrageously generous and have the most fun you’ll ever have with money’