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Episode 150 How much is enough?

How much money is enough? That’s a pretty good question. When people consider retirement, that is always first and foremost in their minds. They just don’t seem to know how much is enough. There seems to be no hard and fast rule. What is a person to do?

This is Retirement Talk. I'm Del Lowery.

I remember facing this question years ago when we decided to retire. It was most important. We had a chance to take an early retirement offer by the state of Alaska. We liked our jobs, but downsizing was happening in our profession and we were being enticed into considering stopping work when we were fairly young. I was 44 and Brenda was 41. Now that is pretty early to even consider retiring let along doing it. What to do?

“Life is short”, someone said somewhere at sometime. I taught philosophy and took those kind of sayings to heart. Though we liked our jobs, we realized the finality of life and knew that there may be other ways to live than continuing in this one direction. We had ideas as to what we might do if we changed direction. The big question came down to money.

If we wanted to continue to earn money then we wanted to stay in our jobs. If we could live on the money provided in our early retirement package then we would be free to cast about: do what ever we wanted, live where we wanted, move, or not move, sleep late or rise early. We could go back to college, or hike in the mountains. It wouldn’t matter. We could follow the path laid out by Mother Teresa or we could try to emulate Warren Buffett. Whatever.

How could we know if we had enough money? It was comforting to know that we were living good at that time and would see a pay raise every year as long as we continued to work. But the question loomed: “How much is enough?”

We took a clean piece of paper and wrote down how much money we thought we would need. The list started with housing costs: utilities, upkeep and that sort of thing. We had paid off our mortgage on a ten year plan so that was no longer a factor. We then figured the price of transportation: car upkeep, etc. Then came food and clothing, etc. That really wasn’t much. Our retirement plan included super good health care insurance; good until we die so that was not a factor. We were very lucky on this one. We totaled up estimated  figures and were amazed at how low they were. It became clear that if we did not buy a boat, airplane or huge RV we could easily say goodbye to the world of work seemingly forever.

That was 22 years ago. How have we done? Prices have gone up. What has happened to our budget in light of all the changes? We’re doing fine. We have never had to consider taking another job for money. What was the key? I think its the idea of spending less money than you take in. Of course we have all heard that one forever. “Spend less than you make,” that worked for us.

I know people facing retirement are always wondering about the future costs and the limits on their income. I guess that will always be a guess, shot in the dark, or estimate at it’s best. But sometimes I think this limiting factor is just an excuse to avoid change.

I’m reminded of a story of Alexander the Great when he was on the move and his army rolled into India. It is said that he was sitting their on his big white horse with an entire army strung out behind him and he came on six men standing in two columns side by side. They marched up and down in place. They were silent. The conquering hero asked his interpreter what the men were doing and the response was, “They are asking how much land you need since we all get only six feet – enough to bury us”.

I think of this story when I consider how much money one person needs. It doesn’t seem to me that one needs much. Of course health care is a big unknown every day of our life. We were lucky with our coverage. And fortunately most Americans are covered with Medicare during most of their retirement. I know we live in a consumer society where we are encouraged at every turn to buy something new but that doesn’t mean we have to agree. There are other choices.

Recently we have been temped to rent our condo in downtown Vancouver. The Winter Olympics are coming and we could get “rich” so to speak. I think we have decided to pass on this one. We will just stay here and enjoy the festivities. It’s not often the Olympics comes to town.

 

This is Retirement Talk.