Taking It With You

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.

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