A Different Type Of Retirement Problem

Barron's had an article about retirees who haven't really spent down their nest eggs even well into retirement. There are a few variables here that contribute to this scenario, and while the title of the article implied it was about people being afraid to do so, that wasn't really it.

The simplest variable is that the stock market has ripped for the past 15 years so just ripped- which, of course, you can't count on in planning. There was a stat in there from Vanguard that 4 out of every ten retirees don't draw on their accounts until RMDs require it. Quick note: RMDs don't have to be spent; the money can be added to a taxable account and invested for any circumstance where that is appropriate. 

The article made a point that we have touched on, which is that there can be peace of mind from having a lot in the bank or brokerage account. That sentiment resonates with me. If something really goes sideways, knowing you can handle it has some value. The dollar amount needed for this sort of peace of mind will be a different number for each of us. 

This idea has evolved for me into being a number I don't want to go below in our accumulated accounts. That thought process made buying the Tucson house much more comfortable, and it turned out to be a fantastic decision.

One point that was lightly hit on in the article with a couple that has $30 million, but moreso in the comments, is that the lifestyle many people want to live isn't all that expensive in relation to what they have accumulated; again, market results are a contributing factor here. This is how I've described my lifestyle. The life we enjoy living doesn't cost that much. When something expensive needs fixing, we do it. We've taken big trips here and there, but we are not the Facebook (META) friends who go to Europe every six months. Our ability to travel is more about scheduling with our volunteer endeavors, so we're not spending a lot on that. I would add that the number of amazing national parks, national monuments, and the like that are within driving distance is endless, so that is inexpensive too. We've been to a lot of them and will never get to all of them. 

This entire conversation is one of privilege and quite the contrast to all the numbers and reports about how undersaved Americans are for retirement. We talk frequently about habits and lifestyle choices that improve the odds of being over-saved, not spending enough, but I wouldn't discount luck either. It's ok to have been lucky.  

One final point is that a couple of comments focused on being healthy. I have been called a health nut by a few colleagues on the fire department, but I can see where working hard to have a financially successful retirement, only to be unable to reap the benefits because of being unhealthy, causes more regret than getting to a very old age with a bunch of money that's never going to be spent.