But What About Optionality In Middle Age?

A thought provoking exchange from Twitter;

Miscalculating your savings and expenses in such a way that you unintentionally wind up leaving a lot of money behind when you die is a valid issue to bring up and maybe avoid. There's no single right answer for everyone but if you have a strong opinion then you need to address the issue raised by fed_speak for yourself.

That's an anonymous account so I don't know whether he is young or old or anything else about him, is it even a him? Maybe not. The Tweet is a useful counterpoint to the desire for optionality we talk about here all the time. How much priority do you assign to optionality? It is very high on my list, maybe higher than most people but I think the Tweet above ignores the concept.

The first time I needed financial optionality was in my mid-20's. I made, and set aside, a little bit of money from my first post-college job at Lehman Brothers/Shearson but was not on a path to success. I resigned with probably eight months worth of expenses socked away. I made my way to Schwab and needed optionality again when I was 32 when we bought our first house in Walker (it was a second home purchase). I took the risk of quitting my job to access a portion of my 401k. It all worked out. Three years later I got laid off from Schwab and had set aside about 18 months worth of expenses. Continuing on there were a couple of other transition periods where having a little bit of a financial cushion, an increasing dollar amount cushion as I got older, allowed for risk taking and career tweaks (I didn't change careers so much as the type of work I did evolved to where it is now, where it has been since 2004) needed to get to where I wanted to be.

The way we usually talk about optionality is different than the above context. Usually we talk about it in terms of an unforeseen desire to change careers, to burn out maybe on a career that might be high paying but stressful and almost like a movie, waking up one day and realizing that you can't do it anymore. 

A lot can change in people between 35 and 45 or 50 and I have to think that anyone in the position of finding themselves miserable would want the financial optionality to make a change, all the better if the thing they want to change to happens to pay a lot less but that can afford to take the pay cut thanks to a combination of living below their means and building up some savings. A nephew of mine is wildly successful, having an accounting background he's been the CFO of his company for quite a while. We haven't spoken about this so I don't know specifically but generically, that kind of work in a relatively intense setting might trigger a desire to make a change, especially as he approaches 40. A long time a go, he worked as a sous chef (I think that's right, definitely in the kitchen of a nice restaurant). Again, generically speaking I could see someone leaving a higher stress job at 40 or 50 for more of a passion job. If that ends up being the case for you, you'd probably hope "I can't afford to do this" wouldn't be the determining factor for this outcome. 

This is what optionality is all about and there is tremendous emotional value having it, even if you never use/need it. 

I agree there is a balance to building optionality and having fun when you're younger. The easiest path to finding this balance might be found being under mortgaged and driving your cars for a long time.

The Tweet ignores this age range we're talking about. At 40 or 50 and I'm guessing 60, you can either be young for your age or old and I think that mostly comes down to habits and maybe some luck. I'm fond of saying that your 50's can be a great time if you're healthy, can still get it done and have a little bit of money in the bank. You could interchange the word optionality for money in that sentence. 

If you're 50, can still sprint, jump and lift heavy things you're young and you're going to want to do things and some of those things will cost money. Playing the long game is what allows your 40's, 50's and I think I'll say the same about 60's to be be great decades. Your 20's are obviously just one decade versus "middle age" potentially being several decades, with good habits and luck, before you're old. 

I certainly can't say fed_speak is wrong but I do take a different view. I've been benefiting greatly for a while now from just a few decisions I made in my 20's so maybe not right for everyone but right for me, hopefully you figure out what is right for you.