Flexibility & Retirement Spending

Barron's had a couple of good reads this weekend. The first one was about The Great Resignation which I wrote about here in late March. Actually in the Barron's piece there was just one interesting point I would hit on as captured in this passage. 

In another global survey, “People at Work 2022: A Global Workforce View,” more than half of the nearly 33,000 workers we spoke with said they’d take a pay cut in return for more flexibility in when and where they do their jobs. In the U.S., the cry for flexibility is even louder—2 in 5 U.S. workers desire control over their own schedules. Nearly half would be willing to accept a 5% pay cut or more to get it.

I don't know that it proves it, but assuming it's not a woefully flawed study, it supports the idea that a lot of people value their time more than money, I know certainly do. If you want to hit the big time as a financial advisor, you don't move to Prescott, AZ when you're 36. I have no clue whether I could be making a million bucks or more in a big city, I suspect not, but I figured out that was not what I wanted when I was in my mid-20's. If you're in your 40's or 50's been living below your means the whole time then you have some money put away, there's probably no need to fight with your spouse about money and you can cover the unexpected things that come along then you're life is pretty easy. At least your financial life is pretty easy and if other things are challenging, at least your finances aren't compounding everything else.

A lot of people maybe started to figure this out about themselves due to the pandemic and while being one who did resign in the Great Resignation movement may not have been a great call for everyone, as a catalyst for some sort of change, maybe good can come from it. 

This reminds of the quote from our friend Bill here in Walker that I cite all the time, "you can figure it out now or you can figure it out later but you'll be much happier if you can figure it out now."

The second article to mention is one about retirees being reluctant to spend their money when they retire. I've blogged about this many times too because I've been seeing around the corner on this one about myself for at least ten years. 

There were a couple of retirees profiled and the answer for them both was that they both have more money than they thought. The article would have been more useful profiling two or three retirees on a spectrum ranging from a little bit ahead of where they need to be to a little behind where they need to be.

If you think you need $900,000 and you end up with $825,000, yeah some things might have to give but you're not automatically forced to take some job that would make you miserable. 

If you think you need $900,000 and you end up with $1,050,00 and you're a reluctant spender then you might think you're one medical emergency from being forced to take some job that would make you miserable. I understand the psychology and candidly I don't know sitting here today how I will overcome it so I think about and have been writing about how to work around it. 

I don't think my preference to never retire comes from this issue, I love what I do for reasons I've laid out before. I can't envision a scenario where I lose interest in any aspects of the capital markets that fascinate me. If you think about the now mostly pension-less, American retirement, it typically relies on two income streams, Social Security and portfolio income. We've looked at countless ways to create other income streams here all in the name of relieving the burden off of your portfolio for a time.

If you can create and manage passive income (real estate), derive income from a volunteer endeavor (for me firefighting), monetize a hobby (selling something you create or teaching a skill you have), figure something out on the internet (the list is endless) or filling some need in your community (here that could be snow removal in the winter or backhoe work) or better yet more than one of those, you might not need any money from your portfolio until you're 80. Do what you need to now to remain able bodied past that age plays a role here which is why I write about it so much. Think about being able to leave your portfolio alone for an extra 10 or 15 years or pull far less from it. Random 10 and 15 year periods can have dramatic price appreciation. The 10 or 15 years that would be relevant for you in this context may not but you'll still be better off with this optionality.