Most of the people I am surrounded by are first-generation wealthy and I bet very few would even describe themselves as wealthy. One of the reasons they wouldn’t describe themselves as wealthy is because, in most cases, they came from meager backgrounds so the idea of being considered wealthy in any sense of the word is almost a foreign concept. Recently, I think I stumbled across an observation I have never noticed before with regard to spending in retirement.
That is, I am not sure that an additional dollar of spending provides any additional happiness.
There are endless amounts that people can spend in retirement, from just a few thousand per month up to (name a number). What I think I’m observing is that, beyond a certain point, most spending doesn’t equate to any additional happiness or satisfaction.
In fact, it may even be a counterintuitive point that spending less might actually lead to additional happiness as it could add an additional feeling of financial security. In other words, by spending less, you withdraw less from your portfolio thereby reducing the possibility of running out of money, which may result in an increased feeling of financial security. Maybe, in this case, additional happiness could be caused by the increased feeling of security? I’m not sure either, but that’s what I think I’m observing.
To be clear, I am not encouraging anyone to become a minimalist or implying that anyone should be reluctant to spend their hard-earned wealth due to an overwhelming fear of running out of money as I’m quite sure that both of those instances may lead to increased stress rather than happiness.
What I am saying is that expectations are everything when it comes to happiness and satisfaction in retirement. Having grown up as a child of meager means, I know it actually takes very little for me to be happy. I know I’m not alone in this feeling. For example, for me when it comes to entertainment purposes, reading good books and playing sports provides just about all the happiness I can imagine and neither of those are overly expensive habits.
This comes back to being in tune with yourself and understanding what adds true and lasting happiness to your life. The goal here isn’t to pass judgment on what anyone is spending. I’m not in a place to do that and do not desire to do so.
It’s just a thought that keeps ringing in my head as I observe folks who spend well within their means in retirement living extremely joyful and fulfilling retirements. And I should note that for the families I’m thinking of, this is a personal choice. These families could spend multiples of their current outflow but have deliberately chosen not to. Yet, I admire their level of life satisfaction which is what lead to this realization.
They just seem to be acutely aware of what makes them happy and choose to pursue those activities rather than other shiny objects. They know that, for them, more spending would add very little to their lives. And as I’m coming to realize, I’m not sure it would for anyone else either.
To be honest with you, I’m really not even sure what I’m trying to get across here in this post. I really just wanted to share this observation with you.
This post is not advice. Please see additional disclaimers.
Join the Retirement Field Guide Newsletter
Subscribe below to get Ashby's list of the best retirement resources from around the web.
I am a Financial Advisor in Pittsburgh and a CERTIFIED FINANCIAL PLANNER™ professional with Shorebridge Wealth Management. I enjoy helping clients and readers find sensible answers to retirement’s big questions. If I can answer any questions for you, feel free to Contact Me or if you think you might be a fit for our practice, see Who We Serve.