I have been reading about different ideas about the money that is suggested to save for retirement. Many authors claim that you need to have a multiple of what your yearly income is, in order to have a comfortable retirement. So if you make $100,000 per year, you should have saved $100,000 between 20-33 times. So in this case a 3.3 million income. This seems a little ridiculous to me.
I understand inflation and that money becomes worth less by roughly 3% per year. At that rate, it would take 33 years to reduce the value of your money by 50%. An example: a 25-year-old who retires at 70 with a million dollars would only see a value in today’s dollars of $190,00. Not very much is it? It turns out that roughly 20 years will double your cost of living. I saw this first hand with my grandmother. She didn’t have the ability to save with a big family so she existed on SS and that was very tough for her. She couldn’t have made it without help from her kids.
For me right now, I read another blog that said $30k living cost every year means you have to save $600k when you wish to retire. Since the average 401k balance is about $99k, it looks like a great number of people will be living as cheaply as possible in the future. This is probably unavoidable due to the recessions and economy. I think that a great deal of FUD is involved in these articles about income. Everyone thinks worst case scenarios, when life often works out better than we can conceive.
So I am left trying to decide what I should do. Do I save and live like a homeless person, or enjoy life and take a chance on the future? I am more inclined to live in the present, but I do see the value of saving towards the future. I guess what makes it hard is that for people of my generation when we are supposed to retire, the Social Security money is supposed to been gone years before. So we paid into a system that won’t pay us. It makes it really hard to pay into any system since it feels the game is rigged. Even if we have a 401k or IRA who is to say that they won’t be heavily taxed when we go to withdraw the money, which means that the money will have been wasted twice. Once on not enjoying it, and secondly on not getting the ability to use it for which it was designed.
I don’t mean to sound pessimistic, but I think there is a middle ground here between being Scrooge and being wasteful and unwise in thinking of the future. I don’t know what other people are going to choose, and certainty I am not advising anyone to follow my strategy. Everyone has to do what makes sense in their situation. Part of me is torn with the idea of taking an early retirement and enjoying life, or contributing to society and continuing to help others as a consultant. I think either way would be fun. So for me, deciding my future wages is committing to my philosophy of life now.
I find it fascinating and admire that some people have been able to retire in their 30’s, 40’s or whenever due to their situation. We are not all gifted into those situations, but I don’t hold it against those who have been. If that makes them happy-great. What makes me happy is finding something that I can feel challenged at, yet still have a sense of security. I have never found security in keeping money, but rather in investing it. I have invested in my health by buying healthy food, in my education, in my relationships with others, in my community and in my spirit. To me, even if I have to live in the YMCA or homeless, I have already enjoyed a life that very few of the world has enjoyed. I am not bragging, but rather trying to convey how grateful I am for my life.
When I hear people talk that money will solve their issues or provide them security, it seems more than misguided to me. It seems downright dangerous. I would estimate that the majority of the money I have spent in my life has not brought me happiness. Am I a bad spender? No, but I do learn from my mistakes. We have to stop spending money on things that don’t bring us happiness, and we will have plenty to spend on things that we need.
Isn’t it kind of silly and ironic that in one of the richest countries of the world, we are afraid of being poor? We are so focused on money as a society, we fail to see the often glaring poverty of spirit and love. It has been my experience that when I am kind and loving towards others I have more than what I need. Many times in my life I have received gifts from others that I have not asked for, but they wanted to share with me. I don’t expect that as a retirement plan, but honestly we have enough food and things in this world for all of us. Maybe instead of focusing on money we should focus on giving to others, and we will probably feel richer than we can conceive.