We May Never Actually Be Millionaires And That’s… Okay

Monopy Money

Shhh.  Don’t tell my wife.  We may never be millionaires.  That’s okay.  It’s perfectly fine.  A big pile of cash is not what’s really important.  You don’t actually have to have a $1 million nest egg to live a rich and fulfilling life.  Even in “retirement”.

News to you?  That’s not what your financial advisor says?  He says you probably need much more than a million bucks stashed away these days to live comfortably once you quit your corporate career?  I see articles all the time like this recent post at CNBC saying just that.  And it kind of drives me nuts.

Just a little.  Bit.  More…

In that article, the author says he talked one of his clients out of “retiring early” on a $1 million nest egg.  It seemed like the client really wanted to hang it up his 9 to 5, but the author persuaded him to give two more years of his life to the rat race to amass hundreds of thousands of dollars of additional cash, just in case, before giving him the “green light” for retirement.

To be fair, I don’t know this client’s exact situation.  It may have been the perfect advice for him at the time.  But I can’t help but wonder, When that guy is near the end of his life with hundreds of thousands still in the bank, will he look back and regret giving two additional years to a job he most likely didn’t like for that extra money he didn’t even have the chance to enjoy?

Maybe not.  Two years isn’t much in the grand scheme, right?  Maybe all the peace of mind he gets by having an extra cushion of savings will have been worth it.  Valid.  Maybe he really wants to leave something to his grandkids.  The goal isn’t to die completely penniless, is it?  Or, maybe the advisor was completely right.  $1 million really wouldn’t have been enough.  And he would have struggled unnecessarily late in life.

On the other hand, maybe he’ll wish he had just trusted his ability to thrive on $1 million, a figure most people will never see in a lifetime.  Pulled some different levers to make that mere million work.  Started up a passion project or two that make a little bit of residual income, perhaps?  A million dollars may not be as much as it used to be, but it still buys a lot of wiggle room.

I’m willing to bet he would have made out just fine with a million and still wound up with extra.  After all, he’s a clever chap.  He has to be, right?  To have made it to $1 million by his 50s (just guessing on his age, by the way).

Maybe he’ll actually wish he had those priceless two extra years of freedom back, after all.  Experienced, wise and wealthy years, yet still ambitious, energetic and healthy.  Some of the best years of his life.  I don’t think people factor that into the equation enough.

It’s really hard to say how he’ll ultimately feel about his decision.  All I know is…

I don’t want to have to make that kind of tough decision.  That’s why building a gigantic nest egg is NOT my main focus.

Oh.  I’m interested in building up a big pile of investments and savings.  But I don’t want to play the retirement number game.  It’s kind of a losing battle.  I could care less about whether or not my family makes it to even a $1 million.  I’m sure we’ll at least hit half a million, but that number is not my focus.

If amassing a big pile of money to be the only source of cash when you reach retirement age is your main goal, you will have to make a gut-check guess about when to stop adding to the pile.  And you will probably be way off.  There are just too many unknowable unknowns.

Best case scenario, you’ll overshoot… maybe by a lot, having wasted good years in the prime of your life chained to a job you might be sick of.  Even then, you’ll probably still be forever worried about the size of your egg, because you can’t possibly account for every crazy situation that could crack it.  And you could have always stashed away just a little bit more.

Remember The Runway Retirement?

My wife and I, we aren’t focused on the massive retirement net egg.  Instead, we are focused on a much smaller cash pile to use as a runway for the next stage in our life.  I talked about this a bit in The 7-Year Plan To A Runway Retirement.

Our plan is to save at least three years of current spending (outside of our traditional retirement savings accounts) and have the option to pull out of the corporate rat race when that happens.  Three years of current spending is easy to estimate.  Enough money to last me until the day I die, is not.

A 3 to 5-year runway should give us plenty of time to design and begin to build our ideal life, so we can wake up to our Perfect Monday far removed from the rat race well before traditional “retirement” age.

It should also be plenty of time to figure out how to earn money doing what we absolutely love, or earn some kind of residual income, or earn money in any number of different ways that fit with and support the life we’re building.

Ideally, we’ll end up with a network of money pipes, some big, some small, carrying cash from all kinds of different income sources to any number of spigots we can turn on or off whenever we feel like it.  Contract consultant work, part-time non-profit work that makes a little bit of money, a life-style business, creative side-hustles, book royalties from the best-selling sci-fi novel I’ll be writing, fat dividend checks, real estate rental checks, cash flow.  I’m actually trying to get some of these spigots up and running, right now, to ease the transition, starting with the smaller pipes.

I’m not saying we won’t need extra savings.  We’ll still need some kind of a buffer for catastrophe or if some of our spigots run dry.  But, with this runway retirement plan, our nest egg, emergency fund, or whatever you want to call it won’t need to be nearly as big as what most financial advisors suggest for retirement.

Somewhere around $250,000 could be more than enough.  An additional 3 to 5 years of living, tucked away in long-term investments to earn even more money while we sleep.  And as long as we have at least that much buffer in the bank to go along with our runway and flow, I’ll sleep just fine at night.  Maybe we’ll boost the buffer up a bit to make sure my wife sleeps fine too.

Who needs a million, when you don’t really “retire”?

Who knows?  Maybe there will be enough surplus from all sources to get us to the million dollar mark and beyond.  I think we will get there, actually.  But I wouldn’t be disappointed if we fall short, because that’s not the goal.

The goal is to cover a lifetime of spending on our ideal lifestyle with continuous cashflow that comes effortlessly or at least feels that way.  The ultimate goal is to never actually “retire” from “making a living”.  If we do it right, making money will be too much fun, too fulfilling and just too damn easy.

What are your thoughts?  Is $1 million or more your ultimate goal?  Could you “retire” with less?  Am I naive about the challenges of a “runway retirement”?  Is my plan too risky?  Is the traditional retirement route too risky?  Add your thoughts in the comments section.  I always love to hear them.

These are my opinions.  Please do your own research before deciding what to do with your money.  

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11 comments

  1. Awesome article! We also do not have a specific “retirement number” because we have so many unknowns that are yet to be solved (how many kids? what will life bring? side hustles? other income?). Instead, we focus on our savings and continuously increasing our net worth with the hope of creating options and the freedom to make the decisions that are best for our family (including the decision to “not retire” like you mentioned above!).

    ps- I always like seeing your sketches 🙂

    Liked by 1 person

    • Thanks, Rich! Life is a gamble no matter what you do. Flexibility is so important. And I think all the cash flow options people have nowadays completely changes the game for retirement. You’ll still want a lot in savings, but the cash flow opportunities are a huge assist to someone who feels they might be falling short.

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  2. We’re cashing out of our house and should have a 3-year runway based on the equity. Now to figure out what kind of fun we can have… 🙂

    Liked by 1 person

    • Nice! Three years is a ton of time for all sorts of fun projects. Do you plan on exploring additional avenues for cash flow? I’m sure Keep Thrifty is gaining some good traction. You’ve got a quality operation over there (besides the random guest posts about cheetos the somehow make it through 😉

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  3. I really like the idea of leaving the corporate world before reaching the traditional 25 times annual expenses nest egg. I think many people forget that it’s entirely possible to work part time or start your own business or earn some supplemental income in ways other than a traditional 9-5 and still enjoy a ton of freedom. I think it’s all about amassing a decent sum of savings and using it to create a life that’s flexible and enjoyable, whether that includes work or not 🙂

    Liked by 1 person

    • That’s exactly it! There are so many options. If all else fails, you can become a Wal-Mart greeter in your seventies. I think that’s been used too much as a scare tactic for ominous warnings about the sorry state of retirement savings.

      Sometimes I imagine myself as a Wal-Mart greeter at 75, having run out of money too early because I bet on myself financially and failed catastrophically. I think to myself, “This isn’t bad. At least I have stories to tell these fine folks walking through the door… And why the hell haven’t I been replaced by a robot by now?”

      Thanks for reading!

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  4. Crispy,
    Interesting perspective. Remember not all 1 million nest eggs are created equal. The guy who has 25K in div income or has 40k in rental income to supplement the nest egg is far better off. A million bucks without the income is not enough in my opinion. It is not because I think you need a huge pile to die with extra but life happens and you just never know what it will throw at you. I would hate to be 79 and have to work to make ends meet. Thanks for the good post !

    -Brian

    Liked by 1 person

    • For sure, Brian. Cash flow is really the most important thing. The million dollar mark or some other “retirement number” is just kind of a warm-fuzzy for people to latch onto. If it doesn’t generate enough cash flow, it doesn’t mean squat. Your point is my point. Generate enough monthly cash flow from enough different sources and you probably don’t even need a million in “retirement”. As always, Thanks for the comment!

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