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But the sad truth is that too many people delay gratification for too long, or indefinitely. They put off what they want to do until it’s too late, saving money for experiences they will never enjoy. Living as if your life were infinite is the opposite of taking the long view: It’s terribly shortsighted.
Put that way, it sounds like a lofty, philosophical question—but that’s not how I see it. I’m trained as an engineer and made my fortune on the strength of my analytical skills, so I see this question as an optimization problem: how to maximize fulfillment while minimizing waste.
the core question is the same for all of us: What’s the best way to allocate our life energy before we die?
Although we all have at least the potential to make more money in the future, we can never go back and recapture time that is now gone. So it makes no sense to let opportunities pass us by for fear of squandering our money. Squandering our lives should be a much greater worry.
What I am an advocate for is deciding what makes you happy and then converting your money into the experiences you choose.
In other words, to get the most out of your time and money, timing matters. So to increase your overall lifetime fulfillment, it’s important to have each experience at the right age.
At least Gates had the wisdom and foresight to stop working for money when he was still young enough to start spending it in a big way. Too many wealthy, successful people fail to do that.
Life is not a game of Space Invaders—you don’t get points for all the money you rack up in the game—but many people treat it as though it were.
higher salary doesn’t always mean more actual income on an hourly basis. For example, a person making $40,000 per year might actually be making more per hour than someone earning $70,000 per year. How is that possible? Again, it’s all about life energy. If the $70,000 job costs you more in terms of your life energy—the cost in time of a long commute to the city,
If we didn’t have to work to earn money, most of us would find other things we’d much rather do with our time.
Many psychological studies have shown that spending money on experiences makes us happier than spending money on things.
Living on a shoestring when you can afford more deprives you of those experiences and makes your world smaller than it needs to be.
Yet again—and I can’t say this enough—many people live as if they forget that this is the point of earning, saving, and investing money. When you ask people what they’re saving money for, much of the time the answer is “retirement.” To some extent, I get it: We all need to save and invest some amount of money for a time when we’re no longer getting a paycheck. Nobody wants to starve in their old age or make their children have to support them. But here’s the thing: Since the whole point of money is to have experiences, investing money to get a return with which to have experiences is a
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or an everyday working stiff—one thing is true: If you spend hours and hours of your life acquiring money and then die without spending all of that money, then you’ve needlessly wasted too many precious hours of your life. There is
Consider all the hours of your life you waste earning money you never spend.
How do I know that people save too much for too late? I’ve seen the statistics. If you look at data on net worth by age, you find that most people keep accumulating wealth for decades, and most don’t start spending it down until very late in life.
So American heads of household between the ages of 65 and 74 have a median net worth of $224,100, up from the $187,300 saved up by householders between 55 and 64. That’s crazy—people in their seventies are still saving for the future!
One-third of all retirees actually increased their assets after retirement! Instead of slowly or quickly decumulating, they continued to accumulate wealth.
go-go years, slow-go years, and no-go years. The idea is that when you’re first retired, you’re raring to have all those experiences you’ve been putting off until retirement, and you still (for the most part) have the health and energy to pursue those experiences. Those are your go-go years. Later on, typically in your seventies, you begin to slow down as you cross items off your bucket list and your health declines. And later still, in your eighties or beyond, you don’t have a whole lot of “go” left at all, no matter how much money you still have. As one retirement-planning adviser put it,
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So I will not work for years to save up for a few more months on a ventilator with a quality of life that’s close to zero—or, depending on the level of suffering, maybe even negative.
The last thing they want is for you to take all your money out of the portfolio they are managing for you. After all, for them, annuities are the competition.
Money is just a means to an end: Having money helps you to achieve the more important goal of enjoying your life. But trying to maximize money actually gets in the way of achieving the more important goal.
My friend Cooper Richey put it well when he said, “The human brain is wired to be irrational about death.” People avoid the subject of death, they behave as if it’s never coming, and too many don’t plan for it. It’s just some sort of mystery date in one’s future when we expire.
app called Final Countdown that counts down the days (and years, months, weeks, and so on) before my estimated death date, and I have been urging all my friends to do the same.
If you’re nervous about someday running out of money before you die, then spend some time looking to annuities as a possible solution.
whether people are getting inheritances from their parents or from someone else, the data clearly shows many people getting inheritances late in life, and that is suboptimal.
Here’s the point: Too many of us still view ourselves on an ongoing basis as being in our twenties, even though our real age is somewhere in our fifties, sixties, or even seventies.
Money is nearly worthless at the very beginning and the very end of life.
The good news from all this: If you take even small steps to improve your health now (improving even 1 percent and avoiding the negative compounding effects), you will have vastly increased your total experience points.
Laundry is just one example; the same logic applies to any undesirable chore, like housecleaning. To me this kind of outsourcing always seemed like a no-brainer—so much so that I started doing it in my twenties, when I had a much lower income.
The more money you have, the more you should be using this tactic, because your time is a lot more scarce and finite than your cash.
I’ll never get more than 24 hours in a day, but I can do my utmost to free up as much of that finite time as I possibly can.
This isn’t just my personal experience or economic theorizing. Research in psychology backs me up: People who spend money on time-saving purchases experience greater ...
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Many of these are particular to each individual, of course, but if you listen to dozens of stories about people’s deathbed regrets, common patterns do tend to emerge.
An Australian woman named Bronnie Ware, whose work as a palliative caregiver put her at the bedsides of patients with just weeks left to live, talked with her patients about what they wished they had done differently in their lives, and found five key regrets coming up more often than any others. As she describes in a popular online article and in a subsequent book, the two most common regrets are ones that are most relevant to my message.
As the old saying goes, “No one ever regrets not having spent more time in the office.”
discrimination against older workers, combined with the stigma of involuntary job loss, apparently causes some workers to say they’ve retired when in fact they were merely forced out of their jobs and couldn’t find another.
If you wait until you’re 65 or even 62 to dip into your nest egg, you will almost certainly end up working longer than necessary for money you will never get to spend.
Key take away!
At a certain point in life, you simply won’t be able to consume above a certain amount of savings—so don’t save too much, and instead plan to enjoy spending that money sooner.
In general, this whole “I’ll wait to do this when I’m retired” is a massive blunder. But if you’ve already made that blunder, go ahead and make the most of the time you’ve got.
Already things I had planned to do that I probably would struggle with now.
