Too much money is too much trouble
You can have too much money.
I know you don’t believe me. I hear you out there saying, “Try me! Just try me!”
Of course, “too much money” is not the malady facing most Americans. Credit card debt is at an all-time high (over $1 trillion) and student loans are 50% higher (about $1.5 trillion). The average savings rate is up (over 8%), but the truth is that higher-income households account for most of the sunshine in that statistic.
If you can’t imagine the words “too much money” ever coming out of your mouth, don’t tune me out just yet. It can happen at the most inconvenient time.
Let’s just assume you’ve got the usual profile of credit cards, car payments, a mortgage payment and maybe the last tidbits of a student loan. You save enough to get the 401(k) match at work but not much more. You feel like you’re going to be making debt payments for the rest of your life.
Well, let’s look 20 years down the road. Your 20-years-into-the-future self has come into my office more times than I can count. Here’s what happens (if you’re lucky!)…
When times were tight, you learned to live on whatever was left after all the debt payments (often 30% to 50% of take-home pay). Then a funny thing happened – time marched on and the mortgage got paid off, you kicked the credit card habit and you realized you didn’t need a new custom-lifted dually pick-up truck every three years. Instead of pumping your lifestyle back up, you saved the money you were sending to lenders all those years.
Now you’re retired. Your Social Security check is about $3,000 a month. Same for your wife (she had a better job than you did). You’re old enough that the IRS mandates you take a minimum amount each year from your IRA.
With no debts to pay and a fairly simple lifestyle, you have more money coming in each month than you can spend. To be honest, it isn’t hurting your feelings one bit to see your checking account grow and grow and grow.
Now…so far so good…what I’m describing is not every American of retirement age, but it’s more than you might think. And most are kind of surprised when they get there (“I didn’t know I was doing this good…”).
Then it happens.
A parent dies and leaves an unexpected inheritance. A land-man calls you and says an oil company wants to lease some land you own so they can punch a hole in the ground and try to make you rich. A business you invested in years ago pays off and you get a windfall.
Now, remember, you’re retired. Your lifestyle is set. There’s only so much you want to travel. Only so much you want to eat out. At some point, it takes more energy to spend more money than you have interest or energy to offer.
You have…more money than you’ll ever spend. And you know it.
Don’t get me wrong. I’m not writing this column to drum up sympathy for people who have “too much money.”
I’m simply acknowledging what some have experienced but were perhaps too humble or embarrassed to admit – above a certain level (which is admittedly different for everyone), more wealth is simply more worry.
You are investing, managing and paying fees for wealth, property and accounts that will never benefit you one bit. This is wealth being managed for another generation. For someone else.
If that someone is someone you love, great. This whole process will be very satisfying to you.
The balance of a current life (and lifestyle) and the need to save for an unknown future is both an art and a science. There’s only so much you’ll ever spend.
So, keep it simple, keep it sane and keep it balanced.
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