Your Life is a Better Benchmark Than The S&P 500

How to make the tradeoff between "I need to save money" and "you only live once"

Photo by pisauikan on Unsplash

I had a reader and a friend ask me to write a post addressing a concern that she had. She said “"I'm stuck between 'I need to save money' and 'you only live once.'" Wow. She is far from alone in that conundrum and I thought it warranted a newsletter. But I’m going to do you all one better. I have a guest writer today who has a most brilliant take on this issue. He’s Russ Thornton of Weathcare for Women, and here’s what he has to say on the subject of securing your tomorrow vs living your life today.

Am I going to be OK?

[My clients] often mention things like "peace of mind" or "feeling safe and secure" or "making sure we have enough."

I've even had 3 separate women say to me something along the lines of that they don't want to wind up alone, having to eat cat food. They were kidding, sort of.

But I think all these ideas (and many more) can be boiled down to the desire to know if you're going to be OK.

And if we can agree that this is one of - if not THE - universal questions about money and about life, let's dig a little deeper...

First off, you'll need to define the word "OK."

OK for you will almost certainly be different than OK for me or OK for your friends, family, and coworkers.

Also, take note of the words "going to be"...

While I applaud your orientation on the future, be careful not to be so "tomorrow focused" that you miss out on enjoying your life today.

And every day along your life's journey.

I'm sure you've heard of stories about people planning to really live it up once they retire or once they achieve some other milestone, financial or otherwise, in their lives. But then tragedy strikes, and they're no longer around to enjoy this wonderful future that may have been decades in the making.

Or their spouse dies or is disabled.

Your ideal future can change suddenly and drastically.

Tomorrow isn't promised.

That doesn't mean we shouldn't plan for it, of course. But neither should we put off living our best lives today.

It will take some exploration and discovery, but there's a healthy balance to be struck between being well prepared for an uncertain - and sometimes scary - future AND making the most of your life today.

And every day.

So perhaps instead of "am I going to be OK?" it should be "am I OK today and am I going to be OK tomorrow?"

Is this just semantics?

Maybe.

But I think there's value in turning some our "either / or" thinking into "both / and" thinking.

And at a high level, this is what financial planning is.

Or what it should be...

Defining and determining what a comfortable and confident future looks and feels like to you. The more specific you can be, the better.

It's one thing to say you want to retire at age 65.

It's quite another to say you want to retire at age 65, spend $84,000 per year, take 2 trips per year, gift money to your children annually, and volunteer weekly with the local rescue group.

Specificity is important.

But - and this is an important but - you also need to consider where you are today. And how you can plan for your specific vision of the future while still making the most of your life today and every day going forward.

I've written before about minimizing regrets. And staking all your hopes and dreams on a tomorrow that may never come - or that may turn out very differently than you planned - is a recipe for regret if you ask me.

So let's say you know, in specific terms, where you want to go. And you've also evaluated how to make the most of your life today and each day along the way.

Now what?

Well, this is where the power of ongoing planning bubbles to the surface.

As boxer Mike Tyson so eloquently puts it,
"Everyone has a plan until they get punched in the face."

Or put another way, your plan is nothing more than a snapshot in time. Based on what we know (and anticipate) right now. Today.

But life has a funny way of wrecking - or at least altering - our best-laid plans.

So we need to make new plans. We need to accommodate new information and experience as we get it. And we need to adjust to a changing personal and financial landscape.

We might have to take some detours. We might accomplish some things ahead of schedule. And we'll certainly have to adjust our plans and evaluate some trade-offs along the way too.

This is financial planning.

All in an effort to help you answer the question, "Am I going to be OK?"

Today AND tomorrow.

A few learnings from my retirement

I love what Russ has to say. Thinking about being OK today AND tomorrow and being ready when life’s uncertainties play a role. And, certainly, revisiting your financial plan on a regular basis is important! Here are a few more tidbits I’ve picked up as I’ve started to travel this retirement journey.

Flexibility - First, know where your budget is flexible. If you can manage to absorb at least some of your splurge/extra “today” spending by reducing spending elsewhere, it can take some of the sting out of living well today. For me, it’s restaurants. I’m fine cooking and eating at home alone or with friends. In an unconstrained month, I’ll go out several times, but if I don’t go to a restaurant at all one month, so be it. Maybe yours is Amazon purchases, or show tickets, or whatever it is, know where you have some give. The other place I’m exploring flexibility is with gig work. I’m trying Upwork to get a gig or two to cover sometimes when there’s a screaming deal on a stand up paddleboard that I really want and it’s not in my budget. (It was a GREAT deal and it came with an electric pump and it’s good for my health and it wasn’t THAT far over budget…) I’ll let you know how it goes with Upwork (and other platforms) in a different newsletter.

Budget realities - Have a “misc” bucket that’s there for whatever comes up and bake it into your budget every month. I had my “usual” spending pretty well nailed before I retired, but I didn’t realize that, pretty much every month, I’d have some unusual spending items, like some medical thing that isn’t covered, or something around the house that needs replaced or a need for a professional’s advice, stuff like that. If you’re using the flexible part of your budget for that stuff, it’s harder to feel good about your YOLO (You Only Live Once) purchases.

Mindset - Not every shiny object is a YOLO purchase. I know you may be used to “just saying yes” when you’re working. Now, you may need to pause and decide if this thing (or experience) you want is truly life-enhancing, or if it’s just something that makes you feel good in the moment, but may end up collecting dust in the archives of your life. Test it out first in your head and project out a few years. Was it still worth it? If you can rent before you own, maybe try that. Wait a week. Is it still as important as it was when you first thought about it? It’s up to you how you do it, but figure out if you can put the brakes on your decisions and only go forward with the ones that are really going to improve your life. (Stand up paddleboards are definitely life enhancing, right..?)

At the end of the day, as Russ says, it’s about balance. Don’t live like a pauper today for a tomorrow that may never come - or at least may look a lot different than you are imagining it to be. On the other hand, don’t rob yourself of the good life in your twilight so you can have a garage full of dust catchers today.

Thank you, Russ, for your great insights!

Check out Russ’ website Wealthcare for Women! He has some awesome podcasts, including topics like being a caregiver and how gift taxes work. And his blog is the bomb! With topics like getting organized, making your plan and life after retirement, you’ll find tons of stuff to help you on your Third Act Journey!