Millions of Americans buy the retirement industry's familiar song: Unless you save upwards of a million dollars, you are likely to end your days living on the street eating cat food.
Wrong! Although it makes sense at any age to save a few dollars for a rainy day, there is no evidence that great wealth is needed to enjoy a safe, secure, fulfilling retirement. In fact, the toll on the human body and spirit it takes to amass large sums of money can make your retirement worse rather than more comfortable.
At first this contrarian notion may be difficult to swallow. After all, given a choice, most of us would be delighted to have lots more money. But perhaps you'll be more willing to rethink the conventional wisdom that richer is always better if you think about the older people you know. I bet you can name at least several wealthy people whom you would classify as miserable old farts. And I'll also wager that at least a few of the people of retirement age whom you admire most have very modest savings.
The problem with saving big bucks for retirement is not, of course, that you end up with a fat bank account, but that for most of us it requires working incredibly long hours during what otherwise should be some of life's most enjoyable and creative years. Too often the nasty side effect of overinvesting in one's financial life is that other more important concerns are neglected, including spending time with friends and family, taking care of your health, and most important, developing and nurturing authentic personal interests that will save you from being a bored, crotchety TV addict later in life.
When thinking about how important it is to retire rich, ask yourself this question: When you were in your 20s or 30s, what were your most important concerns? People I've queried often come up with a list that involves some or all of the following:
- enjoying one or more close personal (sexual) relationship
- learning new things (going to school)
- maintaining good family relationships
- being self-sufficient (working)
- spending time with old friends and making new ones
- maintaining good health (getting enough exercise, eating well, and so on)
- devoting time and energy to one or more personal interest (poetry, music, a sport -- you name it)
The point is that while financial issues usually appear somewhere, they don't dominate the list.
You may ask, "What do my concerns as a young adult have to do with my retirement?" The answer is, "A great deal." Most peoples' personalities, including their fundamental likes and dislikes, don't change that radically as they age. People who loved baseball, chocolate, sex, and music at age 30 will very likely be attracted to the same things at 70.
No question, the details of what you'll enjoy after 65 will probably be different from what they were as a young adult (if you like to learn new things, you may be learning French at an adult school rather than trying to finish a master's degree), but core things you identified as contributing to a satisfying life will very likely have changed little.
In this context, it's easy to see why it can be a mistake to overfocus on making and saving money during one's middle years. Too many of the other things that you identified as being key to enjoying life are likely to be so seriously neglected that they atrophy. Or put more directly, if during midlife you miss most of your kids' school and sports activities, fail to exercise, neglect to renew your friendship network, and are too busy to keep up with your own personal interests or learn new things, you are at high risk of being isolated, ill, and bored in your retirement years.
If you doubt this advice, I urge you to read the interviews I did with nine energized, life-embracing seniors for my book Get a Life: You Don't Need a Million to Retire Well. What I think you'll learn from these discussions is that there's a huge gap between the "save more money" message of the personal finance press and investment industry and what active, interesting retirees themselves say is important. The successful retired people I talked with are, for the most part, not primarily interested in money -- either in spending lots of it, piling up more, or worrying about having enough.
True, a few of the retirees I queried had ample savings and no money worries; their focus on other retirement challenges is hardly a surprise. But many others, with more typical middle-class incomes, also don't give money much thought. Some have chosen to live fairly frugal lives; others are so busy thinking and doing interesting things they simply don't have the time or desire to focus a large amount of energy on their finances. When each was asked, "What is the most important thing a middle-aged person can do to prepare for retirement?" most came up with pretty much the same list:
- "Learn new things."
- "Develop lots of interests."
- "Find useful ways to connect to the world."
- "Cultivate important family relationships and friendships."
- "Take steps to protect your health."
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