Having Too Much Money

This is a guest post by Robert, who lives in Calgary and works as a financial adviser. He is married, has three kids and plans to retire at age 35.  Robert and his wife then plan to return to school and become teachers, eventually living and working overseas.

I recently met with a couple who are retired teachers. They are wonderful people, who both worked full-time to age 65, except the years the wife stayed home with her children. They now work part time with the education ministry about three months of the year. One of the benefits of being a teacher is a generous pension (in our local board). With two pensions, the couple has enough income in retirement for a very comfortable lifestyle. The additional income they earn pays for their frequent trips outside of the country.

Besides their pensions and earned income, this couple has a million dollars invested with us, plus other investment accounts. When we discussed the investment strategy that would be most appropriate, they explained that they don’t need the income from it, so they want to adopt a growth strategy. They’ll just grow it until the end of their lives, when it’ll pass to people who need it. I respect their decision, but it raised many questions in my mind.

Why did they work so long? They probably could have retired at least 10 years earlier, probably more. Between their pensions and the investment income they could have produced, they would have been able to support their current lifestyle at that point in time. Some people do it because they still have children at home. Some people really love their jobs that much (which wouldn’t surprise me of this couple). And some people just have a protestant work ethic where anything that seems like idleness is uncomfortable. But this couple is still working in retirement. When there are other teachers who are having trouble finding work, it seems unfair.

Why not enjoy it? Money is a means of trade, not a good. In itself, money has no value. It is only worth what it can be exchanged for. Having money is worthwhile if it provides the ability to live, eat, travel or purchase things. But if it is sitting unused, it is basically worthless. When it’s hidden under a mattress, it does no one any good. At least when it’s invested, it helps fund companies that operate in our economy. But as long the investor has no plans to spend it, it is of no value to them.

Maybe it’s a safety blanket. This couple isn’t old enough to have lived through the Great Depression, but they may still be influenced by it. By many accounts, people who lived through that period are very careful to not waste anything. They also realize that there’s no telling what could happen. (It would explain why they have investments through two brokerages.) At some point, however, it seems that a person must accept there are certain things, such as war, natural disasters and large-scale displacements, that can’t be protected against.

My last question is why they would wait until the end of their life to support causes they deem worthy? They could have spent it as they earned it or they could spend it now on their favourite causes. They would then receive recognition, if they want it, and they could see the impact they are having. They could maybe even learn how their money is used by different organizations and that may change their ideas of how they want to allocate their charitable gifts.

No matter how much we accumulate, we can always have more. There’s no natural limit to how much money we can amass. But in order to actually benefit from the money we have, we need to make us of it. Do you have a plan for your assets at the end of your life? Do you give or plan to give regularly before the end of your life?

10 thoughts on “Having Too Much Money”

  1. I’m with you. I don’t want to die with a bunch of money either. If there is going to be some left over for charities or family, I’d rather they have some of that money while I’m alive, not have to wait until I’m dead.

    Having said that I hope to have a little cushion–I’d rather die with a little still in the kitty rather than have it go the other way!

  2. Robert – OK but exactly how much is enough? How long are you going to live?
    Two very hard questions to answer – at 91 my Grandmother developed a medical condition that in order to make her life more comfortable required around the clock care. She died just a month before her 100th birthday. Her once large estate was decimated by this prolonged condition. I think its a valid fear that we all have that we would give our resources away and then have an unexpected personal need or worse a loved one develops some kind of urgent financial need. A big fear would be not to have the resources to help a loved one.

  3. Interesting comments. And I will be the first to admit that by far the majority of people need to worry about having enough, not about having too much. In my example, the couple probably has three times what they need: two pensions, investments and a paid-for house. Normally, I would suggest that an income, either from pension or investments, with a paid-for house as a backup plan is probably adequate for your needs, even if that means a medical emergency.

    It’s impossible to know, of course. And then there are eventualities that simply can’t be solved with money. So everyone’s going to have to live with at least a little certainty. I guess the trick is finding a balance.

  4. I don’t know if I’ll have too much money, although it would be a nice problem to have, but I would like to be comfortable enough so that any unforeseen medical circumstance wouldn’t take me or my wife into poverty. I have a fear of that.

    With more folks out of the workforce than in, in another 10 years, another Great Depression is a looming possibility we’re preparing for.

    I enjoyed the post Robert.

  5. “But this couple is still working in retirement. When there are other teachers who are having trouble finding work, it seems unfair.”

    Remove “seems” from the sentence. IT IS unfair.
    These “wonderful people” such as those described in this blog post are really something else. They have a generous, very secure pensions (taxpayer backed), the like of which the vast majority of other Canadian taxpayers will never see or have, and instead of bowing out gracefully and being grateful what do they do? They continue to clog the system like a backed-up toilet, double dipping, making it quite difficult for new teachers to get in and HOPEFULLY enjoy the benefits they currently enjoy.

    Very nice. Top notch people to be “teaching” and guiding.

  6. This last comment from AA has me laughing. I just got a comment on my blog that says I’m lazy for retiring at 44, that I “should” be out being productive. So, even if you don’t want to work, and you have enough money, you should be out working anyway.

    Then on the flip side, these folks are out “being productive” and obviously enjoy what they are doing. But since they already have enough money to retire, they “should” be stepping aside (i.e. not continuing to work if that’s what they want to be doing) so that someone else can have their job?

    I’ll just go out on my limb now and say I think people should work if they want to and not work if they don’t want to (and can afford to make that decision), no matter what their biological age clock says.

  7. These “wonderful people” can be productive all they want and give back by volunteering, or even working at a private school or tutor/homework help centre. Why insist on double dipping at the school board where they were working previously? Give someone else a chance for Pete’s sake. I like the US system for Presidents. 8 years and you’re OUT. 20 or 25 years as a teacher and that’s enough. Time to get some NEW people in there.

  8. Retired Syd, your arguments are fair enough, but a civil service job, in my mind, doesn’t entitle you to lifetime employment. If it’s your own private company, sure, do whatever the hell you want (e.g. you’re Bill Gates or Steve Jobs), but these “wonderful people” who continue to milk a civil service job that has been good to them for decades to the detriment and delayed beginnings of other citizens is thoughtless, selfish and flat out greedy when you consider that this blog post states clearly that these people have more than sufficient income to cover their very comfy retirements.

  9. This is happening at my place of employment right now. Co-workers who have reached their full pension, paid off their house, live frugally, amassed additional retirement savings and too scared they will be bored/run out of money if they retire. I agree that money is worth nothing if one doesn’t know how to enjoy it. I also agree that if one wants to continue to feel useful, they could continue to give back to the community through volunteer work instead of taking up a job/position that could go to someone struggling to find one in this difficult job market.

  10. I wouldn’t be surprised if a lot of this “please bow out gracefully” sentiment were to go away over the course of the coming decade. A huge number of baby boomers will be retiring, and with them will go a lot of wisdom, experience and seniority. Suddenly, there will be job availabilities, but there may not be qualified candidates to match. It may be a case of “you don’t know what you’ve got until it’s gone.”

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