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.
A couple weeks ago, I wrote a post that I entitled, tongue-in-cheek, “Don’t Go on Vacation.” A few people strongly disagreed with my “advice”, and I don’t blame them. The advice to not go on vacation is terrible for anyone who seeks a balanced life, with some well-deserved down-time from a stressful job. Besides that, making a decision out of fear, such as avoiding vacation time for fear of losing one’s job, is a reactive way to live. What I honestly believe is that we should enjoy what we have while we have that opportunity.
I was at work a few weeks ago when a longtime client phoned to tell us that his wife had passed away. To me, it came as a surprise. She was almost 70 and it turns out that she had been battling cancer over the prior year, although they hadn’t told people about her illness. I told him that we would make it as easy as possible to combine the RRIFs and ensure he had enough income and set a meeting for later the following week. After hanging up, I reflected on their situation. They had lost the majority of their investments during the “tech wreck”, before transferring their accounts to us. They had set a goal to have $200,000 (again) before retiring, which required him to work until age 70. When he retired, they moved out of the big city to a condo in a small town, just getting by on their investment income and government pensions. They had three or four good years before his wife passed away.
When we earn income, we are forced to make a decision between spending it now, or spending it later. When investing, the goal is that the more we postpone spending, the more we can spend. The decision is tempered by the knowledge that we don’t know how long we will live. There’s no point saving all our money, only to die prematurely and never enjoy the use of it. Which raises the point that money is only useful when it’s used for something. So the issue becomes: what’s really important in your life?
It’s often the things that are intangible: people, relationships, experiences. So it seems advisable to make the most of the time we have together. In my case, I’d rather have less money, but more time with my family. That may mean working only four days a week, or taking memorable vacations while I’m working. It also means retiring as soon as I am able, instead of amassing a fortune. I occasionally think about what I’d like to leave my children at the end of my life. If I can leave them some money, that would be nice, but if I can leave them a role model and some great memories, that’s something I value far more.
What motivates your choice between spending now and saving for later? What would you do with your time if you didn’t need to spend so much of it earning money?