Needs and Wants in Retirement

So a reader emailed me to asked about writing a post on needs versus wants the other day and I had assumed I had covered the topic.  Then when looking through my blog posts it occurred  to me that while I did cover that in a chapter in the Free at 45 book and I had a strong theme on this blog regarding on needs versus wants I haven’t expressly written on it for a while.  So let’s get to it.

People often assume they understand the idea of needs and wants.  After all needs are just basic things you require in life such as shelter, food, water and heat (especially in Regina this winter).  Needs are the things in your life that you literally die without it, which is a good definition for this post. Meanwhile wants is everything else that isn’t a need.  So you need water but you want a coffee in the morning despite some days it feeling more like a need. Yet the problem becomes when we start to explore the line between wants and needs.

For example, shelter.  Yes you need a place to call home.  But exactly where exactly does that cease to be a need and drift into a want.  After all a trailer is shelter and so is a tent, yurt or a small shack and technically so is a 3000 square foot detached house in the best neighbourhood in town.  But the last one is more obviously a want which happens to also fill a need.  But where exactly is that line between a need and a want?  Is a 800 square foot house in a okay neighbourhood a want?  At what point of outdoor temperatures in winter does a tent or yurt cease to be useful shelter?  The fact is the answer starts to turn into more subjective issue.  I may think 500 square feet is too small for a family of four but other might think it is just fine. In general, something becomes a need when you consider it as such in your own mind.  Heck people even use that sort of language about needs such as “I NEED my coffee in the morning.”

Then on the other side of the issue wants are truly unlimited.  It doesn’t matter what you own, have or do  with your wants, you will always want more.  You can win the lottery and next week still want more than you have.  And this is why a lot of people lose their way in our consumer driven culture.  It is always easy to see something else you don’t have and want.  You often see people that are always planning the next vacation or the next shopping trip or the next item to add to their wish list and never happy with what they already own.  You can fall down that well of wants and never find the bottom.

Then between want and need there is a very fine line that if you can find it really key to having a happy life.  It is called: enough.  Finding it is often a tricky thing as you can pass right pass it without realizing it at first.  How many books are enough for your home library?  How many spices are enough in your kitchen?  And the frustrating part is the answer can change over time.  What used to be enough might be too much later and even later turn into too little.  But once it hit enough you realize you are content there and you don’t really want more than you have.

So how dose this relate to your retirement?  Well I generally suggest you aim your budget to meet your needs and just a few of your wants with your target income in retirement.  In short, aim for enough.  Enough money to do what you want but not too much that you don’t have to prioritize your spending. For example, I can afford to buy all grain brewing equipment or a 3D printer this year not both unless I earn a bit more income.   You should be able to afford what you really want just not all at once.  Of course this amount is still a subjective number which is different for each person but I find talking about enough stops the excessive fantasy spending plan where you live in castle for half the year and drags you back towards something closer to reasonable.

Of course some people might ask: why not aim your budget for just your needs? Well because that can be too thin of a margin of error in the event the markets go to crap for a few years and you want to reduce your spending.  You should have some fat to your spending to allow you to make some temporary adjustments if you need.  You don’t want to end up in a high stress situation where you can’t pay all your basic needs and you end up using debt to fund your needs.

So how did you determine what is enough for your retirement budget?

6 thoughts on “Needs and Wants in Retirement”

  1. For us, planning on 30x expenses, plus an extra lump sum for lumpy one off expenses. We are at 30x expenses saved, just now saving the extra lump sum. Not sure how much that will be yet. Could be an extra 20k, or an extra 100k.

  2. Good post Tim, and yes it gets somewhat subjective! Personally, I’ve gotten a little less concerned with precise goal amounts based on my own life experiences although understanding the numbers is obviously critical. I have to say that I like Scott’s 30X expenses+ approach.

    So many of our ‘current selves’ fear not having enough. Too many of my younger years were spent ‘living to work’. When mild health concerns arose in my mid-40’s I began to contemplate my ‘future self’. Future me regretted not enjoying my time on this planet more and so I did the big job shift. I plan to work at something I enjoy, on my terms, for many more years. It doesn’t earn a lot, but it’s ‘enough’ when factoring everything else in. A more relaxed, frugal lifestyle with occasional splurges on events and goods that are meaningful to us seems to be the sweet spot!

  3. Rick H
    March 15, 2019 at 7:08 am

    “I did the big job shift. I plan to work at something I enjoy, on my terms, for many more years.”

    Hi Rick
    What is that work?

    Always looking for ideas on what to shift to.

  4. Finding contentment in what you have and clearly distinguish between what you NEED and what you WANT is indeed difficult, but once you found your balance, you can really find happiness!

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