Reflection
Over the years, I’ve worked with plenty of professionals making really, really good money. Certainly plenty of people earning a comfortable $150,000-$250,000 per year. But executives aside, I’ve worked alongside and am networked with folks who, as sale representatives or consultants, have had a few back-to-back years earning mid- high-six figures. I wouldn’t be the least bit surprised if, during the halcyon days of high tech in America, top sales people I worked with had a few low seven-figure compensation years.
Do you know what amazes me? How few of these people have yet announced their retirement, despite today being in their 50s and 60s. Sure, I get it, retirement is a personal decision, and there’s more to the decision than money. However, as outlined in my post titled Late Career: Don’t overstay your welcome, when to retire really comes down to finances for most people, rather or not they want to admit it. People who have their financial house in order have options and, given a choice, few would stay the course in their corporate life.
Thus, when I see someone that I know spent years pulling down bank still hustling to prove themselves in the corporate world, I figure there’s a very high likelihood that they frittered away that strong income. All the bragging over the years about the vacation home on the coast, the fancy cars renewed ever year or two, the lavash vacations and the heli skiing trips to Canada have come home to roost. While some of these individuals miraculously managed to “out-earn their stupidity”, in the words of Dave Ramsey, others have reached the final third of their lives with very little to show for it. Oh, they may pose like they’ve got zero regrets, but deep down inside, I cannot imagine having let these riches flow through your hands and to have so little to show for it. Trying to maintain your high water mark earning lifestyle for you and your family while becoming less valuable in the white collar workforce each year must be incredibly stressful.
My Solution
Sometime in my early thirties, I reviewed my Social Security earnings statement. First, I was impressed by the solid ascent of my annual salary over the years. But then I had another thought: How much of this was spent (given to someone or something else) vs. how much of this is still mine (invested or saved). While I was pleased with the answer to that inquiry, this exercise nonetheless inspired me to inventory and reign in my spending while increasing my savings and investing. I wanted even more to show for all of my hard work.
Next, I got on a financial literacy reading spree. Three books, in particular, reframed my relationship with money.
Stop Acting Rich, by Thomas J Stanley, PhD
After reading this book, I would laugh every time I approached an intersection in my paid-off car with plenty of miles, wear and tear. I would glance around at the shiny new cars and realize that the vast majority of these people really couldn’t afford these vehicles. With few exceptions (truly wealthy people who really could afford to pay cash for a $70,000 ride), most drivers around me were saddled with heavy car payments, making some banker rich each month with interest payments. The crushing burden of living way above our means on credit so common in America is no joke, and after reading this book, I didn’t feel so foolish for my frugal ways. Driving a beater car became a badge of honor.
The Millionaire Next Door by Thomas J Stanley, PhD
In this book, the author again sticks with the theme about the difference between being rich and merely acting rich. A major thunderclap came when the author outlines which careers are the best (in aggregate) at converting income to assets. Spoiler: Doctors, executives and sales people fail, while teachers, small business owners and skilled tradesmen excel. Sure, we all know exceptions to this rule. But I see this play out in real life, as I see frugal blue collar workers and savvy pizza franchise operators retire early in comfort while high-flying surgeons and once-mighty software salesmen furiously try to keep their high-spending lifestyles afloat entering their 5th, 6th and even 7th decades!
Your Money or your Life by Vicki Robin and Joe Dominguez
This book rocked me to the core emotionally and further reset my relationship with money. While plenty of personal finance authors know money, these authors introduce in stark contrast another dancer at the party: TIME. Reading this book helped me to visualize and quantify the opportunity costs of staying in my corporate career. They helped me come to grips with the reality that, when it comes to saving and investing, more is not necessarily better. At some point we need to decide what is enough. This is the book that lit the flame in me to build a “good enough” net worth and then create a plan to exit this career life that was paying me so handsomely, but costing me so much in terms of time, happiness and contentment. If you ready only one of the three book I recommend here, this should be it!
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Key Takeaway
I realize that for my core audience of 50+ professionals, some of my reflections and solutions may be a little too late. I hope not. If this is the case, I encourage you to read these three books and strictly mend your ways. Then share this post with your kids or nieces and nephews or that young professional at work. Yes, it’s important to enjoy your money: Life in a comfortable house, donate to beloved churches and charities, relax on vacation and pay someone to cook your meals at a restaurant from time to time.
But I can imagine fewer worse regrets in life than reaching sixty years old, having worked your tail off and earned a handsome income for decades, to realize you’ve let a comfortable retirement slip through your hands because you spent it all trying to meet some unachievable lifestyle standard. I wholeheartedly reject the conventional professional retirement model of working until we’re sixty-five, and retiring tired, old and riddled with health problems. It’s completely reasonable to make the final third or so of our life something more fulfilling, more enriching, more relaxing and more authentically us. Don’t let retirement slip away for your or the people you love.