This rant may come as a surprise to you, at least coming from me. It’s actually a little surprising to me that I’m writing it because I wrestle with this topic quite a bit. The subject is that of luxury items; things like a ’69 Camaro, a Florida condo, a full-sized pickup truck that cost more than your first house, or a diamond ring for your other hand that makes your actual wedding ring look like a grain of sand. I suppose you can fill in the item that most appeals to you, that’s not really the point. Instead, I’d like to focus on when it’s best to buy these things rather than on whether you actually should buy them.
See, I’ve learned that I can’t stop a person from getting what they really want. They’ll ask me my opinion or even appear to suggest they’d like my permission to buy something that’s pricey. And regardless of how I respond, they’ll manage to get it, come hell or high water. And for the longest time, I struggled with this. After all, to accumulate enough money to retire only to turn around and begin taking sizable withdrawals in order to buy stuff does kind of hurt my brain a little. It sometimes feels like a person has crossed the finish line only to turn around and start running the other way! “Wait, where are you going?”
Before I get to the part where I say this is all okay, I do want to add that it may not be okay. The world around you may change, the market could decline, the sky might begin to fall. And if it does, you’d better be ready to adjust your plans accordingly because there’s no law that requires that people who’ve retired will stay retired happily ever after. Yes, bad things can happen to really good people and to really good plans. With that said, I also think the human mind is a powerful machine that’s capable of recalculating when inputs are altered. In other words, not only can I not stop people (and their powerful, persuasive brain) from doing something they REALLY want to do, I might be surprised how well they can shift their strategy when things do change for them.
If you’re going to find a way to get that enormous new SUV, please don’t ask me to try to talk you out of it. I can’t. If that new boat has you tossing and turning in bed at night, there ain’t no way I can summon enough strength to stand between you and it. To the contrary, I may be better off supporting you in this adventure because you’re smart enough to find a way to get it and you’re also cunning enough to find a way to fix it when the situation turns back against you. How do I know this? I do the same thing.
The best part about being 62 rather than 22 is that you’re very likely buying the luxury item with money that your money made for you and not with money that you earned directly from hard labor. That is, the growth of your investment money over the years is what you’re spending, not the deposits you made into the account in the first place. That makes a $50,000 item comparatively less ‘costly’ to a 62-year-old who has saved for decades than for a 22-year-old who hasn’t begun saving in earnest. The 22-year-old is spending money that would have benefited from compounding for the next 40 years, thus becoming a very expensive luxury.
Do your best to save enough to someday retire and stay retired, buy that thing that has haunted your restless mind for years that will make it all seem worth it, and know that you may need to adapt should these things not turn out exactly as planned. I’ll support you and even find a way to adapt your retirement plan to your crazy motorcycle fetish as long as we agree that we’re all a little crazy anyway, so let’s just be real about it.
All the best,
Adam Cufr, RICP®