Save for your dreams, not for retirement…
I touched on this a few days ago, but I really want to talk about it in more depth. As I’ve said, I’ve been having some trouble articulating my ‘dream’, but I feel like this concept is so powerful that it deserves to be talked about even without being able to give a personal example of how I’m doing this.
For the past 80 years or so, the idea of your retirement has the fourth leg of the bar stool that is the “American Dream®” (Go to College,Start a Family, Buy a House, Retire). Talk about an effective marketing campaign – can you think of anything that is more American? Ok, maybe apple pie, but seriously, this is what several generations have collectively been programmed to strive towards. Unfortunately, much like home ownership, I’m not convinced that my generation will ever see the retirement that my grandparents did. (yeah, yeah, I’ll talk about home ownership some other time. I promise.)
Before I continue, just let me establish that this is not an excuse to stop investing in your various ‘retirement’ accounts. Just that you’ll probably want to use (and think of) those accounts differently.
Honestly, I’m not even convinced that my parents, who are coming up on the mythic retirement age of 65, will ever truly get the chance to retire and live a life of leisure. Good thing neither of them is really into that. My mom just a year ago finished her masters degree in social work, and my dad bought into a small business just a year prior to that. Talking to them, you wouldn’t think they were ever planning on retiring.
Ok, so what should we do instead? I’m still advocating long term savings, and I still think everyone should be contributing as much as they can to any tax-advantaged savings account they can. I just think we need to start thinking about them differently. Sitting in an old folks home playing bridge at 2 pm in the afternoon and seeing the grandkids once every few months isn’t something that sounds appealing. It sounds like something I want to avoid. So instead, I feel like we should start calling them ‘Dream’ accounts instead of retirement accounts.
Everyone (and I mean everyone) should be saving at least 10% of their annual earnings for the long term. That includes saving money for a time in which you won’t be able to work. That is different from retirement. Retirement is a ‘life of leisure’ where as what I’m talking about is a life of hospital bills and not wanting to be broke when you are no longer capable of caring for yourself. Basically, it’s a really big emergency fund. But it’s not for fun, and I don’t think it needs to be able to support you for 30 years (although that’s a great goal). But it should be big enough that your needs are met when the time comes, and it can be co-mingled with your dream money for simplicity sake.
If your dream is to buy a dive shop in Bermuda in 20 years, maybe you don’t want to put all of your long term savings in your 401(k) where it will be hard to get to. You might choose to put in just the minimum to get your company match, and then put the rest into a Roth IRA, which allows you to take the principal out at any time penalty free. That way, you get to save for the future, get a tax advantage, and also get to save for that dive shop (there are ways to do that from your 401k as well without paying a penalty, I’ve been told). If your dream is to travel the world and write for a travel magazine (or blog), then you might want to allocate your money differently still. And heck, if your dream really IS to retire and be practically useless, keep following the advice of everyone else, because it’s definitely good, if that’s for you. The point here is you should be deliberate about that you are saving about, not just some nebulous thing that’s 40 years from now that you’ll probably hate.
What is wealth?
Wealth [welth] – an abundance or profusion of anything; plentiful amount - Dictionary.com
Honestly, I’m not a big fan of any of the dictionary definitions of wealth, but the one above was as good a one as I could find easily. For me, personally, wealth is the ability to do what you want, for whom you want, when you want. Really, wealth = freedom. Nothing more, nothing less. Notice I didn’t equate money to freedom – I think that’s a load of b.s., personally. It is certainly not about being ‘rich’, although I’ll admit being rich can definitely help you reach be wealthy.
I like to think about it like this – a retired guy who’s got a ton of cash but is bored with his life and everything in it isn’t wealthy at all. I’m sorry, but most retired people I’ve met fall into this category of affluent but miserable. On the other hand, a young guy making $5.15 an hour living with 6 of his friends making music in the garage on his off hours most certainly is wealthy. Why? Because the old guy has somehow gotten himself trapped in a situation where he doesn’t want to be, while the young guy is where he is because he wants to be there, and is happy about it.
The point I’m trying to hammer home here is that you can be happy without money, but you can’t be wealthy if you aren’t happy. So, rather than making it your life’s goal to collect as much money (or stuff, or whatever) as you can, maybe we should be making it our life’s goal to collect as much happiness as we can. Corny? Maybe, but I would rather be happy and broke (and still wealthy by my estimation) than be rich and miserable.
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So, you want to know what's up with the brackets in the name? "Curly brackets (also called braces, or "squiggly brackets") are sometimes used in prose to indicate a series of equal choices" and "Square brackets are mainly used to enclose explanatory or missing material usually added by someone other than the original author, especially in quoted text." So basically, if you really want to be wealthy in life, you have to figure out how to get happy. Since that whole spiel would make a crappy name for a blog, I decided to do something a bit creative with some brackets.
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