Balancing Enjoying Your Money Now Versus Later

In my post titled The Joy of Wealth, FMF reader Old Limey (who's retired) made the following comment:

To give you an idea of how I spend my days. Yesterday was the day my hiking group rents a luxury motorcoach that costs us each $30. Thirty five of us were driven to a beautiful county park on the California coast between Santa Cruz and San Francisco where, in gorgeous weather, we hiked through a beautiful Redwood forest. The group splits up into small groups according to ability. I go with the fastest group, that the others call, "the Rabbits", and we did a hike I estimate to be about 12 miles. I can't say for sure because my GPS lost satellite coverage in several of the steep canyons we went through. There were just 5 of us, myself and two old friends and two newcomers (each 46) that were still working but had flexible hours. One was a PhD in electrical engineering, the other was an Iranian lady that was also a PhD and a clinical biologist at a local hospital. What more can you ask than to be doing something that's very healthy, great for the psyche, have intelligent conversations, and to meet two very interesting new friends, all for $30.

This is the retirement many of us imagine -- days filled with fun and excitement. But to enjoy a retirement like this, you need two things: money and your health.

Let's consider various money and health combinations and what sort of retirement they give you:

• Enough money and good health -- The great retirement described above.
• Enough money and poor health -- Depending on how bad the health and how much money you have, it could be an ok retirement or quickly turn into a big mess.
• Not enough money and good health -- Though far from ideal, at least you can still work (which is what many people are counting on.)
• Not enough money and poor health -- You're counting on the government and/or family to take care of you.

Thankfully, one of the key factors to retirement success is fairly controllable. If you take a few simple steps (and avoid some others), it's likely that you'll be wealthy when you retire. But having your health is less certain. Sure, you can eat well, exercise, get enough rest and so on, but accidents, heredity, "fate", and a variety of other things can still conspire against you.

This gets to the "do you spend your money now or later?" question that people bring up here from time to time. The "spend it now" group argues that you have your health NOW, so why not enjoy what you have while you're young. It's not often said but it's certainly implied that retirement can take care of itself later. Unfortunately, we know that this is not usually what happens.

The other point-of-view is the "save now and enjoy life in retirement" group. This way of thinking focuses on putting money aside for that one day when you can enjoy a lifestyle like Old Limey's. The one problem here: you never know if you'll have your health or not when you retire.

So what's the solution? I believe it's balance. If you make the gap between your income and your expenses large enough, you can both enjoy life and have plenty of savings. No, you can't spend everything every year on one big party after another, but you can have a ton of fun while also not sacrificing the future.

That's my opinion. What do you think?

Comments

[Derek Clark - Christian Common Cents]

Completely agreed. I try to save as much as I can, and sometimes I get called a tightwad, but I have plenty of fun. Also, there are lots of ways to have fun without spending lots of money. The example given sounded like a great afternoon and $30 isn't all that much. I went on a hike in a state park a few weeks ago as well and the only cost was a negligible amount of gas driving there. No need to spend hundreds or thousands to have a good time.

[Budgeting in the Fun Stuff]

I'm for the balance. We spend about 40% on needs (housing, bills, food, etc), 40% on savings (retirement, emergency fund, investments, and extra money towards the mortgage), and 20% on wants and savings for wants (like our housekeeper and travelling). This works well for us. :-)

[wanzman]

I think this is the balance that everyone who is financially responsible is trying to achieve.

I think this is where the conversation about earning more money starts to really come into the picture. As you work hard to grow your income, your options begin to grow, and you can do more fun things today while still achieving your savings goals.

My wife and I have been married for 2 years and have been out of college for 3 years. When we got married, due to having 2 incomes, our options increased. Over the past couple of years, we have both received promotions and raises that have increased our incomes substantially. We are both working more, but we also like our jobs more due to the increased responsibility and more interesting work that comes with jobs you are able to get once you most past "entry level".

I think the next balance we will need to work to achieve will be one of time. If we continue to gain more responsibility at work, time will become more scarce. We also plan to start a family in 3 to 4 years. We are already discussing having my wife stay hoe to raise the children, something that she really wants to do, and something that I really want to me able to make happen.

[squirrelers]

I completely agree on taking a balanced approach. Life should be enjoyed to its fullest. That said, we need to do so in a way that protects our future enjoyment.

Its easier to enjoy a highly active, fun loving life when one is younger and the body healthier. That said, its also easier to work when younger, with your health and energy level better.

Important to keep both points in mind.

[Rob]

I'm all about having balance. No sense in scrimping and then your health is not good enough to do anything once you do not have to work anymore. My thought is however that I will probably be working a little for most of my life, whether it is working for income or just volunteering.

[Old Limey]

Unfortunately health factors rear their ugly head for nearly all of us eventually but some are a lot more fortunate than others. Another of my really good hiking friends is a retired teacher and he and I are the same age, 75. Ten years ago he was diagnosed with colon cancer, had 2 feet of his colon removed and was told that if he had chemotherapy he would have a 20% chance of living for 5 years. With those odds he decided against the chemo. He's one that beat the odds and hikes with the "Rabbits".
Another younger woman that hikes with us is a manager at National Semiconductor and works flexible hours to be able to join us. At 46, she is very fit - her husband of the same age however has bad knees and cannot play golf without using a motorised cart.
When we stop for lunch, one thing I have also noticed with my fellow hikers is that, apart from having good control over their weight, is that they are quite preoccupied about healthy eating. A healthy diet, and not being very much overweight are prerequisites for good health. I also bought an elliptical exercise machine and use that daily - it doesn't compare with slogging and puffing up to the top of a mountain ridge but every bit of exercise helps.

Our newspaper today had examples of laid off workers that were now living off their 401Ks - what a tragic sign of the times that is. One's IRA or 401K is the best possible pot of money that a person can have because of the deferred income taxes. These people that are paying a 10% penalty plus income taxes to make a mortgage payment on a home that is "under water", to pay their healthcare premiums, or to just survive, are in a very sad state of affairs. Unfortunately a happy retirement for them is a dream that is fading fast. This is why you have to try to be the best possible employee you know how so that when layoffs come, they don't affect you. I'm in the camp that believes that when you are in mid career, your career must always take priority over pleasure. The other big finance wrecker is of course a divorce - but what can you say about that other than that we all make mistakes of judgment. My daughters both initiated divorces but are OK today, partly because I'm their financial advisor, watch their accounts daily, and they are a little scared to go against my advice. My son doesn't have the marriage he would like but he realizes that with one income, for both of their sakes, and their 10 year old daughter, he has to suck it up and make the best of it, or neither one of them will have a happy and secure future.

[Eddie]

Balance is the only way. The perils of not saving for retirement are obvious(to posters here, anyway), but at the same time, I've yet to go to a funeral and hear somebody say "He never should have spent all that money on that trip to Paris". One's time is limited,one never knows how limited, and enjoyment of the here and now should never be forgotten as we look to the future.

[Money Reasons]

The balanced approach is when I'm going to do. If I do it correctly, I can expand my lifestyle and save at a consistent rate every year.