Hello class and welcome back to Fire Univesity. Today I want to talk about something that is very personal to me and Mrs. FU. Recently my family received some bad news in the form of a health diagnosis. In light of dealing with the eventual death of someone we love and being forced to acknowledge our own mortality, it has caused us to reflect on finding the right balance between enjoying the present moment and saving for the future. Our family member is fairly young and faces a reality of not living much longer, having spoken to them they have regrets about waiting to do things until retirement as well as fears of not having saved enough to care for their spouse and kids. This created an interesting question about the reality of postponing spending money and having instant gratification versus saving and waiting to spend money until later in life. When speaking to older people that are near death, I don’t recall ever hearing one say they wish they had saved more or spent less, never a single person, their regrets are usually centered around the things they didn’t do. Things like staying in a job they didn’t like instead of pursing a dream job, or never having the courage to sell everything and move to a new place to live a life they dreamed of. However I have never met an older person nearing retirement or in retirement that hasn’t said they wish they had started saving and investing sooner. That’s a weird combination isn’t it. When you think you have health and time, you wish for more money but when you are out of health and time you wish for more of both and could care less about how much money you have. I try to be mindful of this and live in a way that will not create regret later in life but it is so hard, there are so many things that pull at us for attention and time continues to pass, whether we like it or not. Kids grow up and become adults, parents grow old, and spouses both have different demands that seem to battle for attention. I wonder how many rich old people would trade it all to be a teenager again?
Personally Mrs. FU and I are very frugal but because we have always lived that way we do not feel like we are sacrificing anything. Also as the parents of four kids we both prioritize saving to ensure their futures as well as ours. This is where the FIRE journey comes into play and why it is such a powerful lever for us to pull. Pursuing FIRE does take a lot of discipline and sacrifice, we could easily afford much nicer cars and a much larger house, however I am not convinced that either would provide more enjoyment or happiness. In fact I think that by learning to be present in the moment and by practicing gratefulness for the simple things in life it actually makes us happier and more thankful for the things we have. Since we have a simpler live style we are able to save a larger percentage of our incomes and therefor hope to hit retirement earlier than the average person. By not locking ourselves into large mortgages or ridiculously expensive car loans, we are able to not only save more but we are also able to enjoy more disposable income. So we are enjoying the present, while also saving for the future. Our shared goal or purpose is for Mrs. FU to retire before 50 years old and both of us spend time traveling and enjoying life doing the things we have always dreamed about doing. I think retiring any earlier than 50 would harm our long term financial goals such as paying for our kid’s college and saving enough to withdrawal 3% of our nest egg to live off of, which will give us the peace of mind to know our money will last as long as we do.
There is peace in having a plan and knowing the math behind the plan, however when you see a life cut short it makes you rethink the why behind the plan. So is sacrificing in the present worth saving for something that you may never get to enjoy? Well in our opinion YES. For us the satisfaction of knowing that we can not only provide for ourselves in retirement, when we need our money to work for us, instead of us work for our money. Add to this the fact that our children will have a strong foundation to build on for their financial lives and we are confident that we are making the right decisions.
Another way of looking at this is that being financially independent would allow us to know that even in the absence of one of us, the other surviving spouse would not be destitute and unable to maintain the same quality of life. The thought of knowing that you would not only be unable to physically protect someone but that you would also be leaving them in financial ruin would make being sick even worse. The age old saying that money doesn’t buy happiness is true, however it does provide peace of mind and comfort knowing that your loved ones will be okay no matter what.
Thank you for joining us and remember that we are not licensed financial advisers or tax professionals, please consult with your financial specialist before making any financial decisions.