Updated on 06.20.11

Some Thoughts on the Long Term

Trent Hamm

A few days ago, Donald left a provocative comment on my recent article How to Get Rich Quickly!. Although I think his tone is a bit aggressive, he does bring up an interesting point:

Yes this is good advice – work for 45 years, squirrel away your income the whole time, and when you are ready to die, you will be rich (*disclaimer – rich in 2011 dollars, maybe not so rich in 2043 dollars)

First of all, I have no interest in being rich. My impression of being rich is that I have enough money saved that my children will have an easy life. I have no interest in that at all.

My goal is financial independence, which means simply that if I choose to engage in activities that don’t earn an income for the rest of my life, I’ll survive financially with a standard of living roughly similar to what I have now (and I don’t live like a rich person). I might choose to earn an income at that point so I can spoil my grandchildren or sponsor a charity or fulfill some other goal, but I don’t need it to survive and I certainly have no interest in supporting my children as adults.

Of course, the core of Donald’s point is that long-term savings goals are pointless because of a perceived short life and low quality of life you would have once you reach a retirement age. Donald mentions working for 45 years and, assuming that you’d start such work at age 25, you would be working until age 70.

Here’s the thing, though. The average person at age 70 can expect to live another fifteen years on average (see Table 6 in the 2007 CDC life expectancy report for the numbers). The simple fact is that people at age 70 aren’t sitting on their deathbeds. This may have been the reality fifty or sixty years ago, but it’s not the reality now. Health care and standards of living have given people much longer healthy and productive lifespans than ever before. The majority of people at age 70 have a decade or more or productive life ahead of them and the percentage will just continue to go up as time marches on.

I don’t know about you, but my plans for when I’m seventy don’t involve me sitting down in a chair and waiting for the end. I plan on being engaged with my family and with charities and other community activities until I’m truly unable to do it any more, and the statistics indicate that, for me in my early thirties, that time is a long way into the future. Estimates on life span increases indicate that I have more than fifty years of productive life yet to live and I’ve already been in the workforce for more than a decade.

Simply put, if you are young today, saving for the future doesn’t mean saving for retirement and life’s end; it means saving for financial independence and a second career.

Now, with regards to the comment of “rich in 2011 dollars, not in 2043 dollars”: you have to go back for two decades to find a year with an inflation rate higher than 4%, and some recent years have seen microscopic inflation rates. 2008 and 2009 had extremely low inflation and, by some estimates, had deflation. This is the inflation metric you’re trying to beat and if you’re investing over the long term (40 years), a well-diversified investment with diverse stocks and other assets will annihilate these returns, giving you much better than inflation. Simply put, saving properly for a second career over the long term will handle the inflation problem.

But what about the economic bogeyman? You know, the fear of a financial apocalypse that political opportunists and media members who know how to sell fear love to trot out all the time? The only thing we have to fear is fear itself. Most of the people preaching fear have been preaching fear for several years now. All I see is a prolonged recession and a national debt that was worse in the 1940s than it is now.

The things that have worked for the long term throughout human history work now. Spend less than you earn. Invest the rest in a diversity of things because you don’t know exactly what the future holds. Invest in yourself, too, and make sure you have skills and education to handle both the needs of your life and the needs of the marketplace.

One final thing: think and plan for the long term, because the long term is longer now than it ever has been – and it’s full of more opportunity than ever as well.

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  1. Katie says:

    To be fair, the article was titled “How to get rich slowly,” so it’s not surprising that the comments were about the concept of being rich.

  2. jackowick says:

    Whether a hypothetically saved million dollars lasts me 5 years, 10 years, or 20 years when I retire, I’d rather have it than not have it, and that’s in addition to owning my own home so my monthly living expense is vastly reduced. I’m not that old, but a lot of young ‘uns just don’t see the value of saving. It didn’t take me long to start being really happy with my 401k statements once I started working a couple of years.

    And as far as “getting rich quickly”, the commenter Donald should 1) listen to Chris Rock’s stand up comedy discussing being “rich” vs “wealthy” 2) Realize that getting rich is not for the lazy, otherwise we’d have a world of billionaires, which leads to 3) Front ending your labor capacity when you’re young and taking on second jobs and overtime is a huge boost. A friend of mine worked every holiday and overnight shift possible when he has in his early 20s and was able to buy his first home, single, at a young age with a BIG downpayment. I used to work six days a week when my weekend job cash went solely into partying, and boy do I regret that.

    People who expect to read a few blogs and find some magic trick to make money are never going to be wealthy, even if they do get rich someday…

  3. Johanna says:

    Most 70-year-olds aren’t at death’s door, but some are. And some people don’t even make it to age 70. That is a risk you run whenever you plan for the future – you might die before you get there.

    This is why balance is so critically important: Don’t focus on today at the expense of tomorrow *or* on tomorrow at the expense of today. Figure out how to put together a life for yourself that’s enjoyable now *and* allows you to save adequately for the future.

  4. Steven says:

    I’d love to see how your opinion changes when you’re 70 years old…

  5. Des says:

    “The majority of people at age 70 have a decade or more or productive life ahead of them”

    Cite your source? Just because someone is alive doesn’t mean they are (or can be) productive. Hell, my FIL is 55 and he is already done with the productive part of his life.

    “I don’t know about you, but my plans for when I’m seventy don’t involve me sitting down in a chair and waiting for the end.”

    Everyone I know that is 70 or better spends a good amount of their day sitting. My grandparents used to be involved in charity work and travel when they were younger (as in their 60s), but they are, indeed, too weak to continue that stuff. That doesn’t mean life isn’t worth living, obviously, but it is important to be realistic about what you will and won’t be able to do at that age. Look at your grandparents on both sides to get an idea of where you will probably be.

    Also, that comment must not have been too “provocative”, since there are no responses to it. I do not think that word means what you think it means. ;)

  6. Gretchen says:

    “My impression of being rich is that I have enough money saved that my children will have an easy life. I have no interest in that at all.” is the oddest definition of being rich that I have ever heard.

    It’s all about balance- and good health insurance.

  7. Steven says:

    @Des: What I find most “troubling” about Trent’s comment about having a decade of productive life after 70 is that he makes it seems like this is a LONG time. It’s a flash in the pan. This doesn’t even take into consideration the problems Trent ALREADY has at his young age. Some of his other posts have made it sound like he is very poor physical condition. What was it, he bent down to tie his shoelace and through out his back or something crazy? Really? And you expect the be productive and full of piss and vinegar in another 40 years? I think it might be time to really re-evaluate your fitness goals and push beyond the walk around the block and the Wii Fit.

    JD over at GRS seems to be “getting it” lately…he realizes he’s not going to live forever and wants to grab life by the horns…right now! I’m pretty confident he’s not throwing out the security of his future to do it which Trent continuously makes it seems like people must do if they’re to enjoy the moment.

  8. Paul says:

    I like to think there’s a happy medium between waiting to die and “having a second career.” Retirement should be more like a permanent vacation.

  9. Jon says:

    I was thinking the same thing as Steven. With all of trents health problems and inability to get in shape I think it’s a stretch for him to assume health and vigor at 70. If you want to be fit and healthy then mowing the grass and casual walks can’t be your exercise routine at 34.

  10. todo es bien says:

    Well, the thing about accumulating money is it might just go BETTER than you think (really) and/or you might just need it sooner than you think. So, for instance…. If things go better than you think, you might find yourself retiring in your low 50s… In which case you might be pretty happy you planned to retire well and then found out you could retire early.
    Or, you might find yourself losing your highest paying livelihood at below retirement age and still being able to live reasonably well on a lower paying job because you have built up a passive income and no debt. If you live prudently, you have so many more options, not just in retirement, but through the rest of your life.
    I think there is most valuable thing that money can buy you is freedom. It IS attainable. It DOES take some delayed gratification.

  11. Sarah says:

    I think the comparison between JD at GRS and trent is really not worth even considering. Despite both thinking financial security/planning/smartness is important, they have totally different priorities. Kids, for one, are the top priority for Trent. (Personally, I find I relate better to JD because he has a wife and no kids – i suspect the opposite is true for others.)

    Personally, I have no interest in this “second career” idea. I want to live a happy life well below my means (but not without fun and travels) while I am in my career. When I have enough money I want to pursue other interests with no pressure to turn those interests into money. Luckily I love my job enough that it is not that I’m counting down the hours until I retire. But if I didn’t have to work, I would not. I would pursue interests that (likely) won’t pay anything.

  12. almost there says:

    I recently read the book, “Never Say Die”. In it the author debunks the idea sold to the baby boomer and younger generations that we will be feeling like 50 at age 90. A small amount will, most won’t. The time that people retired to a life of amusement with their needs being taken care of is a real short span. I think unless we get a handle on spending as a country we won’t have what the retirees enjoy now. My wife and I are not working and don’t intend to look for jobs, though we have been without work for almost 3 years. My (our) income supports the frugal lifestyle we enjoy. It was a real joy to drive to the local national park and get in for free today and take advantage of mostly uncongested traffic because most others were at work. If one has a chance to not work, go for it. We don’t know how long we will be around and by my observations, there are lots of younger people than us at an increasing rate being published in the obituary section.

  13. lurker carl says:

    My two oldest siblings are in their 70s. Both are unable to work due to health issues yet live productive lives as neither is at death’s door. They can not do everything they used to and everything else is done at a considerably slower pace.

    Luckily, they both saved, saved, saved and can afford to maintain their lifestyles in spite of their health concerns. You get premium medical care when you can afford to pick the best doctors, treatments and hospitals – much better care than health insurance is willing to pay for. Otherwise, they and my wife would be dead.

    I hate to tell y’all this, but 70 is not the new 40. Just because modern technology and medicine postpones death doesn’t mean we’ve discovered a fountain of youth. We survive to suffer new and different fates. Alzheimer’s, anyone?

  14. What I find unfortunate is the idea that spending a great deal of income is what will bring happiness and implying that living frugally is akin to living miserably. Personally, I’ve found that living intentionally and finding happiness outside of our expenditures has increased our families happiness. I believe Warren Buffett is a great fan of living below his means and does not equate his happiness with his expenditure either. One of my favorite of his quotes is this: “Someone’s sitting in the shade today because someone planted a tree a long time ago.”

  15. Marinda says:

    Okay, so we saved and have retired at ages 52 (me) and 56 (him). With the house paid off and health insurance. The fact he can’t stay retired is his problem, but with his experience, it’s hard to say no to the salary, travel and perks of consulting. We traveled extensively when the kids were younger, done trips to all 50 states and Mexico, Canada and England.

    We lived and continue to live wisely, we took care of things, personal and moneywise. We aren’t 70 and miserable, we aren’t even 60 and we are enjoying the fruit of our labors with each other. Sometimes, I just don’t get the people who post comments here.

  16. con says:

    I never got it when I was younger and never saved much, yet I’d still like to retire when I’m 65 (I’m 52 now). I am trying to make up for it (and have been doing fairly well). I live below my means but, at this late stage in life, I’m afraid I am very behind.

    If I want to retire at 65 (if I make it), I will have to live WELL below my means, but that’s okay. I don’t care about travel. I have no house payment and want to grow a garden that “might” help some. I guess I’ll just make do the best I can. Just not having to go to work (and I like my job)will be worth it. A perpetual vacation volunteering at my local pet shelter will be great! If I don’t have enough for health care, I’ll deal with it. If I can’t get the care I need, I won’t. I don’t have any children, so I’ll not leave them behind. My feelings.

  17. jim says:

    Des, What do you consider productive? Able to work full time manual labor? Or just able to get around on your own and dress yourself?

  18. Chere F says:

    RE: #15: bravo! We’re in your boat. Retired 49/55 and loving it in good health and frugal (not miserable) lifestyle. Loving our time volunteering for our favorite causes. We are making a difference more now than ever.

    re: #14: “What I find unfortunate is the idea that spending a great deal of income is what will bring happiness and implying that living frugally is akin to living miserably.”
    I have to agree with this gross misconception. Folks think saving will make you destitute.

    Camping , canoeing(one time expenditure on a serviceable boat & paddles), rock climbing, hiking, gets you into the glorious wilderness and keeps you fit. You can afford to do this NOW. Don’t forget ballroom and contra dancing for great fun and good exercise. And I’ve got several friends who have picked up instruments (fiddle and mandolin) and are having a ball jamming with new friends.

    Keeping fit and active is THE most important factor in maintaining the quality in your life as you age.

    Do/Experience life with friends – old and new. Don’t buy the biggest and best of everything – look for good values. Trying to “buy your way to happiness” just doesn’t work.

  19. Annie says:

    Ha Ha Steven, I love the way you write. I don’t think i will be productive at 70, i would want to just sit down and do leisure activities by the beach or someplace tropical. I want my enjoyment now while i am young and healthy. I agree with Johanna that you need a balance and that is a good rule of thumb to follow. For Trent, I think it’s ok that you don’t want to be rich, that is perfectly up to you to rule your life but at the same time you should think if you have 1/2 a million in the bank at age 70, what are you going to do with it other than pay for healthcare, you did this by restricting your pleasures now. Are you going to pay for your grandkids education, buy them a home, etc..so they live comfortably at a young age and not you? I don’t know it sounds depressing when you write like this.

  20. sandra says:

    So maybe 70 isn’t the new 50, but it ain’t old! At least not in my family – and truly your genetics plays a role. My father retired at 65 and until his death spent his retirement doing what he oloved – making custom furniture and giving it away. He spent hours and hours sitting on the front porch – not because he was infirm or decrepti, but because he liked to do it, and had done so since he was a homeowner, enjoying the ‘fruits of his labour’ and his neighborhood. My mother started her business at 60, sold it at 75, and at 90 is starting to get frail – but still mentally alert, travelling the continent, spending her money doing whatever she wants. Wisely savedmoney is paying for her accommodation in a beautiful retirement community where she is the resident instructing others on how to use computers, planning their trips, coordinating their activities. I think my life at 70 will not be waiting for death!

  21. Agreed with Marinda (comment #15), there is a lot of carping in the comments and lots of people pushing back on irrelevent details. What this usually means is that Trent has hit a nerve, he’s onto something, and readers are struggling to face the basic truth here in this post.

  22. getagrip says:

    I have a friend who is the spend it all now because I could be dead tomorrow type. So when he hit 20, he figured he’d be dead by 30. When he hit 30 he figured he’d never see 40. At 40 he claimed loudly 50 was definitly a no-go. So he’s currently at 47. After multiple serious motorcycle and car accidents; a few muggings at seedy joints over the years; hepatitis, STDs and other disease causes for hospital stays; and struggling with alcoholism since a teenager he’s still alive. Given both parents have lived into their eighties, he could easily limp along into his seventies.

    Sometimes despite giving it the ol’ college try you keep living. So it wouldn’t hurt to put a bit away for that potential future so you won’t be living badly.

  23. Planning for the long term is what it’s all about; sure we may die before we use it. Life is full of risks. One thing to think about if you make it to retirement is what will you do. Many people arrive at retirement and don’t know what to do, so they go back to work. Some people turn hobbies into a vocation, which is a great way to fill in the retirement savings gap. When planning for retirement you need to think about replacing 100% of your current income. Some expenses will decrease, such as gas for the car, but many will increase such as health care. On his 90th birthday, someone told George Burns he didn’t want to live to be 90. George Burns replied, “That’s because you’re not 89.”

  24. Adam P says:

    The article is fine, and the comments are fine…not sure where anyone is disagreeing much. Trent and the commentors both agree that you have to strike a balance between spending for today and saving for tomorrow that makes you happy “now” whenever now is!

  25. Andrew says:

    Des, if your father-in-law is 55 and already done with the productive part of his life sopmething must be dreadfully wrong. I’m 55 and, despite a few aches and pains, I feel like I’m just getting started.

    Obviously, 55 is not the new 25, and 90 is not the new 40. That’s just silly. But to have as your goal an abdication from being a productive member of society (however you define productive) so that you can take cruises and play golf is pathetic.

  26. Ashlee says:

    Trent we can’t forget to stress a healthy AND frugal lifestyle while you’re young. Because even though we have medical advances that are downright shocking at times, we are still on the trend to actually have a lower life expectancy with all the diabetes and other diseases that are obesity related if we don’t do something! I feel so strongly about balancing health, nutrition and being smart with your money because if we don’t have that balance then many of us may not make it! Balance and smart choices in ALL areas of your life are essential here. (Lesson learned recently as I had a 27yr old friend die of cancer Monday.)

  27. Canan Onat says:

    Could 45 be the new 30? Please? :))

    I agree with the commenters who say “balance”. Don’t live like there is no tomorrow but don’t live like you will be 150 either.

    Save some, enjoy some and share some!

  28. socalgal says:

    @Aslee #26- I am sorry for your loss.

  29. Kevin says:

    Lurker Carl makes a great point. Just because medicine has found ways to keep us limping along a little further into our 80’s doesn’t mean we’re going to be spry, energetic, nimble, sharp-minded, eager workers. It just means our hospitals are going to be more crowded, and Big Pharma will be raking in record profits.

    You can be alive and mobile, but arthritis might keep you from doing anything really productive. You can be alive, but maybe your cancer medicine limits your “energetic” time to just 3-4 hours per day. You may be beating it, but you can’t hold down a conventional job like that.

    My point is, science and medicine may have found ways to keep us alive into our 80’s and 90’s, but it’s downright ignorant to assume our energy and health levels will be comparable to our youth. The reality is, we’ll still be frail, with numerous health issues. Just because we’re managing to find ways to stay on the green side of the grass a little longer doesn’t mean we won’t have any health problems at all.

    Medicine may be able to keep you alive past 85, but from the 86-year olds I’ve talked to, you may not WANT to. Quality of life plummets dramatically in the late-70’s/early-80’s (if you even live that long). Waking up to an alarm clock and slogging to a part-time job (after taking a dozen different pills) is not my idea of an ideal way to spend my twilight years.

  30. Andrew says:

    Kevin, you make valid points, but why do you limit them to “old” people? You may be 25 or 30, but if you spend your life playing video games and eating crap you aren’t going to be “spry, energetic, nimble” etc. either. And Big Pharma will be raking in the $$ from your asthma pills and diabetes medication.

    Also, arthritis may in some cases–though certainly not always–be age-related, but cancer? Come on.

    Waking up to an alarm clock and slogging to a part-time job isn’t an attractive idea at any age. And most of the people in their 80’s and 90’s that I’ve talked to are quite happy to be alive, thank you.

  31. GayleRN says:

    The problem that I see all the time is the young elderly 60s and 70s taking care of the extreme elderly 80s and 90s. While I am sure that nobody thinks they will spend their golden years taking care of their parents it is increasingly the norm. Nowhere in any retirement planning articles I read is there ever any mention of this.

  32. jim says:

    Andrew said: “Also, arthritis may in some cases–though certainly not always–be age-related, but cancer? Come on.”

    Cancer rates overall are significantly higher for people of older age. Statistically speaking someone in their 70’s is 100 times more likely to be diagnosed with cancer than a teenager. Some forms of cancer can hit you early or at any age, but most cancer victims are older.

  33. Ginger says:

    I don’t plan to wait 45 years to be “rich”, even with saving the amount I do now I would be financially independent in 40 years but I plan to improve my savings rate and pay off debt as I go along. I still can have fun and travel some, eat health and live life.

  34. Johanna says:

    @Kevin: The 86-year-olds you’ve talked to would rather not be alive? I’m not sure I believe that. How many 86-year-olds have you talked to?

    I agree that it’s foolish to assume that you’ll be as healthy and physically capable at 80 as you are at 30. But it’s also pretty ignorant (and harmful to people with disabilities of all ages) to assume that people with “numerous health issues” are totally worthless and can’t enjoy life at all.

  35. Lisa says:

    Savings is a way to arm yourself against the future. With the way that health care is in the U.S. most of my savings will be “just in case” something happens to me. I’m 23 and I have no idea what health care costs will be like when I’m older. My cousin was diagnosed with MS a couple of years ago and she’s in her 30’s. The symptoms popped up suddenly. I am afraid of what would happen should I be diagnosed with something major and then I either do not have insurance or my insurance won’t cover the costs. I don’t expect Medicare to be around when I get up to 65, either. If I end up with a lot of money left over once I’m dead, that’s okay with me because I know a lot of charities (as well as family members) I would like the money to go to.

  36. Johanna says:

    And just in case somebody wants to give me a hard time for replying to one comment but not another, I’d also like to point out to Des, way up at comment #5, that “sitting” is by no means the same thing as “sitting around waiting to die.” There are plenty of other things you can do while in a sitting position.

  37. SLCCOM says:

    # 35 Lisa: I STRONGLY recommend that you get a personal disability insurance policy ASAP. With autoimmune diseases in the family, you are definitely at higher risk than the average person. This is particularly important if you have other relatives with other autoimmune diseases. You are young and it will be very cheap. And DO NOT ever stop paying the premiums, for any reason.

    I hope your cousin does well

  38. David says:

    “Life’s not worth living, and that’s the truth”
    Carelessly carolled the golden youth.
    In manhood still he maintained that view
    And held it more strongly the older he grew.
    When kicked by a jackass at eighty-three
    “Go fetch me a surgeon at once!” cried he.

  39. kristine says:

    @GayleRN- I agree- this is not addressed anywhere, but it is happening more and more. And for those who cannot afford assisted living or in-home help, it is akin to having a new full-time job with no vacation or sick days.

  40. Brenda W. says:

    As someone who is older than the majority of Trent’s readers (I think — I’m 58, hubby is 72), I can add a bit of perspective from these two age group. The human body was designed to be active, healthy, and strong for ALL its years. My husband runs 2 hours every morning, and then often bicycles for several hours in the afternoon. I can hike in the mountains from morning to night. So no, not all folks in their 70’s or 60’s “sit for most of the day”. Like anything (money choices, food choices), staying active is a conscious decision one has to make.

    My husband and I are both vegans, and have followed Trent’s change to a vegan diet with interest. Re: @Steven’s comment that mentioned Trent’s health issues at a young age. My guess is that Trent will be healthier as he gets older since he is making the kinds of changes that promote health (food choices, exercise choices, having a positive outlook on life, having a strong support network).

    My aunt has a saying that hubby and I repeat regularly: You can do anything you did when you were younger when you’re older … you’ll just do it slower. (She’s living proof of that … teaching at a girl’s college in China till she was 82, because she loved the work and loved the girls).

  41. SLCCOM says:

    #40, Brenda, congratulations on you and your husband winning the genetic lottery! Food and exercise don’t prevent autoimmune disease, infectious disease such as long-term lyme disease, mental illness, and so on. Just because you and your husband won the genetic lottery doesn’t mean that those who didn’t are “responsible” for their own ill health.

    And yes, that is the undercurrent of your posting!

  42. Brenda W. says:

    Actually SLCCOM, my husband and I did anything but “win the genetic lottery” (to use your words). Since I am using my real name and can be easily identified via my website link, I’m not going to go into specifics for privacy reasons, but both my husband and I have had significant health problems, some genetic, some not.

    And as an RN, I would never, ever say folks are responsible for their ill health (again, using your words).

    Please don’t read things into my post. The entire point of my post was to offer examples countering some of the previous posts that referenced loss of health and functionality with getting older.

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