The $4.2 Million Man Who Couldn't Spend His Own Money

Tyler Gardner (0:00)

Real wealth is the freedom to do what you would have done anyway, but without the friction of having to do it. So if I had to put it in one sentence, and I've spent five years trying to put this in one sentence, I would say, real wealth is the freedom to spend my hours doing the things that, on my deathbed, I will be glad I spent my hours doing.

Hello friends, this is Tyler Gardner welcoming you to another episode of Your Money Guide on the Side, where it is my job to simplify what seems complex, add nuance to what seems simple, and learn from and alongside some of the brightest minds in money, finance, and investing. So let's get started and get you one step closer to where you need to be.

Quick note before we dive in, August pre-order incentive for my book Real Wealth is now live, and this one is my favorite so far. Pre-order this month, tell me you did at tylergardner.com/book, and I will send you a draft chapter of a new book that I'm already working on. And no, not even my editor at Norton has seen this writing yet. This sneak peek is yours to keep, delivered to your inbox in early September. Pre-order today and you're locked in for every monthly incentive through December 1st. tylergardner.com/book. Now let's get into it. A few years ago, a man I'll call Edward, early 70s, retired engineer, three grown children, $4.2 million in invested assets, paid off house in Ohio, no debt of any kind, sat across from me at a wooden table at a coffee shop and told me with what I can only describe as a kind of subtle longing, that he and his wife had not taken a vacation in 11 years.

I asked him why.

He said, and I want you to hear this exactly as he said it, we're worried we won't have enough.

I want you to sit with that sentence for a moment. We're worried we won't have enough. From a couple with $4.2 million, no debt paid off house, no dependents and social security checks landing every month like clockwork. By every objective measure, every Monte Carlo simulation, every withdrawal rate framework, every spreadsheet a financial planner could possibly run, Edward and his wife had enough. They had emphatically enough. They had several times enough. They had so much enough that if their portfolio dropped 50 percent the next day and never recovered, they would still have enough. And yet, I sat with Edward for two hours that morning. We ran the numbers over and over. We projected his portfolio to age 95 at a 3 percent withdrawal rate, then at a 4 percent withdrawal rate, then at a 5 and 6 percent withdrawal rate. Every projection ended with him dying with more money than he had retired with, often substantially more.

The math was, in a gentlest possible way, embarrassing. So Edward listened, he nodded, he thanked me, he went home.

We followed up 6 months later. He had still not taken the vacation.

This is part 5 of the Decumulation series, the final episode, and it is, I want to say up front, the episode the entire series has been pointing toward, because everything we've covered up to this point, the buckets and the withdrawal orders and the Roth conversions and the Irma Cliffs and the rising glide paths and the guard rails, all of it, every minute of it, was the technical scaffolding for a question we have not yet asked directly. The question is, how do you actually spend the money you just spent your whole life not spending? And I'll be honest with you, I don't have a tidy answer to that question, as it's going to be different for different people. I do have a framework. I also have some philosophy. Surprise. I have, I hope, a few useful provocations. But the question itself, the question of how to be in right relationship with money that you spent 40 years not being in relationship with, is one of the deepest questions a human being can ask. And I'm genuinely not sure that anyone has quite cracked the code. But today, we're going to try, we're going to wander around a bit, and this will be a meandering walk.

Part 1, the identity trap.

I want to start with something that I think is the foundational misunderstanding of retirement, and that I've seen literally no one in the personal finance space talk about this way.

You didn't spend 40 years saving money. You spent 40 years becoming the kind of person who saves money. The savings is a byproduct. The identity is the main event. This distinction sounds semantic. I assure you, it's not. If saving were merely a behavior, an activity you performed like flossing or commuting, then stopping the behavior on the day you retired would be pretty straightforward. You'd hang up the saving the way you hang up your work clothes. The activity ends, life continues in a new mode. But that's not what saving is. Saving, when you do it well for long enough, becomes a self. It becomes part of how you understand your relationship to the world. You're not a person who happens to save, you're a saver. The word becomes the noun, the behavior becomes the identity. And once an identity has been formed over decades, once it has been reinforced by every monthly contribution, every dollar of compound growth, every conversation with a friend who admires your discipline, every act of self-restraint at a restaurant where you ordered the cheaper thing.