Weekend Reading – When enough is enough edition
Welcome to some new, fresh Weekend Reading: the enough is enough edition.
You can some recent Weekend Reading editions below:
I also recently shared my latest dividend income update – a brand new all-time high.
Last but not least, I’m giving away 6 copies of The Money Master with thanks from the author, savvy real estate investor and speaker Sandy Yong. Check out my interview with Sandy and enter The Money Master giveaway here.
Have a great weekend and enjoy these reads!
Weekend Reading – When enough is enough?
While every money number for every person may be different, depending on your circumstances, values, needs and wants, “the science” continues to support that happiness tends to level off at about $75,000 per person per year as of 2010. Maybe slightly higher of course now thanks to inflation.
Give or take, I’ve read that $75,000 USD per year is “enough” for most of us.
That number comes our way according to an older 2010 study, by famed psychologist Daniel Kahneman and economist Angus Deaton (who both won the Nobel prize in Economics) when they undertook research to figure out the role of money in two aspects of people’s emotional lives: emotional well-being and secondly, life evaluation.
For reference, here are definitions for the two key things they investigated, emotional well-being and life evaluation:
- “Emotional well-being (sometimes called hedonic well-being or experienced happiness) refers to the emotional quality of an individual’s everyday experience—the frequency and intensity of experiences of joy, fascination, anxiety, sadness, anger, and affection that make one’s life pleasant or unpleasant.”
- “Life evaluation refers to the thoughts that people have about their life when they think about it.”
When “enough is enough”
Essentially what this study has told us is, if you are not going hungry, if you have shelter covered, if you can put clothes on your back regularly then generally speaking you are capable of at least being as happy as the world’s billionaires per se without feeling unpleasant.
In re-reading the takeaways from this study recently, I was reflecting upon my own emotional well-being and life evaluation.
Well into my 40s now and thinking about semi-retirement in a few years, while I could certainly work full-time much longer (say into my 60s, likely generating far more wealth in the process), I’m not convinced it’s going to deliver more emotional pleasantry or superior life experiences. In fact, it might do just the opposite for me.
Beyond a certain point, each additional dollar you make really doesn’t add too much value to your life. I’m finding this as I get older…
For well over a decade now, I’ve long since had some designs about what my “retirement lifestyle” might look like – and it’s exciting to know we’re getting very close to those realities…
However maybe those goalposts will change in the coming years. I might just fall into a just-one-more-year trap like many of us aspiring early retirees do. I could also seize any near-term workplace opportunites and keep any higher-octane pace to help my organization deliver. I guess I won’t really know how I feel about any sort of retirement until I get there…
I do know; however, I must remain cognizant and readily aware of my thoughts and feelings when it comes to the emotional side of any retirement plan – the stressors that may come from it but also the calming peace of mind it could deliver knowing I’ve struck the appropriate balance between working, living and playing for today.
I’ve written about my “enough” number many times on this site in many ways.
Have you considered what your “enough” number is? How does that make you feel? Is it realistic or too daunting? Do share…
Further Reading from Daniel Kahneman: my takeaways from Thinking Fast and Slow.
Aligned to understandng your “enough”, read on in this Morningstar article about investing – there is far more to investing that just risk and return. Amen.
From the article:
“I wish we were all operating with so much self-awareness of “enough”–how big our portfolios need to be, how much we need to save and spend to have good lives, and how much risk we need to take in our portfolios to ensure a high quality of life. “Enough” is a relative of peace of mind, but it’s arguably an even more fundamental consideration because it relates directly to lifestyle choices.”
While I’ve covered my game plan to fight inflation going-forward, I’m well aware when it comes to inflation – every time it is different. As such, check out this article: we have no theory of inflation.
Henry Mah wondered: is it possible to pay no tax? The answer: “it depends” and yes.
I tend to disagree with Tom Bradley from Steadyhand in his post: is it time to raise cash? Yes.
Based on my financial lessons learned, cash is always a core component of any diversified portfolio and it’s always a good time to have some, even more of it when you enter retirement or any sort of #FIWOOT. In fact, I could make a case that you could live without any bonds if you had enough cash on hand via a Cash Wedge.
There are only a few reasons why bonds might work for the next 10-20 years. I could be wrong of course but I don’t see that asset class as helpful unless these reasons apply:
I enjoyed this read: trying to make sense of the markets from MoneySense and blogger Dale Roberts. I also think higher inflation is here to stay – from the article:
“We see that BlackRock has U.S. inflation at the 3% range even into 2025.”
From the adventure file – some amazing mountaineering pictures from Chris Istace from Vancouver Island. Enjoy.
Justin Bender compared global ex-Canada ETFs VXC vs XAW recently.
Hard to go wrong with either really…
On Cashflows & Portfolios, we shared some of our favourite U.S. Dividend ETFs to own and why.
That post comes on the heels of the Best Canadian Dividend ETFs and why.
Labour to Leisure enjoys money while he sleeps.
More FREE My Own Advisor content:
Looking for free calculators, tools, or even my support? Check out my Helpful Sites page here.
I also run a site with my partner called Cashflows & Portfolios, a site dedicated to free content for any age but also low-cost services about how to drawdown your retirement portfolio and provide personal, tailored answers to these time-tested questions:
- How much can I safely spend in retirement?
- Will I run out of money?
- What accounts should I drawdown first?
- What is the best drawdown order for tax efficiency?
- When should I take CPP or OAS?
- How much will my estate be taxed?
- And more!
Finally on Boomer & Echo, Mike Drak was back to discuss retirement lifestyle design. Essentially saying:
“To create your own version of retirement heaven, you need to find balance and the right mix of work, leisure, health and relationships. Working too much, or focusing on just one thing, throws everything else out of kilter. And it can come back and bite you in the butt hard.”
Reader Question of the Week (adapted slightly for the site):
Thanks so much for your site. I was wondering if you have any articles or would you know answer to my
question. In the long run, let’s say I only have an RRSP worth close to $500,000. No non-registered account and maybe my TFSA is maxed in the coming years. Could I retire? I also have questions about the drawdown order of my RRSP, thinking I could tackle that RRSP first before I’m forced to at age 71? Thoughts?
Thanks for your readership and question.
In fact dear reader, we had a very similar case study recently on Cashflows & Portfolios, showing what the “max spend” might be for a retiree (Tom in the case study) who wanted to retire at age 65 with just that, $500,000 invested inside his RRSP, no workplace pension to speak of and no spouse to rely on either. Check that out and let me know your thoughts!
Have a great weekend,