Having Too Much Money
Posted by Robert on February 14, 2011
This is a guest post by Robert, who lives in Calgary and works as a financial adviser. He is married, has three kids and plans to retire at age 35. Robert and his wife then plan to return to school and become teachers, eventually living and working overseas.
I recently met with a couple who are retired teachers. They are wonderful people, who both worked full-time to age 65, except the years the wife stayed home with her children. They now work part time with the education ministry about three months of the year. One of the benefits of being a teacher is a generous pension (in our local board). With two pensions, the couple has enough income in retirement for a very comfortable lifestyle. The additional income they earn pays for their frequent trips outside of the country.
Besides their pensions and earned income, this couple has a million dollars invested with us, plus other investment accounts. When we discussed the investment strategy that would be most appropriate, they explained that they don’t need the income from it, so they want to adopt a growth strategy. They’ll just grow it until the end of their lives, when it’ll pass to people who need it. I respect their decision, but it raised many questions in my mind.
Why did they work so long? They probably could have retired at least 10 years earlier, probably more. Between their pensions and the investment income they could have produced, they would have been able to support their current lifestyle at that point in time. Some people do it because they still have children at home. Some people really love their jobs that much (which wouldn’t surprise me of this couple). And some people just have a protestant work ethic where anything that seems like idleness is uncomfortable. But this couple is still working in retirement. When there are other teachers who are having trouble finding work, it seems unfair.
Why not enjoy it? Money is a means of trade, not a good. In itself, money has no value. It is only worth what it can be exchanged for. Having money is worthwhile if it provides the ability to live, eat, travel or purchase things. But if it is sitting unused, it is basically worthless. When it’s hidden under a mattress, it does no one any good. At least when it’s invested, it helps fund companies that operate in our economy. But as long the investor has no plans to spend it, it is of no value to them.
Maybe it’s a safety blanket. This couple isn’t old enough to have lived through the Great Depression, but they may still be influenced by it. By many accounts, people who lived through that period are very careful to not waste anything. They also realize that there’s no telling what could happen. (It would explain why they have investments through two brokerages.) At some point, however, it seems that a person must accept there are certain things, such as war, natural disasters and large-scale displacements, that can’t be protected against.
My last question is why they would wait until the end of their life to support causes they deem worthy? They could have spent it as they earned it or they could spend it now on their favourite causes. They would then receive recognition, if they want it, and they could see the impact they are having. They could maybe even learn how their money is used by different organizations and that may change their ideas of how they want to allocate their charitable gifts.
No matter how much we accumulate, we can always have more. There’s no natural limit to how much money we can amass. But in order to actually benefit from the money we have, we need to make us of it. Do you have a plan for your assets at the end of your life? Do you give or plan to give regularly before the end of your life?
