What Would You Choose: $100 Billion at 90 or Broke at 20? - Episode 53
In this episode of Retire You Way Radio, we talk about more than just money. We look at the relationship of money, health, and time and how to maximize those resources to create memorable experiences throughout your life.
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Would You Trade Places with Warren Buffett?
This episode is based on an interesting article by finance writer Owen Stoneking called Would You Trade Places with Warren Buffett? The relationship between time, health, and money.
Warren Buffet, is currently 92 and has a net worth of over $100 billion. He is one of the most successful investors of all time.
The article starts by asking the question, would you rather be 20 years old and have no money, or would you rather be 90 years old and have $100 billion?
Most people would say they would rather be 20 and broke, because it is harder to enjoy that much money when time and health are significantly limited.
This suggests that our own value of money changes at different stages of life. And time and health also matter for a fulfilling life.
The article compares life to a game made up of resources that include time, money, and health. After meeting our basic survival needs, we have many choices for allocating our remaining resources.
Generally speaking, in our 20s and 30s, we tend to have:
- great health,
- a good amount free time (before having kids)
- but little money
In our 40s and 50s, we tend to have:
- good health,
- good money,
- but little free time (while raising kids)
In our 60s and older, we tend to have:
- a great amount of free time,
- great money,
- but less health
We can accumulate more resources. We can work to accumulate money. We can exercise, eat nutritious foods, and sleep to accumulate health.
But there’s not much we can do to accumulate time in our lives. While we hope to have as much time as possible, we know our time will end. This can actually be a good thing because it gives us more urgency to live each day to the fullest.
In this game, we win by accumulating experience points.
Matching Experiences with Stage of Life
Some experiences require a lot of money, and some don’t.
Some experiences are best enjoyed at certain times in your life.
For example, if you want to go backpacking through Europe, the best time would probably be when you are young and don’t have kids. You could certainly travel to Europe with your kids or when you are older, but it probably won’t be the same experience.
If your goal is to climb a mountain, you might not want to save this experience for late in life.
Your kids will likely only live with you for 18 years, so your window of time to share experiences with them is limited. And their ages will make a difference too.
Money provides access to a lot of experiences. However, many experiences are best had at certain phases of life.
This is why we should look at experience points rather than just money.
Early experiences also provide dividends in the form of memories and stories told over and over again.
But instead of matching experiences with the times we have the most health and free time, we are taught to trade time for money and save as much money as possible so we can retire as early as possible.
By doing this, we are saving money for a time when it will likely be less useful to us. Plus, later in life, work is often a big part of people’s fulfillment. If you love your work, you are making money while gaining experience points.
We trade time and health in our early years when we could better use that time to enjoy experiences.
Then our net worth peaks at a time when the utility of that money is less useful.
The top regrets people have at the end of their lives tend to be things they didn’t do rather than things they did do.
Here’s a list of what people often wish they had:
- followed their own aspirations instead of others’ expectations,
- relaxed more instead of working so hard,
- expressed their true feelings,
- stayed in touch with friends, and
- took it easier on themselves so they could feel happier and less stressed.
And notice, none of these things require extra money.
Living Rich Instead of Dying Rich
In the book, Die with Zero: Getting All You Can from Your Money and Your Life, author Bill Perkins talks about living rich …instead of dying rich.
For many people, leaving money to family or to a charity is important to them. Perkins suggests giving money while you are still alive. This allows you to see the benefits of your contributions to charity and to your family members.
If you live into your 90s and you leave your money to your kids to inherit when they are 65, your kids will be in the same situation of having more money at a time when it is less useful to them.
Instead, you could give money to your kids when they are in their 40s when they can enjoy the money more to create memorable experiences.
The author even says giving less to charity is more helpful to that charity now than giving more money to that charity later.
But what if you don’t have enough money now?
In an interview with Perkins, he was asked if any of this is applicable to a 40-year-old with a net worth of $50,000 and liquidity of $1,000.
He said it is still applicable. This person would just need to determine their survival number at retirement and use the rest for experiences. Even without money, there is still an allocation decision to maximize fulfillment.
If you want maximum health, you could spend all your time focusing on your health with cardio, strength training, yoga, meditation, green smoothies, etc., but at what cost.
You can optimize your resources to get the most out of life.
There is also the option to buy insurance for areas of risk. For example, if you don’t have a large nest egg that would be able to handle a long-term care event, you could purchase long-term care insurance to mitigate that risk.
Everyone is different. Everyone has different circumstances and values experiences differently. In addition to money, time and health are precious, and all three are needed for meaningful experiences.
Would You Trade Places with Warren Buffett? by Owen Stoneking
The Top Five Regrets of the Dying by Bronnie Ware
Die with Zero: Getting All You Can from Your Money and Your Life
Peter Attia's interview with Bill Perkins, author of "Die with Zero”
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