ER and the value of money

[surprising]

I've been retired almost 2 years now. Retired at 51. It's interesting how my relationship with money has changed since retiring. When working, I had serious heartburn with any kind of spending. I just wanted to save save save. Looking back, I realize how crazy I acted because I had a really large salary and we could afford pretty much anything and still save quite a bit. Now that I'm retired I don't seem to have so much trouble spending, even though there is no wage income coming in. Maybe it's because I have a clear picture of our financial status and can logically see that we can afford to spend on things.

On the flip side, I struggle a bit with the value or purpose of money. When working, there was a clear cause/effect relationship. I used my education and experience and whatever else to provide a service to my employer, and I received compensation for it. I did something tangible to deserve that money. Now I do nothing except occasionally click buy/sell on a screen and watch my net worth go up or down. There's no sense of pride or accomplishment. Even though I have a lot and the gains so far are significantly higher than my wage income, it doesn't feel like I'm doing anything worthy for that money.

Anyone else have a similar relationship with money since ERing? How have you coped with it?

 

[NW-Bound]

I am older and been retired 14 years now. My portfolio has grown 3.4x since, but my expenses have been roughly the same despite inflation. Don't have anything expensive in my desire. Two homes paid for. No fancy cars. Even travel lust has been somewhat satiated.

I make money off the stock market as a fun thing to do, to see if I understand how it works, how other investors behave. I have been an active investor since 1998 or so, with mixed results. And I observed my past mistakes, and kept telling myself that I would have done better if I was able to conquer greed and fear. And that's why I am still trying to learn.

In the last couple of years, money has been coming in more than I expected, and I keep telling my wife and myself that it looks so easy, it's not right.

And we have been in a bull market. One day, it's going to reverse. I am OK with it.

 

[RetiredHappy]

Nope. When we were working, we were spending pretty much without constraints and now that we have retired, we have kept up the same lifestyle, although money gets spent on different things. The portfolio growth is the result of many years of working hard and saving for retirement. Even when the portfolio goes down, we are OK with it because we have income that is not tied to the portfolio, i.e. social security and annuity income.

 

[disneysteve]

I've also been retired for 2 years (May 2024). Yes, things have changed, as is normal. I no longer get a paycheck every 2 weeks so that's a huge change. There's no longer a steady predictable stream of income like there was for 31 years. I've had to adjust my approach and thought process regarding how to access the money that we need to live on. Do I take cash from our money market? Do I spend the stock dividend checks that come in? Do I take my inherited IRA RMD and use that to cover our bills for a couple of months? Do I need more investment income or do I want to sell a few shares of stuff now and then when we need cash? What about my side gig income? Where does that fit into the big picture?

I think all of those sorts of questions are perfectly normal for retirees.

Have I lost a sense of pride or accomplishment? No, not at all. I really can't say that I've encountered that myself. I do find that even though I was always tuned into our investments, I'm even more tuned in now. I pay a lot more attention to the portfolio earnings because I know we need that money to support us. I've also been spending time simplifying our portfolio and shifting assets around to be more tax efficient, something I just never worried about during my working years. I guess that gives me the sense of pride and accomplishment that you are referring to. For example, over the past month or two I eliminated 3 accounts from our lives and I feel good about doing so. I moved my HSA from a place that was charging me $2.50/mo maintenance to a place charging me $0, so that was an accomplishment. Deciding when my DW should claim SS was a process and I was pleased with our decision.

As mentioned, we've also benefited from the ongoing bull market and our portfolio has grown by about $1 million since I retired. That has allowed me the freedom to feel comfortable spending more freely without the fear of outliving our savings. And I know that I can claim SS at any point after next month when I turn 62. I don't plan to claim until 70 but that window opens for us in a month so it will become a backup plan if needed.

Long winded way to say that I think a lot of what you're experiencing is normal. Times change. Situations change. Your mindset around money evolves as your lives moves along.

 

[audreyh1]

We definitely started spending more - we finally had time to spend! We had deliberately set aside a travel “slush fund” so that we could do a huge amount of traveling at least the first two years. We did that. Regular (already modest) living expenses did not go up.

It still took me 2 years to get used to not having a paycheck, but living 100% off investments instead. I set up the monthly transfers to bank checking from the brokerage, so that felt familiar, but I knew it wasn’t a paycheck. At some point that felt normal.

So that was early 2000s. In the past 6-10 years we have ramped up spending quite a bit. We’re a lot older and our portfolio has grown considerably. Now we’re much more conscious of having less active travel time left and keeping our fingers crossed.

 

[disneysteve]

It still took me 2 years to get used to not having a paycheck

I don't think this gets talked about enough. I've only got my own experience to draw from but 2 years does seem to be a landmark time for settling in to the new normal.

When I first retired, I had a lot of uncertainty about the plan. Every calculator and our CFP all said we were in great shape, but actually doing it is different. There's a learning curve and adjustment period, tweaking things here and there, seeing what's working well and what needs modification, what makes you feel comfortable with the plan and what keeps you up at night.

 

[COcheesehead]

People’s relationship with money takes on many forms. To me it’s a tool to be used not something to feel guilt over how I now earn it.

 

[disneysteve]

People’s relationship to money takes on many forms. To me it’s a tool to be used not something to feel guilt over how I now earn it.

TBH I think I get more pride and sense of accomplishment by seeing our income from our investments than I ever did from my job paycheck. That was just a given - you do the work and you get the money. Now, I'm getting the money from the time and effort I've put into building the portfolio over the past 35 years. It's delayed gratification for the scrimping and saving we did for so long, living well below our means building our nest egg for the future. Now that the future is here, we're enjoying the payoff for all of that effort.

 

[audreyh1]

TBH I think I get more pride and sense of accomplishment by seeing our income from our investments than I ever did from my job paycheck. That was just a given - you do the work and you get the money. Now, I'm getting the money from the time and effort I've put into building the portfolio over the past 35 years. It's delayed gratification for the scrimping and saving we did for so long, living well below our means building our nest egg for the future. Now that the future is here, we're enjoying the payoff for all of that effort.

Good point! I have a sense of pride of carefully managing our financial resources over decades.

 

[Lewis Clark]

TBH I think I get more pride and sense of accomplishment by seeing our income from our investments than I ever did from my job paycheck.

For me, this is right on target. And the direct result is the ability to retire earlier than most.

It helps that due to the market gains our investments have grown more each year, on average, than we ever earned working.

 

[TickTock]

I retired in March 2024 at 56. We spend more or less as we did while w*rking, maintaining the same standard of living. Our portfolio means that we are part-owners of business and are also lenders. Due to that, we have no issues with the value or purpose of the money that the portfolio brings in.

 

[NW-Bound]

TBH I think I get more pride and sense of accomplishment by seeing our income from our investments than I ever did from my job paycheck...

In the recent years, the market has been giving me 5-10x my annual pay when working, and I was reasonably well compensated. Making so much money from the market feels like cheating to me.

Same as the OP, perhaps I might be happier if someone had paid me that much money to work. Perhaps we are wired differently. He just retired, but I have been loafing around for 14 years. About to claim SS soon at 70.

 

[marko]

Went to high school with a bunch of trust fund kiddies. The whole "I didn't earn it" thing is largely a myth IME, notable by the exceptions.

To them, money was just a tool (for better or worse) and something that was part of their lives early on...the (unearned) income was just "part of the fabric".

Tying it to "accomplishment" is probably where OP is having trouble. Probably stop thinking of it as a paycheck and try thinking of it as income....they're not the same.

 

[Dtail]

TBH, I had no issues with not earning money, but spending it. 9 years retired now and just loving it.
I enjoy managing different portfolios, but don't feel a need to do it in order to justify anything.

 

[Gumby]

The Covid lock down started less than a year after we retired. Then we couldn't have spent even if we wanted to. By the time that was over, we were quite comfortable in our new life. Now, we spend on things we want to do or have and don't really think about it that much.

 

[engineernerd]

[snip]

On the flip side, I struggle a bit with the value or purpose of money. When working, there was a clear cause/effect relationship. I used my education and experience and whatever else to provide a service to my employer, and I received compensation for it. I did something tangible to deserve that money. Now I do nothing except occasionally click buy/sell on a screen and watch my net worth go up or down. There's no sense of pride or accomplishment. Even though I have a lot and the gains so far are significantly higher than my wage income, it doesn't feel like I'm doing anything worthy for that money.
Anyone else have a similar relationship with money since ERing? How have you coped with it?

I don't think you need to feel bad about seeing the way the world works, and taking advantage of the benefits of building savings early in life so you can let your money work for you once you have enough of it. I think there are many moral failures in our society but it makes little sense to feel responsible for one that happens to help you if you weren't involved in creating the situation (i.e. you didn't lobby the government to create the environment where money can make so much money compared to labor).

 

[disneysteve]

I have been loafing around for 14 years. About to claim SS soon at 70.

Only 2 years for me but you won't find anyone who knows me who will say I've been loafing around. I probably work harder now than when I had a paying occupation.

 

[Aerides]

Now, we spend on things we want to do or have and don't really think about it that much.

We got here too, but it took longer, mainly because DH is a bit more fiscally conservative than I am. We've been retired 10 years, and it took about 6-7 years for him to really get to a "BTD? Go for it" mindset.

I think at first, DH was kind of in the same pre-retirement/savings mindset of spacing out expenses, but I would say why? It's not like we're waiting for our next paycheck. Just because we bought A thing last month doesn't have relevance to now buying B thing.

I just bought a new car, about twice the cost I paid for my current one. It was 10 years old, looked nice still, no issues...I was just...bored of it, and wanting something a little bigger, a little higher off the ground, and I do like that new car smell. And it's pretty.

But I still even had a twinge of thinking I'm nuts, that this makes no sense. I should be sensible and drive my totally fine paid off car for 2-3 more years. Compared to our portfolio it's nothing, but compared to what I might have made in a year it was a big chunk. It's all relative.

 

[CO-guy]

For me, this is right on target. And the direct result is the ability to retire earlier than most.

It helps that due to the market gains our investments have grown more each year, on average, than we ever earned working.

Having our investments grow more than a full-time annual salary was a huge eye opener for us.

I just celebrated 3 years since I quit my career, with more than 4 years to go before I'm able to tap into my retirement savings. The retirement accounts are already where I was hoping for them to be in 2030 and we are well past our FI goals. Plus, my better-half plans to remain full-time employed until 2030 and I'm still consulting.

Unlike the years leading up to hitting our FI number, we now have excess income even after continuing to max out our retirement savings. That's given us a chance to take some bucket list trips like skiing in Japan last year. In addition, it's given both of us the ability to hop on a plane to visit friends and family whenever we have a chance.

 

[scrabbler1]

One unbreakable condition for me to ER back in late 2008 was that my day-to-day life would not be affected. I could spend as I was doing before, with a built-in cushion between income and expenses in case I went on a small spending spree once in a while.

I already had some practice living on a reduced income resembling what I would be living on in ER. After working FT for 16 years, I switched to working PT starting in mid-2001. However, after 6 years of that, I was still getting burnt out from the awful commute even though it was down to 3 days a week. In mid-2007, I reduced my weekly hours worked a second time, from 20 to 12. This reduced my commute from 3 days a week down to 2 and reduced my workday from 7 hours down to 6, getting me home an hour earlier.

This made my gross income lower, too, roughly what it would be when I ERed at 45 in late 2008 and cashed out the valuable company stock, invested it in a good bond fund, and lived off its monthly dividends. I had to get used to having one "paycheck" per month instead of 2, but that wasn't hard to get used to or to plan accordingly.

It didn't change how I valued money. I did like a lot, however, getting the same "paycheck" from a monthly dividend as I was from those last 18 months of working. My budgeting hadn't changed. For a while, the elimination of FICA taxes and commutation expenses was offset by an increase in my health insurance costs. The ACA stabilized my health insurance a few years later.

I had to put in more time managing my investments because I relied on them more than I did when I was working, even at the end of my career. I didn't mind that, of course.

I still live the same simple lifestyle as I did all along. If I go on a mild spending spree once in a while, that's fine. I have already gotten from age 45 to age 60, when I no longer need to live solely off my taxable portfolio. I have access to my rollover IRA but don't need anything from it. I could claim SS but don't need that, either. I have a frozen company pension available at age 65, 2 years from now. So, it only gets easier from here.

 

[TickTock]

After thinking about it more, here's the purpose of money for us:

• To provide us with the same standard of living without having to spend time at paid employment.
• To ease the inevitable discomforts/frictions of life when possible.
• To purchase material things and experiences that we value enough to spend the money on.

We have a family member who requires full-time care. It wouldn't be possible for us to provide that without at least one of us not w*rking, and it's much easier with both of us being retired. We've spent five figures on durable medical equipment to make it easier for us to care for them and for them to be more comfortable/improve their quality of life/(hopefully) extend their life. THAT is what money is for.

 

[Koolau]

I think the fact that we (most of us here) saved and invested for our retirement (to not be a burden to anyone else) is reason enough to feel good about the "dividends" we are now reaping. If not, then I feel good because I can now share from my wealth with my favorite charities (and our kids).

Very rewarding and very fulfilling for me.

 

[Fermion]

I feel like we may be on the edge of money not being important, perhaps a decade from now if things keep escalating with AI and robotics.

 

[audreyh1]

I feel like we may be on the edge of money not being important, perhaps a decade from now if things keep escalating with AI and robotics.

I don’t really expect to see that in my lifetime, so I don’t worry about it.

 

[RetiredHappy]

I feel like we may be on the edge of money not being important, perhaps a decade from now if things keep escalating with AI and robotics.

More money = better robots.