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

Greetings!

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Pre-order today at tylergardner.com/book, let me know you did, and receive a bonus chapter from the second book that I am already working on. Not even my editor at Norton has seen this one yet, and I’m excited to share it with you first and get some early feedback. It will be delivered to you digitally in early September.

And remember, once you pre-order, you are eligible for every monthly incentive between now and the book’s release on December 1st. As always, appreciate your support, and hope the book proves useful.

Pre-Order Real Wealth

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

We’ll start this week with a man I’ll call Edward. A retired engineer, around $4.2 million in relatively liquid assets, no mortgage, no debt, monthly Social Security checks as icing on the retirement cake, and one confession that he hesitated to tell me for the first thirty minutes of our call:

“Tyler, things are great. I love retirement, and I’ve been very relaxed. The only problem is my wife and I haven’t taken a vacation in eleven years.”

…

“We’re just worried about the state of the markets, and we don’t want to spend a chunk of our principal right before something bad happens.”

…

We sat on the call for another thirty minutes and ran every projection you could imagine. As should come as no surprise, not a single one of these projections ended with Edward or his spouse dying penniless. Far, far from it. Each one ended with them dying with millions of additional capital, regardless of how many vacations they chose to take.

Six months later, when we followed up, Edward still hadn’t taken a vacation.

(Now, before I risk sounding too much like a self-righteous ding-dong handing down wisdom from on high: I bought an absurdly expensive white t-shirt last year after watching too many episodes of The Bear and wore it exactly once before deciding to hang it up in my closet and never wear it again because I didn’t want to risk its getting dirty.)

This is our last edition and episode in the decumulation series: the 6 Moves to Make Before You Retire, the Withdrawal Order Nobody Taught You, the $250,000 Mistake Most Retirees Never Know They Made, the Subtle Art of Doing Absolutely Nothing, and now, alas, how to spend the money you just worked so hard to accumulate. So put on a pair of headphones and stare at your screen diligently, so your colleagues think you’re on a vitally important conference call and won’t interrupt you for the next four minutes.

Here Are the 3 Things I Want You to Think About This Week:

1. You Can’t Just Flip a Switch and Start Spending. If you’ve spent the past 40 years accumulating, you can’t just become a spender. This is all tied up in your identity as a saver and wealth-builder. So, you need to start practicing deliberate, repeated acts of spending that violate your old identity (That sounds so much more aggressive than I mean it to).

2. The True Cost of Over-Saving. In the past two weeks, I have had two separate conversations with friends over 70 years old, both of whom are projecting out their retirement plans, neither of whom is front-loading their “high decay” experiences as much as I believe they should be. During those go-go years, you have a mental and physical capacity that simply won’t stand the test of time. High impact sport plans? Do them now. Long travel plans? Do them now. Cribbage circuit? That one can wait.

3. What Was the Money For? For what it’s worth, I still can’t answer this one myself. I know I like the idea of accumulating assets, and I know I like the idea of true financial security. What I don’t know is once the assets are accumulated and the finances are secure, what does that then buy that I can’t experience today? Those answers need to direct the portfolio, not vice versa.

What’s that? You’re interested in exploring these topics further but you’d rather have me read this to you than read it yourself? Check out this week’s episode of the podcast Your Money Guide on the Side, and if it proves useful, please consider leaving a review, as it helps new listeners find the show and helps me know that this endeavor in free financial literacy for all remains relevant.

Listen to Your Money Guide on the Side

Two Things I’m Currently Thinking About:

1. The Kaizen Method: Born in America, but Made in Japan. During WWII, the US military needed to produce massive amounts of tanks, planes, and ammunition but didn’t have the time to build new factories or other necessary infrastructure. So instead, the government launched a training program called Training Within Industry (or TWI). The slogan? Find a way to do it better with what you already have. It was only after the war, when American experts brought the TWI program to Japan and the Japanese named it Kaizen (Kai for Change and Zen for Good), that the Japanese fully embraced the “art of the tiny tweak.”

   Cut to the 1950s, Eiji Toyoda and his engineer Taiichi Ohno, just back from a visit to a Ford factory in America and realizing they couldn’t possibly afford a factory of that size and stature, adopted (and adapted) the Kaizen method to become the Toyota Production System. They gave every worker in the factory the right to pull a single cord that would stop the entire assembly line if anyone noticed a way that someone could do something even just 1% better. And it wasn’t until 1986 when organizational theorist Masaaki Imai published Kaizen: The Key to Japan’s Competitive Success that the world became obsessed with consistent and incremental improvements in every facet of our lives.

2. So Why is Tyler Talking About Toyota in a Finance Newsletter? Because I have a set of Stoic Reminders next to my desk, and each morning, I read a new one. This morning’s: It is not that we have a short time to live, but that we waste a lot of it.

   This immediately reminded me of a piece of advice I heard from Mark Cuban years back: learn to think in minutes, not in hours. If it’s 9:14am, and we have a call at 10am, instead of thinking that we have 46 useless minutes ahead of us, you might choose to think about those minutes like Sid does in Wallace Stegner’s Crossing to Safety:

   Accustomed to making every hour count, he reads a hundred pages of Middlemarch while he waits.

   Now, back to avoiding sounding like the man in the ivory tower: last week, I had thirteen minutes before a call, and rather than opening Eliot, I used those minutes to watch YouTube videos of the Great Molasses Flood of 1919, which took the lives of twenty-one people in Boston and is precisely as bad as it sounds. I have thought about it since and have yet to be in a position to use the information. Until now, I guess.

And Before You Go…

This week’s newsletter is brought to you by LMNT.

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As always, hope this gives you something to think about throughout the week ahead.

—Tyler