Today’s article is an original guest post from the White Coat Investor.
Like the good Dr. Dahle, I have crossed the threshold of having Enough to consider our family financially independent, but I continue to work one more year after another.
Read further as he delves into some of the lifestyle and financial considerations for those of us in the extremely fortunate position of having Enough and then some.
While I’ve discovered that both financial independence and retirement are a little bit squishy rather than some hard and fast concept, I’ve basically arrived. And I’m not done. I’m not done working. I’m not done saving. I’m not done giving. Whenever possible, I’m trying to align my actual life with my ideal life. But, like PoF, I’m trying to figure out what the rest of my life is going to look like.
“Enough” is a critical concept in life. If you have never bothered to figure out how much money is Enough money for you, i.e. Enough that you never need to work again, it’s certainly a worthwhile exercise. If you never do that, you might blow right through it doing something you don’t want to do for much longer than you should have. In this post, I wanted to explore what happens when you get “Beyond Enough.”
One issue I have run into is that I seem to keep revising my original financial goals. Whereas I used to think that $2 Million was Enough ($2.7M in today’s dollars), we seem to have found Enough other stuff to spend money on that brings us additional happiness, especially when combined with our progressive tax code, that $4-5M now seems to be our number.
Our old plan for our children was to provide Enough money to cover tuition only at our alma mater, something like $25K. Now we’re thinking $50-100K a piece saved up in advance for college and graduate/professional school.
We also donate more to charity every year and while we don’t have hard and fast charitable giving goals, would also like to be able to do more in that department.
William Bernstein, MD famously said, “When you win the game, stop playing.” Once you get to “Enough,” especially if you plan to continue engaging in paid work of some type, you can reduce the financial risk in your life.
That can refer to having a less aggressive portfolio (more bonds, fewer stocks) or deleveraging your life (paying off the mortgage.) You can even hire a low-cost financial advisor to reduce the risk of your partner mismanaging the money if something happens to you. Or buy longevity insurance you would not have gotten otherwise. The point is, you can afford to take less risk, so consider doing so.
Changing Professionals Goals
Most of us like our job at least a little bit. Why not find those things you like, and do more of them and find those things you don’t like, and do less of them?
While you may not like working 40 hours a week, working 10-15 might be much better than zero for various non-financial reasons. There are also parts of your job that you may not like, in addition to the sheer volume of work.
Perhaps you can drop call or night shifts. Perhaps you can arrange to work at a slower pace, spending more time with your patients. In my case, as I approached FI I reduced my total hours by 25%, dropped my overnight shifts, and dropped some administrative duties that were eating up an additional evening a month.
Now I enjoy work much more. One more reduction in hours and I could actually enjoy practicing medicine well into my 60s.
[PoF: I’ll be starting my own “work less” experiment this fall, when I drop 40% of my clinical workload.]
Perhaps you want to do a completely different job, such as the classic encore careers of cooking, art, or being a river guide. Now that you no longer need your career to pay you gobs of money, you have all kinds of additional choices available to you.
Not Having To Maximize Financial Assets
Another beautiful aspect of being “Beyond Enough” is you no longer have an obligation to your family and yourself to maximize your financial assets.
You can leave your money in a bank that pays a little less interest than is possible, just because you like the location. You can keep your business in the family, even though someone else is offering you more than a fair price for it. You can make business and personal decisions that earn less money, but align better with your values.
Asset protection becomes a more important aspect of your life as your assets grow. While purchasing personal and professional liability insurance, maxing out your retirement accounts, placing rental properties and other toxic assets into LLCs, and titling your home properly probably compose an adequate asset protection plan for someone who is still accumulating, as your assets grow you may be willing to spend more and give up other benefits in exchange for additional asset protection.
Perhaps you want to establish some irrevocable trusts. Maybe the low returns available on cash value life insurance matter less to you. Perhaps the expense of setting up a family limited partnership now makes sense.
One of my partners, now retired, at the advice of his advisors, decided the risks of practicing medicine now outweighed the joy he got from it. He simply had too much to risk it all on an above-policy-limits lawsuit, despite the low likelihood of that ever occurring.
If you continue to work, earn, and save “Beyond Enough,” you may find you are now going to have an estate tax problem you never anticipated.
Perhaps a business you started is going to cause you liquidity issues. You now have Enough money that if you left it all behind to your children, it would ruin them. Warren Buffett plans to leave Enough to his heirs that they can do anything they want, but not nothing. Estate planning used to be a rather minor part of your financial life. It is now probably a lot more significant.
“Beyond Enough” is a great place to be. The problems it brings are all “first world problems.” But that doesn’t mean they’re not worth solving.
What do you think? Are you Beyond Enough? Did you continue earning money after hitting Enough? How did that change your financial plans? How did your life change “Beyond Enough?” Comment below!