February 09, 2006 :: Ant or grasshopper?

I had an interesting conversation with my brother a while back. He was talking about money, and financial habits, and the philosophy that drives them. He asked me if I was a person who lived for the moment, or if I was a hoarder. He describes himself as a hoarder, and from what I know of his finances, it's accurate. Hoarders save money even when they don't need to... they save above and beyond, out of reflex and instinct. They will defer and deny themselves things in order to save for the future, for that rainy day. They are the proverbial ant.

By contrast, a person who lives for the moment (I need a pithy one-word description here but I can't think of one at the moment) hardly saves enough, never denying him or herself things in the moment because tomorrow is not promised. Such a person believes that life is for the living, and the young have more fun. This probably describes me, to a good extent. When I am old and gray, and I have grandchildren, I want to be able to tell them about all the fascinating things I did and places I went, not about how I scrimped and saved so I could leave an inheritance for their greedy little fingers.

To be fair, from an objective point of view, neither is wrong. They simply reflect different philosophies about life and how it should be lived. I will not pass judgment on how one chooses to live, as long as it is self-consistent. In other words, don't choose one path and then whine about how you wish you had the other path, like I'm going to do right now.

The other day, I used the calculator on my 401k website to project out how much money I would have, if I continued to save at my present rate until age 65. I used conservative estimates of salary and inflation growth, and it crunched and calculated and told me I'd have $1.8 million. Of course that sounds great, until one realizes that those are 2039 dollars, not 2006 dollars. The equivalent now is $650,000. Still sounds good, until you realize that (A) if my life expectancy takes me to, say, age 85, that's 20 years... about $32,500 a year, and (B) You still have to pay taxes on it. So in order to live what I figure to be a comfortable life at that age, I'd need to save.... about 3 times that much. This made me momentarily depressed.

I'm beginning to understand why some movie and rock stars deliberately flame themselves out young. Live life, enjoy it, use it up. It occurred to me: I could forgo buying things and going places now, to be able to .... buy things and go places when I'm 65. In my calculus, that just doesn't add up. So that pretty much seals it up for me. My new retirement plan? Win the $250 million Powerball jackpot this week.

posted by Rainmayun at 11:52 AM -