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

0:00Real wealth is the freedom to do what you would have done anyway, but without the friction of having to do it. So if I had to put it in one sentence, and I've spent five years trying to put this in one sentence, I would say real wealth is the freedom to spend my hours doing the things that, on my deathbed, I will be glad I spent my hours doing. Hello friends, this is Tyler Gardner welcoming you to another episode of your Money Guide on the Side, where it is my job to simplify what seems complex, add nuance to what seems simple, and learn from and alongside some of the brightest minds in money, finance, and investing.

0:43So let's get started and get you one step closer to where you need to be.

0:51quick note before we dive in august pre-order incentive for my book real wealth is now live and this one is my favorite so far pre-order this month tell me you did at tylergardner.com book and i will send you a draft chapter of a new book that i'm already working on and no not even my editor at norton has seen this writing yet this sneak peek is yours to keep delivered to your inbox in early September. Pre-order today, and you're locked in for every monthly incentive through December 1st. TylerGardner.com slash book. Now let's get into it. A few years ago, a man I'll call Edward, early 70s, retired engineer, three grown children, $4.2 million in invested assets, paid off house in Ohio, no debt of any kind, sat across from me at a wooden table at a coffee shop and told me, with what I can only describe as a kind of subtle longing, that he and his wife had not taken a vacation in 11 years.

1:53I asked him why. He said, and I want you to hear this exactly as he said it, we're worried we won't have enough. I want you to sit with that sentence for a moment. We're worried we won't have enough. From a couple with$4.2 million, no debt, paid off house, no dependents, and social security checks landing every month like clockwork. By every objective measure, every Monte Carlo simulation, every withdrawal rate framework, every spreadsheet a financial planner could possibly run, Edward and his wife had enough. They had emphatically enough. They had several times enough. They had so much enough that if their portfolio dropped 50 % the next day and never recovered, they would still have enough.

2:45And yet, I sat with Edward for two hours that morning. We ran the numbers over and over. We projected his portfolio to age 95 at a 3 % withdrawal rate, then at a 4 % withdrawal rate, then at a 5 % and 6 % withdrawal rate. Every projection ended with him dying with more money than he had retired with, often substantially more. The math was, in the gentlest possible way, embarrassing. So Edward listened, he nodded, he thanked me, he went home. We followed up six months later. He had still not taken the vacation. This is part five of the Decumulation series, the final episode, And it is, I want to say up front, the episode the entire series has been pointing toward.

3:35Because everything we've covered up to this point, the buckets and the withdrawal orders and the Roth conversions and the Irma cliffs and the rising glide paths and the guardrails, all of it, every minute of it, was the technical scaffolding for a question we have not yet asked directly. correctly. The question is, how do you actually spend the money you just spent your whole life not spending? And I'll be honest with you, I don't have a tidy answer to that question, as it's going to be different for different people. I do have a framework. I also have some philosophy. Surprise. I have, I hope, a few useful provocations.

4:17But the question itself, The question of how to be in right relationship with money that you spent 40 years not being in relationship with is one of the deepest questions a human being can ask, and I'm genuinely not sure that anyone has quite cracked the code. But today, we're going to try, we're going to wander around a bit, and this will be a meandering walk. Part 1. The Identity Trap I want to start with something that I think is the foundational misunderstanding of retirement and that I've seen literally no one in the personal finance space talk about this way. You didn't spend 40 years saving money.

4:57You spent 40 years becoming the kind of person who saves money. The savings is a byproduct. The identity is the main event. This distinction sounds semantic. I assure you it's not. If saving were merely a behavior, an activity you performed like flossing or commuting, then stopping the behavior on the day you retired would be pretty straightforward. You'd hang up the saving the way you hang up your work clothes. The activity ends, life continues in a new mode. But that's not what saving is. Saving, when you do it well for long enough, becomes a self. It becomes part of how you understand your relationship to the world.

5:42You're not a person who happens to save, you're a saver. The word becomes the noun, the behavior becomes the identity. And once an identity has been formed over decades, once it has been reinforced by every monthly contribution, every dollar of compound growth, every conversation with a friend who admires your discipline, every act of self-restraint at a restaurant where you ordered the cheaper thing. Once that identity has been formed, it does not simply evaporate the day your last paycheck lands. It persists. It persists with the full structural weight of 40 years of accumulated self-concept, and it persists with no obvious replacement.

6:27The retirement industry, when it talks about the saver to spender transition, tends to treat it as a switch. You flip from saving mode to spending mode. The framework is mechanical, like changing your oil. That's the wrong framework. The correct frame is that you have to become a different person, not metaphorically, literally. The 30-year project of retirement is the project of dismantling a self you spent the previous 40 years building and constructing in its place a self that has different relationships to money, to time to identity and to the question of what life is for. And that's hard. That is wrenchingly hard.

7:13And it's the hard thing that almost no financial content prepares you for. Edward wasn't failing to spend his money because of the math. He was failing because the math problem and the identity problem were operating on different frequencies. The math said, spend, you have plenty. But the identity said, spending is not who I am, and it's gotten me to have a massive portfolio and be, for all intents and purposes, successful. The identity had been built over decades. The math was something we recognized in a single morning over coffee. Surprise, the identity won. The identity will almost always win.

7:54And if you don't believe me, just go pick up a copy of James clears atomic habits. This is, by the way, why financial advisors who only do math will fail retired clients. The math is not hard. The math has been the easy part for 40 years. The hard part is now, and the hard part is not financial. It is, in fact, existential. This episode is brought to you by Delete Me. I just audited every subscription I pay for, and I canceled 11. Here are the three that survived. Number three, my password manager. 36 bucks a year and the only real cost was learning how many accounts share the same password I've used since AOL Instant Messenger.

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10:49And for new clients, they will help model your prior year retirement contribution opportunities and help you fund what's still on the table before October 15th. Visit joingelt.com slash Tyler to get started. That's joingelt.com slash Tyler. Part two, the cost of frugality at the wrong time. I want to do something here that I haven't seen anyone do in the retirement space, which is to argue with real force that over-saving in retirement is a real cost, not a missed opportunity, not a slight inefficiency, a genuine quantifiable life-shaped cost. Most retirement content is built around the fear of running out.

11:36The 4 % rule exists because of the fear of running out. The bucket framework exists because of the fear of running out. The conservative glide path, the cash buffer, the guardrails, all of it is structurally biased toward the catastrophe of outliving your money. The bias is reasonable. Running out of money in your 80s is a terrible outcome, and it deserves serious planning attention. But there is also another outcome, even more common, in fact way more common, that no one talks about with the equivalent seriousness. The outcome where you die with$3 million you never spent. The outcome where you spent 11 years not taking the vacation.

12:17The outcome where you didn't take your grandchildren to Europe when they were 10 because you might need the money when you're 90. And then you get to 90 and you still have this money and your grandchildren are 35 and the window for that kind of trip that you would have taken with them when they were 10 has closed permanently. That outcome, to me, is a tragedy. It's just a tragedy that's harder to see because it doesn't have a visible failure state. There's no moment where the money runs out. There's no phone call to a child asking for help. There's just this slow accumulation of things not done, dinners not eaten, gifts not given, experiences not had.

12:57And then at the end, in a state that goes to children who are themselves in their 60s and don't particularly need it. Bill Perkins wrote a book a few years back called Die With Zero. I've talked about this on a few episodes. The title is provocative on purpose. His central argument is that the goal of a financial life is not to maximize the size of your portfolio at death. It is to maximize the experiences purchased with your portfolio across the entirety of your life. Money has a time value, but so does experience. A trip you take at 65 is not the same trip you would have taken at 35, and not because the destination would be different.

13:41The trip is different because you are different at 65 than you were at 35. The 35-year-old version of you who would have taken that trip no longer exists. The 65-year-old can take a different trip and should, but the 35-year-old's trip is gone permanently, regardless of how much money you have. This is, I think, the most underweighted truth in retirement planning. Money has a half-life, or more precisely, the utility of money has a half-life. A dollar in your 60s buys a different set of experiences than a dollar in your 40s. A dollar in your 80s buys a smaller set still. By the time you reach your 90s, most of what money could have bought you, the physical adventures, the long travel, the active engagement with grandchildren who are now adults, is gone.

14:37Not because you can't afford it, but because your body or theirs or both no longer accommodate it. The cost of oversaving is the cost of foregone experience that no future spending can recover. It's the cost of arriving at the finish line with a great deal of unused fuel and no race left to run. I'm not telling you to spend recklessly. I'm not telling you to abandon your bucket framework completely. I am telling you that the bias is toward conservatism, and repeated across 30 years of retirement, that has a price that we simply don't talk about enough. Part three, the permission problem. Edward, the man at the coffee shop, was not bad at math.

15:21He'd been an engineer. He could run the numbers. He had at various points in his life run scenarios that proved to be on any reasonable doubt that he had enough. He did not lack information. What he lacked was permission. This is the part of retirement that no financial advisor can solve for. And I want to say it plainly because I think this is at the heart of the entire series we just spent five weeks covering. The technical work, the conversions, the brackets, the buckets, the guardrails, exists in service of a question that the technical work cannot answer. Am I allowed to spend the money? Nobody can answer that but you.

16:03No Monte Carlo simulation can answer it. No financial planner can answer it, though many will be happy to take your money to try. The permission has to come from somewhere else. And this is, I think, what people are actually looking for when they do hire a financial advisor in retirement. Not optimization, but permission. They want someone to look at the numbers and tell them, with the authority that comes from doing this for a living, that they are allowed to take the trip, allowed to buy the cabin, allowed to give the grandchildren the wedding present, allowed to live the life they spent 40 years funding.

16:42But here's the strange thing. The permission, even when granted by a competent advisor, often doesn't take. The advisor can say with all the authority in the world, Edward, you have enough, go on vacation. And Edward says, awesome, thank you. And Edward does not go on vacation because the permission granted by an external authority never quite penetrates the internal architecture of identity that says, I'm not the kind of person who takes vacation. That permission has to be self-granted, and self-granted permission is one of the hardest psychological feats a human being can perform. Anne Lamott once wrote in Bird by Bird that perfectionism is a mean frozen form of idealism.

17:32I would add that hoarding as self-concept is also a mean frozen form of discipline. The discipline that built the savings becomes in retirement the frozen form that prevents you from using them. So what does self-granted permission look like practically. It looks like a small, deliberate, repeated practice of spending in ways that violate your old identity. Not recklessly, not unsustainably, but intentionally. You take the slightly nicer hotel room when you travel, you order the appetizer and the entree, you buy your spouse the gift you would have previously talked yourself out of, and you do this not because the gift matters in itself, but because the act of doing it begins to construct a new identity, the identity of someone who is allowed to enjoy the work of the previous four decades.

18:30The practice is repetitive on purpose. Each small spending act is a brick in the new identity. In my conversation with him on the podcast last year, Bill Perkins described this type of intentional spending as making sure you don't allow your muscles to atrophy. You have to work them out, and you've got to work them out repeatedly. The old identity does not yield to a single dramatic gesture. The old identity yields to a thousand small acts of repositioning. The trip to Italy does not, by itself, transform you into a person who takes the trip to Italy. But the trip to Italy in March, and the long weekend in May, and the dinner with friends in July and the museum tour in September, those together begin to transform you slowly with the same patients that built the savings in the first place.

19:23Part four, the time bucket reframe. I want to give you a concrete framework now because I know that I've spent the last 20 minutes on philosophy and I do in fact owe you something practical to take to the next conversation with your spouse. The framework I find most useful, and I'm absolutely adapting it once again from Perkins' Die With Zero, is what I'll call the time bucket reframe. The idea is simple and profound. You do not have one retirement. You have several. You have the retirement of your 60s, when your body is still most likely capable of most things. Your mind is sharp. Your friends are still alive.

20:03Your grandchildren are still young. This is the act of retirement. It is the period in which the greatest range of experience is still available to you. You have the retirement of your 70s, when your body begins to negotiate with you, but you're still profoundly capable. Long travel becomes a question of comfort rather than possibility. Physical adventures shift in scale. You can still do almost anything. Some things just take a little more planning and maybe a little more ibuprofen. You have the retirement of your 80s, when the world starts to contract. Travel becomes shorter and closer to home.

20:38The pace slows. The pleasure becomes more local. A walk, a meal, a conversation, a familiar landscape. The body is more deliberate. The mind is, if you've tended to it, still entirely yours. And for many of you, you might have the retirement of your 90s, which is what it is. A great gift if you have it. A period in which the calendar of pleasure is very, very local. The important thing to note is these four phases are not equal in their capacity to use money. They are, in fact, dramatically unequal. I've mentioned this several times in my argument about why you should take Social Security earlier.

21:15A dollar in your 60s can buy a multi-week trip across Europe with your spouse, including hikes and museums and long dinners and the kind of physical engagement that requires legs and lungs and stamina. The same dollar in your 90s, even if your 90s are healthy, will not buy that same trip, and you won't have 30 years of memory of that same trip. It will buy something else, something perhaps quieter, perhaps more meaningful, but something different. The framework's prescriptive force is this. Front load your spending toward the experiences whose value depreciates with age. The long international trip, the physical adventure, the active engagement with grandchildren who will themselves not be young for long, the cabin you've always wanted while you still have the energy to spend weeks there.

22:10These are the experiences whose half-life is shortest. They are also, almost universally, the ones retirees most consistently defer. The same logic does not apply to all expenses. The annual donation to your favorite cause, the spoiling of grandchildren the support of an aging sibling. These have less time sensitivity. The visit to a familiar restaurant in a familiar town does not depreciate the way the multi-week hike through Patagonia does. What this framework gives you practically is a way to prioritize your spending without abandoning the conservative principles of the bucket framework. You ask of every spending decision, Is this an experience whose value will be meaningfully less in 10 years?

22:56If yes, you weighed it more heavily now. If no, feel free to defer. Most retirees, when they actually do this exercise, discover that they have been deferring exactly the wrong things. They have been deferring the trips, the experiences, the active adventures, the high decay experiences, and accelerating the low decay ones. The pattern is inverted. This framework helps you invert it back. This episode is brought to you by Caldera Lab. Quick confession. In high school, my AOL screen name might have been Pretty Boy Durden. And it wasn't ironic, because while other guys were collecting baseball cards and playing real sports, I was collecting his skincare products and taking my appearance embarrassingly seriously.

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25:06And if you're currently looking for a financial planner, there are three things a percentage-based financial advisor is hoping you never think about. Number one, it is not necessarily harder to manage more money, yet these advisors will often charge you more just because you have more. Same asset allocation plan, same phone calls asking how the kids are doing, and yet the fee continues to grow. Number two, and the line they feed you, the we do better when you do better, it sounds great until you realize that the fastest way for them to do better might be to put you in riskier assets than you wanted or needed.

25:37Your risk tolerance and their incentive structure need to be properly aligned. And number three, notice how they never tell you the fee in dollars, only the percentage. Because once it's not in dollars anymore, it doesn't feel like dollars anymore. FACET works differently. One flat annual membership fee based on the services you need. No percentages, no commissions, just a dedicated team of CFP professionals who help you figure out what you want your money to say about your life. Head to facet.com slash Tyler to book your intro call and you'll still have time to make it to bed, bath and beyond.

26:09I'm not a member of facet. I have an incentive to endorse facet as I have an ongoing fee-based contract for cash compensation as well as a percentage of equity in facet based on this endorsement. Facet is an SEC registered investment advisor. All opinions are my own and not a guarantee of a similar outcome. Part five, the question beneath the question. I want to pause here and ask you something directly because I think this is the most important moment in the entire series. What is the money for? I don't mean this rhetorically. I mean this as a real concrete question that I want you to actually answer with specifics right after you finish listening to this episode.

26:51What is the money for? Most retirees, when they answer this question, give answers that are, on close inspection, not real answers. They say things like security, or to not run out, or to leave something to my kids. I don't think these are answers. I truly believe they're placeholders. Security from what? To not run out so that you can do what? Leave something to your kids who already have their own incomes and 401ks for what specific purpose? The placeholders are easier than the real answers because the real answers require you to admit what you actually want, and what you actually want is harder to articulate than what you think you should want.

27:38What you actually want when you spent 40 years saving might be one or several of the following. Time with specific people, your spouse, your children, your grandchildren, the small handful of friends who matter most in a quantity and quality that your working life did not permit. Engagement with a place, a city you've always wanted to live in, a landscape you've always wanted to spend real time in, a country you've always wanted to know rather than visit. A creative project. The book, the woodworking shop, the garden, the second career that doesn't pay but matters that you've deferred since you were 30.

28:20A practice, physical, intellectual, spiritual, that requires sustained attention and that paid work made impossible. A contribution to a cause, a community, a body of work, an institution that you've cared about for decades but never had time to serve properly. Freedom from a specific thing. A commute. A city. A relationship. A financial pressure. A kind of meeting that was the texture of your working life and that you no longer want to feel. These are real answers, and money does in fact fund them. Now, here's the part that matters. Most retirees never sit down and ask themselves this question.