He retired with a lot of money. Now he hesitates to spend.


The time of dreams


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I spent 30 years building up a nest egg to pay for my retirement. It has been two years since I last worked full time, and I discovered something deeply disturbing.

I don’t like to spend this nest egg.

Instead of backing down, I did everything I could to avoid dipping into my savings. I managed to cover most of our expenses by writing freelance articles and columns like this; A year ago, I sold a piece of art that had been in the family for decades to raise even more money.

What is wrong with me? Why can’t I relax and smell the roses?

For starters, I always enjoy seeing my portfolio grow. It’s like winning Monopoly, my favorite childhood game. Thanks to a buoyant market and my freelance work, I am better than retired. I would like to attribute this to my work ethic, but the rise in stock prices was the main driver. The Federal Reserve has kept interest rates low to support asset prices during a vicious pandemic. Those of us who are fortunate enough to own stocks or houses benefit from it.

The next factor is that I still love to work. After 20 years of editing other people’s stories, I have fun telling my own stories again. That’s what first got me into journalism, and I forgot how much fun it was.

I like to learn things. When we report a story, we get paid to learn, paid to speak to the world’s leading experts on various topics, paid to put words on a screen. It’s hard to beat. Experts tell us that working in retirement is good for us, especially if we like what we do.

Well i like it.

The last factor in my reluctance to embrace retirement is more neurosis than virtue. I’m afraid of running out of money.

When I lost my full-time job in the summer of 2019, I consulted with a financial planner. I told him the minimum we needed to fund our retirement. He told me we had more than enough money saved to cover it. It was reassuring to hear that.

The problem is, I don’t believe it. I believe that stock valuations are unsustainable, that we need to prepare for a sharp decline, and that many retirees have overly aggressive withdrawal rates. The safe percentage that we can withdraw may be as little as 3% per year.

Stocks lost more than half of their value during the Great Recession a dozen years ago. At the start of the pandemic last year, stocks quickly fell by more than a third and would have sunk again without the massive government spending.

I believe we’ll have another sharp drop or two in stock prices in my lifetime. I have no idea when they will come. The market could start falling tomorrow or continue to rise for another decade. Timing Markets is a cup game.

So I keep half of my portfolio in equities despite deep concerns about equity valuations. Over the next 30 years, I still expect stocks to outperform bonds. So, I think the safest long term retirement portfolio should include stocks. Which is another way of saying that the safest long-term portfolio is inherently volatile.

One way to compensate for portfolio volatility is to slow down the burn rate of that portfolio. And that’s exactly what I’m doing right now, continuing to cover a lot of my expenses while working.

It’s a good thing that I like the job.

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