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URL:  http://boards.fool.com/great-question-hharri-i-have-been-thinking-about-12383195.aspx

Subject:  Re: Puzzled Date:  4/11/2000  8:47 PM
Author:  ptsurmr Number:  21132 of 75335

Great question hharri! I have been thinking about writing a post on just this subject. I have wondered with you:
"I am puzzled by the lack of comment on the fact that you may only have a few years, with something to be said for concentrating on them, not on the other end"

I believe that this whole question boils down to risk management. We have a "back-side" risk (running out of money before we run out of life) and a "front-side" risk (working for more years than we really needed to, and thus depriving ourselves of that time being spent in more fulfilling pursuits).

The trick is to balance the risk. Attempting to eliminate one of these risks at the expense of the other can be taken to an extreme, in either direction. Consider the 18-year-old with $500 bucks in his/her pocket. "Forget about tomorrow, it may never come. Live for the day!". Chances are, tomorrow WILL come for him/her. This is irresponsible behavior.

On the other side, consider the individual saving for retirement. He/she obtains a portfolio large enough to cover the likely time frame they will live, but does not feel "safe" enough. They continue to work in order to provide for events they will most likely NOT encounter. They sacrifice, with 100% certainty, time now for a statistically UNLIKELY event that may occur in the future. This, in my opinion is just as irresponsible as the 18-year-old.

I think most retirees, especially early retirees, have the attitude you describe because we are masters of delayed gratification. We forget that the process of saving was an end to a means, not a means in itself. We fear that in the unlikely event we do run out of money, we have somehow failed in our objective. We have not!

Our objective is to enjoy life, but to do so responsibly (not at the expense of charity, government programs, etc.). By delaying our retirement until we have absolute certainty we will never run out of money, we are acting in direct conflict with our objective (unless we never wanted to retire in the first place)! As I say, the trick is to identify when the effort (in terms of life energy) to reduce the "back-end" risk exceeds the likely benefit (i.e when the front-end risk exceeds the back-end risk).

I for one am willing to accept a (smallish) possibility that my funds will not last forever. In return for accepting this small risk, I obtain the nearly certain (I may die tomorrow) benefit of spending several more years being retired, doing what I really want to be doing. I believe I have the responsibility to myself and to my family to act this way.

PtSurMr

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