A few nights ago, DW and I went out to dinner with a woman who lives down the street. Her husband was out of town on business. The woman is right at 60, and she spent her prior years as a housewife and mother of three. Her husband was/is a very successful professional, with multiple professional degrees. He has made excellent mid 6 figures for many years, but his work is involuntarily drawing to a close. He's almost 61. They have a primary residence in a great NC town, plus a vacation home in the mountains. Anyway, the woman mentioned during dinner that they had just determined they were way short of retirement funding to maintain their current lifestyle, and she was somewhat worried. We just listened, and frankly we couldn't believe that she was telling us all of this. Anyway, when we got home, DW asked how they could be in such shape. I mentioned that he probably had fully funded his 401k over the years, but likely spent most of what was left on their lifestyle. They have expensive homes, very expensive cars, take very expensive vacations, have tickets to every expensive sporting and entertainment event, and do expensive things all the time. If they had spent most or all of their then current income on lifestyle, then all they would have now is his 401k, which couldn't have more than around $1.5M in it, given the limits on what can/could be contributed over the years. I explained to DW that $1.5M would allow for about $60K before taxes each year, and that their current lifestle probable would take around $200K before taxes. Other than working for more years, there isn't much they can do at this late stage, other than substantially reduce their lifestyle, which wouldn't mean ruination by any means. DW then said that she was glad that we didn't take expensive vacations over the years, or drive expensive cars, or buy up to more expensive homes, or live beyond our means. Retiring early has been great for us, but being reasonably secure is even better. I say this with fingers crossed and knocking on wood, because bad things can happen to anyone at any time. Bottom line: The choices folks make during their younger years determine the choices we have in future years, so make your choices well while you have the chance.
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