A lot of finance sites focus on getting out of debt or making more money. However, what is seldom discussed is what to do if you actually have “too much” money. That may sound absurd at first, but think about it. Many people oversave and worry about running out of money so much during their 30s through 50s that by the time they’re in their sixties and seventies they realize they’ve only got a decade or so left of active, healthy living and they have more money than they know what to do with. They’ve already gotten the kids through college, paid off the mortgage and the Social Security checks are just starting to roll in to supplement their income. So, what now?
Seeing this situation play out with various family members, friends of the family and such that are reaching their “golden years”, I’ve seen numerous approaches to this “problem” if you will. After all, nobody wants to die with too much money – meaning you could have done more with it during your living years. Here are some of the things I’m seeing people do with their money – whether these are prudent or distasteful, I defer to your opinion:
- Family Vacations (Large Groups) – We have a few friends that get to go on annual family vacations now with their mother/father or both, where they pay for massive groups of their children and grandchildren to all go to Disney, cruises, shore houses and more each year. Must be nice! They don’t pay a dime except for some gas to get where they’re going and maybe some food/drinks. But all rooming, flights, cruise costs, etc are paid for by their benevolent aging parents. If we are in that situation when we’re older, I could see us doing something like that rather than just trying to continuously grow our nest egg into a larger and larger valuation. After all, nobody’s on their death bed wishing they earned an extra few thousand dollars in their retirement funds. I’m a big believer in life experiences.
- Philanthropy – Many people find great value and purpose in philanthropy. There are so many forms of philanthropy that it perhaps shouldn’t all be considered one bucket. There’s the giving of one’s personal time and energy along with funds. There’s very targeted giving to a particular cause. There’s the shotgun approach of donating funds to several different worthy causes, religious institutions, the poor, medical causes, etc. And then there’s the notion of letting someone else make the best use of your funds. For instance, the likes of Warren Buffet handing over substantial sums to the Gates foundation to manage is an admission that the foundation could probably make better use of his money than he could himself.
- Gifting – Many people have mixed emotions on gifting to their family members. On one hand, it’s keeping money out of the hands of the government by staying below the threshold for death taxes (or minimizing the hit). That’s a noble cause, since most people would rather see their money spent on their family than all the absurd things the federal and state governments do with taxpayer funds. To the contrary though, is it sort of enabling and babying a generation? Many people want to see their kids make it on their own and not be getting what’s basically a very high-value allowance each year, if they’re giving say, $13,000 to each spouse at Christmas every year. To that, I’d say, if I’m in the position to gift to my future heirs when I’m older, I’d like to do that rather than send it to government coffers. But I probably wouldn’t start doing that until my kids are older and established, not in their early twenties for instance. You also have to make sure they don’t become accustomed to it, or expect an annual gift. Then it truly becomes an allowance.
- Cars, Jewelry, Etc. – I’ve seen my fair share of seemingly silly purchases by elderly folks that don’t seem to make a lot of sense. There’s the proverbial mid-life crisis car purchase, second and third vacation homes that are seldomly used, expensive jewelry which still baffles me, and all sorts of other gadgets. I suppose this behavior is no different in golden years than someone who makes these sort of purchases during their younger years, but people sometimes seem to get this urgency to spend their money and in treating it as such a pressing issue, they don’t research, they don’t haggle, and it appears outwardly that they don’t even think – they just spend. But then again – it’s their money! They’ve earned it, they have more of it than they need, and they should spend it how they see fit. Who are we to judge?
If you find yourself in this position as you reach your golden years, what approach will you take?