Will you have enough money?

Think back to pre-Covid and remember what ‘a lot of money’ was then. We were still talking about millionaires as the epitome of wealth. Now we talk of billionaires, increasingly of multi-billionaires. International finance today often talks trillions, though many people don’t know how many zeros there are in one. These vast sums of money don’t apply to you and me.

Or do they? Not, of course, that we are likely to make ‘multi-much’ money. In fact, we will be fortunate if we have enough for a comfortable old age and are able to afford the rising health care costs. But the world is growing wealthier and with that come expectations of better lifestyle, greater security and old age peace. Many of the costs involved in these new luxuries were not even imagined by our parents. Now we take for granted that we deserve them.

Inflation is only one cause of the increased size of sums of money being bandied about. Greater wealth of the richest precipitates a general sense of more money some of which ought to be ours. Widespread and facile media create impressions that wealth is life’s goal. Politicians pander to it lest they be thought conservative and unadventurous. Almost without our noticing, the annual holiday becomes two holidays and long weekends are a reason to travel overseas. A modest amount of hard work legitimises WfH for a month. Why not?

Expectation and curiosity are inflationary points that don’t show in the financial reports. Both are perfectly legitimate but seldom taken into account when weighing up what you need for the third quarter of your life. Inevitably, you will gear your spending to what you have. That is how people survive. But don’t ignore the word ‘comfortable’. It doesn't matter much when you are young. It does when you are old. You are likely to live longer than you now expect. At 92, I can confirm that. If you are 40 today you may well see 115. Good on you if you do.

Setting a wealth target is important. If you reach it, you will be able to help those who may be a bit dependent on you, you will be able to indulge yourself from time to time and, most importantly, you won’t spend your time worrying. How to set your wealth target? To make sense of it you must know your assets now and the assets you will inherit. Make sure they are assets. An ancient castle in Ireland is fun but may be more a liability than an asset.

Obviously the best way to decide what wealth you need for your old age is to list the things you want to do (Bucket List), cost them, add 50% if you are aged 40-60, 30% if you are 60-70 - and see what that shows you. Make sure health insurance is included in the Bucket List. You should have that insurance from an early age. If you do, you will limit the exclusions - those per-existing conditions that are not insurable.

A simple test of your wealth target is to treble what your parents own and have to live on now. It’s not accurate but it will indicate if your target is fairly realistic. And a job with even a small pension is worth 20% more than one without, provided you stay in the company long enough to trigger it. However, no calculations will give you a perfect answer. You’ll get nearer to that if you consult a life coach who is regularly dealing with diverse people about the future.

Like so many things in life, planning ahead reasonably saves you headaches later on, especially when you are setting your wealth target.

Money isn’t everything. Having nearly enough is comforting.

Knowing you have nearly enough makes for true contentment.

Good morning

John Bittleston

Please tell us what you think but please don’t say you don’t want to live that long.

When you reach it, you will! mentors@terrificmentors.com for your thoughts, please.