Posts Tagged 4% solution

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In my son’s English class in 8th grade, he was asked to write a letter to himself 4 years into the future, the year he would graduate high school.  His 8th grade teacher mailed the letters to all of the students soon after graduation.  We got a kick reading about the assumptions that he had made 4 years ago about what his life would be like, such as what car he was driving, what college he was going to attend, did we ever catch Osama bin Laden, did A-Rod ever come through in the postseason, etc.  Inspired by my son, I decided to go a little further into the future, and write a letter to myself to be opened at the time of my retirement.  So, cue the swirly effects as I take you many years into the future…

Dear Old Fart,

If you’re reading this, then I can assume that I made the right decisions many years ago, because you’re able to retire.  You’re welcome.  I’m glad you’re able to enjoy the fruits of my sacrifices, and my investment savvy.  OK, I’m probably making you sick with my arrogance, but you’re probably sitting pretty in a financial sense.

In order for you to reach this stage, you had to stick to the plan that I laid out for you.  You continued to excel work, work to full retirement age, and to religiously invest in your 401(k).  You stuck to index funds, as the expense ratios wouldn’t eat up any gains that you made.  You lived within your means, because the only person you had to impress was yourself.  And you must still be married to that gorgeous woman, who’s the true brains of the marriage.  ;-)  I’m glad you didn’t screw things up, or you’d be a greeter at Wal-Mart, wrangling shopping carts and subsisting on dog food.

I hope that the kids are settled into their chosen fields.  I can only hope that they’re not still living under your roof, or all of those lessons on self-sufficiency and responsibility would have been for nothing.  If they are still living at home, it’s time for you to help them get their shit together.  They have to grow up sometime.  Make them read Your Money or Your Life again, and send them out into the Real World.  It’s time.

I hope you’ve taken care of yourself physically as well as fiscally.  You better not be one of those old, slovenly, beer-bellied guys that wear black socks with shorts.  I worked too hard on my appearance to have you turn into a buffoon.  Take some of that nest egg and invest in some new threads and a gym membership.  But don’t tap the savings too hard; you should be able to siphon off 4% of the total and still live a life well beyond subsistence.

Are you still living in the original house?  Sure, it wasn’t huge, but it was one that we could afford, and somehow we found enough space for all of us to live comfortably.  The key was not accumulating “things”, but experiences.  If you are moving to warmer climes, I hope they have the Yankees on cable or satellite.  Did A-Rod ever come through in the postseason?

Lastly, I want to wish you a happy retirement, old-timer.  I’m sure you gave it your all every day at the office, so you should have nothing to be ashamed about.  Your reputation should be intact.  I hope that you’ve inspired some others along the way.  My advice would be to never stop learning.  Did you ever learn to play the guitar?  Now’s a good time to add it to your “bucket list”.  New challenges keep your mind young. Anyway, have fun spending my money.  It should last you a long time.

Sincerely,

Your Younger Self

OK, it’s a little too arrogant, but it serves a purpose.  Would you rather read this letter at retirement, or one that starts with:

Dear Old Fart,

I hope you like working, because years ago, when I should have been investing my hard-earned money, I blew it on gadgets and expensive vacations, so you’re shit-out-of-luck when it comes to retirement.  Enjoy the dog food!

Make your plans now, and stick to them, so that you’ll have a happy letter to open in your golden years, and not one filled with a bunch of excuses.

What letter would you write to your future self?  What would you tell them?  What questions would you like to ask?

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