Problems of the wealthy

A random story popped up on my computer the other day, a story from Kiplinger’s “Wealth Wise” advice column: “Can a 64-Year-Old Retire on $1.6 Million and ‘Shaky’ Social Security?” (Please note this person is my age.)

“Dear Wealth Wise,” wrote the advice-seeker. “I’m 64 (almost 65), work full-time, and I’m tired of being told to use AI at my job. Can I retire on $1.6 million if my yearly spending needs are roughly $90,000 and Social Security will pay $3,500 a month (if benefits remain fully payable)?“

I confess I choked on my tea when I read this. This dude has $1.6 million in his retirement and his Social Security benefits are $3,500 a month? Yowza. Don receives Social Security, and let’s just say his payments are considerably less than $3,500 per month.

This man’s spending needs amount to $90,000 per year, or $7,500 per month. To us, that is wealth untold.

I think one of the things that baffles me about this kind of financial question is it highlights the different approach to spending and the dichotomy between the wealthy and the lower middle class. Because our income has always been unstable – and because we’ve experienced the horrors of debt – we’ve learned to live below our means, however humble those means are. We’ve spent years finding ways to whittle down our expenses and our spending. This has enabled us to pivot on a dime and adapt when times get tough (see here and here). As a result, we feel very financially stable.

The Kiplinger advice columnist was able to assure the man that yes, he could retire on that kind of income: “Our reader’s estimated $42,000 annual Social Security benefit should cover roughly half of annual spending needs. The remaining $48,000 will need to come out of savings. Using the popular 4% rule, $1.6 million could support $64,000 in annual withdrawals. Since our reader only needs $48,000, they have a pretty good buffer.”

Now don’t get me wrong; this person is to be commended for his diligent savings during his working years. I know no one who has that much put away, so kudos to him and I hope he enjoys his retirement.

But for those of us who were not as financially blessed during our productive years (obviously we get by on a whole lot less than $90K), we’ve had to adapt and make do. This video is more along the lines of our financial philosophy: “How to Live on a Low Income, $30,000 or less.” Don points out that $90K is not a huge income anymore, and in fact falls distinctly into the middle class. I guess that puts us in the “lower middle class” category.

This kinda reminds me of a couple of quotes. Someone once said, “A rich man is not the one that has the most – it’s the one that needs the least.”

And Diogenes of Sinope (c. 413/403 – c. 324/321 B.C.) famously tells a similar anecdote, to wit: A philosopher named Aristippus, who had quite willingly sucked up to Dionysus and won himself a spot at his court, saw Diogenes cooking lentils for a meal. “If you would only learn to compliment Dionysus, you wouldn’t have to live on lentils.” Diogenes replied, “But if you would only learn to live on lentils, you wouldn’t have to flatter Dionysus.

As it happens, I’m very fond of lentils.

What are your thoughts? Could you afford to retire on $90,000/year?