A friend recently asked me if I had enough money to retire right now if I wanted. The only answer I could give her was it depends. Our household has enough money to theoretically never starve or be homeless. I live in a house that is paid off but it has operating costs of $1400/month today. I write theoretical because I have no way of knowing how good or bad inflation will be over the next 30 years. What will be our annual operating costs for our home in the year 2038? How much will insurance premiums grow? What about utilities, property taxes, etc?
Theoretical 2038
I picked 2038 because that’s the year I may start taking social security. If I assume 3% inflation for the next 14 years then my current $1400/month operating costs will be $2117/month in 2038. If I assume 5% inflation then it’s $2771 and at 7% inflation it is $3609/month!
Will social security be solvent in 2038? Will I get the full benefits I was promised or will baby boomers bleed the fund dry?
My wife and I are now in our early 50’s and we have millions of dollars saved up, we have rental properties and various investments in cash, stocks, bonds, and other things so you’d think we’re set for life right?
Well as I recently wrote, I burned through $95,000 on two credit cards mostly on travel related expenses but those were only things we could charge. We have other expenses that require check writing, cash or other forms of payment. How much will things cost over the next decade? Prices only seem to go up and rarely down unless it’s an obsolete item.
The worry doesn’t stop there because just think of the people that were living happily along in Ukraine or Middle East that were suddenly found homeless because of war. Imagine if COVID re-surges into a deadly form and we need to evacuate, what good will money be in a world where all supply chains are permanently broken?
So when it comes to asking the question, how much is enough? The correct mindset isn’t answering that question in terms of dollars or euros or yen but in friends, family and community that can help you get past the point of oblivion.
