When Enough Becomes Enough

Series 4: How Much Is Enough?

Part 5: When Enough Becomes Enough

There is something I have noticed over many years of talking to people approaching retirement. The closer they get to the point they have spent decades preparing for, the easier it can become to find another perfectly sensible reason to postpone it. Another year of work would add a little more to super, the mortgage could be reduced further, markets feel uncertain, the children may need help, or perhaps it would simply be prudent to build a slightly larger cash reserve before giving up a regular salary.

If you have spent most of your adult life being responsible with money, none of those thoughts sounds unreasonable. In fact, they sound exactly like the sort of decisions that probably helped you build a strong financial position in the first place. The difficulty is that there will almost always be another reason to wait, because financial certainty is not something we suddenly acquire when we reach a particular age or account balance.

That is where I want to finish this series. After looking at how much might be enough, what we actually need the money for, what happens when partners are ready to retire at different times, and why being wealthy does not necessarily mean feeling financially secure, we eventually arrive at a different question: at what point do you stop preparing for the life you want and give yourself permission to start living it?

There will always be another number

One of the interesting things about financial targets is how easily they move, particularly as retirement gets closer. Someone might tell me that they would feel comfortable retiring once their superannuation reached a particular amount, and for several years that figure becomes the goal around which everything else is organised. Eventually they reach it, but by then circumstances have changed. Markets have moved, inflation has been in the news, property prices look different, perhaps the family situation has changed, and suddenly another number feels safer.

Continuing to work may be exactly the right decision. Another year of employment can materially strengthen someone's retirement position because it means another year of salary, further super contributions, potentially more savings and one less year drawing on retirement resources. For someone whose financial position is tight, those things can make a meaningful difference.

There are other occasions, however, when the numbers already appear to work. The home may be largely or completely paid for, retirement resources are adequate, spending has been considered, contingencies have been allowed for and different scenarios have been tested. There is reasonable flexibility if circumstances change, yet the conclusion remains the same: perhaps one more year would be safer.

When I hear that repeatedly, I think the conversation needs to move beyond the spreadsheet and towards what that additional year is actually expected to achieve. If another year genuinely changes the financial outcome, that is useful to know, but if it simply produces a slightly larger number without materially changing someone's security or lifestyle, then we also need to consider what is being given up in exchange.

Time belongs on the balance sheet too

Financial planning naturally concentrates on resources that can be measured. We can calculate superannuation, investments, property, cash flow and liabilities, and we can model different assumptions to see what various decisions might mean over the next 20 or 30 years. What we cannot accumulate, however, is time.

A dollar earned at 65 can still be sitting in an account at 70, but a healthy year at 65 cannot be stored away and used later. That does not mean everybody should retire at the earliest possible opportunity, because work provides far more than a salary. It can provide structure, identity, friendships, intellectual stimulation, purpose and the satisfaction of continuing to contribute. For someone who genuinely enjoys their work and has sufficient flexibility around it, continuing may be exactly the right choice.

The distinction I think matters is whether you are continuing to work because you genuinely want to, or because you are frightened to stop. If work remains interesting and meaningful, there may be no reason to walk away simply because you have reached a traditional retirement age. Perhaps the better answer is four days a week instead of five, followed eventually by three, or a move into consulting, mentoring or project work that provides greater control over your time.

But if you have spent years saying that you will travel once you retire, spend more time with the grandchildren when work slows down, take up an interest you have continually postponed or simply enjoy having days that belong to you, then postponing those things deserves the same careful consideration we give to spending money.

Time has an opportunity cost too, even though we rarely see it represented on a financial statement.

Enough does not mean nothing can go wrong

Part of the difficulty may come from the way we think about financial security. People sometimes approach retirement as though the objective is to reach a position where nothing could possibly threaten their lifestyle, but if that is the standard we set, I am not sure any amount of money will ever feel completely sufficient.

Life does not become predictable simply because we retire with a larger balance. Investment markets will still rise and fall, inflation will change, houses will require repairs, family circumstances will surprise us and health can alter plans very quickly. Children may need financial assistance at precisely the time we weren't expecting it, while government rules and the broader economy will continue to change over a retirement that could last several decades.

Financial planning cannot remove those uncertainties, nor should we pretend that it can. What it can do is help us understand which risks matter, how much capacity we have to absorb them and what choices would remain available if circumstances changed.

That creates a different and, I think, more useful definition of security. Instead of asking whether we can guarantee that nothing will ever go wrong, we can ask whether we have enough flexibility to respond if something does.

Perhaps discretionary spending could be reduced temporarily, a major purchase delayed or travel plans adjusted for a year. Housing choices might be reconsidered later in life, or there may be assets and income sources that have not yet needed to be used. Some expenses will be essential, while others will remain choices, and understanding that distinction can provide a level of confidence that a large account balance on its own may not.

A retirement plan should not be so rigid that it only succeeds if the next 30 years unfold exactly as predicted, because real life has never behaved that neatly.

The problem with waiting for certainty

There is another reason this conversation becomes increasingly important as retirement approaches: many of the things people want to do in retirement have their own timeframe.

Travel is an obvious example. Long flights, weeks spent walking around Europe or more adventurous holidays may feel relatively easy in your early 60s, but there is no guarantee they will feel the same at 75. Yet travel is only one example of something whose value depends partly on when you are able to do it.

It might be spending time with grandchildren while they are still young enough to want that time with you, looking after them one afternoon a week, joining a golf club, learning something new, volunteering, visiting friends who live interstate, spending more time outdoors or simply discovering the pleasure of having a Tuesday afternoon that does not belong to an employer or a calendar full of meetings.

None of those things necessarily requires an extravagant retirement, but they do require some combination of time, health, independence and freedom over how you spend your day. The difficulty is that those things do not always arrive together, and they certainly cannot be guaranteed indefinitely.

This is why I am cautious about viewing retirement planning solely as a problem of preserving capital. Capital needs to last, of course, and nobody wants to reach later life wishing they had been more careful, but preserving the maximum possible amount of money is not necessarily the same thing as creating the best possible retirement.

If somebody reaches their late 80s with substantially more money than they expected, that may be a wonderful outcome, particularly if leaving an inheritance was always important to them. But if the larger estate exists because they were too frightened to travel, enjoy their home, help their family or do the things they had spent decades looking forward to, then it is reasonable to ask whether the financial plan achieved what it was supposed to achieve.

Money is an important resource for retirement, but accumulating money was never meant to be the purpose of retirement itself.

Couples may reach “enough” at different times

This becomes even more complicated when two people are involved because, as I explored earlier in this series, couples can look at exactly the same financial position and have very different ideas about whether it represents enough.

One partner may look at their superannuation, investments and home and feel comfortable that they have built sufficient resources, while the other looks at the same figures and immediately thinks about everything that could still go wrong. One may place greater value on freedom at this stage of life, while the other places greater value on preserving capital and maintaining the security of employment income.

Neither person necessarily needs to win that argument, because retirement does not have to mean both people finishing work on the same Friday and beginning an entirely new life the following Monday. One partner might retire while the other continues working, both might gradually reduce their hours, or someone may leave a demanding full-time role but continue consulting or doing work they enjoy on their own terms.

What matters is understanding what each person is trying to protect. If one partner is protecting financial security while the other is protecting their remaining healthy time, both concerns deserve to be taken seriously, and a good retirement plan should help determine whether those priorities really are in conflict or whether there is enough flexibility to accommodate both.

Sometimes the solution is not choosing between money and time, but designing a transition that gives the couple more of each.

So when does enough become enough?

After five articles, I don't think there is a number I could put here that would answer that question for everyone, and that has really been the point of this entire series.

Enough depends on the life you want to live, whether you intend to remain in your current home or downsize, whether you want to travel regularly or prefer a quieter life close to family, whether helping children and grandchildren is important, whether you want to leave a substantial inheritance, and whether retirement means stopping work completely or simply working differently.

It also depends on your relationship with uncertainty, because two people with similar resources can feel very differently about the same retirement plan.

Perhaps, then, there comes a point when enough becomes less about reaching another financial milestone and more about achieving clarity. You understand what you own and what you spend, you know what your money needs to do, you have considered the things that could reasonably go wrong, and you know where there is flexibility if life takes an unexpected turn. Just as importantly, you understand the trade-off involved in continuing to accumulate more.

At that point, the question may no longer be whether you could have more, because of course you could. Most of us could work another year, save a little more, invest for a little longer and create another layer of financial protection. The more useful question is whether doing so would meaningfully improve the life you are trying so hard to protect.

The purpose of enough

At the beginning of this series, I asked what sounds like a relatively simple question: How much is enough?

From there, we looked at what the money is actually for, because the answer changes depending on the retirement somebody wants to create. We explored what happens when one partner is ready to retire and the other isn't, and why having substantial wealth does not automatically create a feeling of financial security. Together, those conversations have reinforced something I have seen many times over the years: retirement planning is rarely just about arriving at the right number.

For me, financial planning should not be about accumulating the largest possible amount. It should help people understand when the resources they have built are capable of supporting the life they want to live, while allowing sensible room for the uncertainty that comes with being human. There will never be a spreadsheet that can identify the perfect day to retire, just as there will never be a superannuation balance that guarantees nothing difficult will ever happen. There may not even be a morning when you suddenly wake up feeling that you could not possibly benefit from another dollar.

Perhaps that isn't what “enough” is supposed to mean. Perhaps enough is the point where you understand what you have, know what matters to you, recognise the risks and have sufficient confidence in your position to begin using both your money and your time deliberately, rather than continually postponing one in pursuit of more of the other.

Over the course of this series, I’ve come back repeatedly to the idea that retirement is not simply a financial destination. The numbers matter enormously, but ultimately they are there to support the life you want to live, the people you care about and the choices you would like to have while you still have the time and health to make them. There will always be another financial milestone you could aim for, but there also comes a point when planning for the future needs to make room for enjoying the present. Perhaps that is when enough really does become enough.