Why your biggest fear should be running out of time – not money

By David Lamb

In the last in our series of articles on the components that make up our lifestyle we look at abundance.

This is when you have more money than enough…enough to give you the lifestyle that you want without the fear of running out of money, whatever happens.

Many people do not realise they have abundance because they do not know how much is enough. This can result in them having more money than they need without realising it. And then it is wasted for years.

For many, their biggest fear is running out of money, but I would suggest that your biggest fear should be wasting your life and the time, not running out of money. This may mean that you have wasted the opportunity to use your wealth to enhance your lives and others you care about.

We only have two types of clients: accumulators and decumulators. Accumulators are, generally, those still working and therefore increasing their wealth. Decumulation would normally start at retirement.

Unfortunately, many people spend all their working lives saving for retirement but when retirement comes, they feel uncomfortable about spending their hard-earned money. This is probably because, not only do they not know how much is enough, but their brains are not wired to spend money after 40 years of accumulation.

Try this: fold your arms. Now fold them the other way. For most people this does not seem natural. This is because you have spent your whole life folding your arms one way and then, I come along and ask you to do it another way. It is a similar process, but your brain is not wired that way.

It is the same with decumulation, it does not feel right. Proper financial planning will help you rewire your brain by identifying how much is enough and then, with that knowledge, help you to structure your wealth to support an orderly the decumulation of capital. So long as it is controlled, and logical, you will feel comfortable.

Scottish-American industrialist and philanthropist Andrew Carnegie once said: “It is a sin to die with too much money.”

However, this does not mean you should waste your hard-earned wealth. When you are absolutely sure that you have the lifestyle that you want and are confident that there is nothing left on your bucket list, you can use your wealth help other people.

If you live to age 100, how old will your children be when they inherit? If you were 30 when you became a parent, your children will be 70. Will they really need their inheritance? They struggled to buy their home, put their children through university, probably worked long hard hours (possibly to the detriment of spending time with their children) and when they don’t need the money, it falls into their lap. But too late.

All the time they have been struggling financially, your wealth has been sitting in investments, not doing you any good (other than providing a feeling of security, because you don’t know how much is enough) because you are not spending it and it is not helping your family because it is lying in your investments.

It is, however, doing the financial services industry a lot of good because it is making money from your money (and it will continue to make loads of excuses why your money should continue to be invested). If you are never going to use that money, why not give it to your family now when they actually need it?

Of course, there can be other beneficiaries of your wealth, not just your family. Many people get a lot of satisfaction from supporting charities. I had a client who wanted to leave money to the Dogs Trust in his will. He was only 75 and he was never going to spend his excess wealth so why help his favourite charity in 25 years’ time? A lot of dogs would suffer over the next quarter of a century when he could be helping them now. Why wait?

I know older businessmen who still get a lot of satisfaction from work. Unfortunately, the longer they work and earn money, the bigger their inheritance tax liability. Why not use all that experience to help younger businesses and save them money and time by learning from the mistakes they had made 30 years ago? Invaluable knowledge that can be shared.

A friend of mine who is a solicitor has noticed that more and more people are investigating the establishment of charitable foundations (there are organisations that can help with this). His experience is that, because there are fewer burials and therefore fewer headstones, setting up such foundations is a nice way to be remembered.

Identifying abundance can avoid a lot of money worries, ensure that you get the most out of your life, and help other people. Do not let your money lie in investments to be passed to others when you die (because, hopefully, this may be a long time in the future). Do not die with too much; it is a waste of opportunity.

When you are aged 100, with one foot in your box, please do not look back and have regrets.