The “problem” of dying with too much money

The fear of running out of money in retirement is very real. In fact, it’s the number one fear among older adults – even over declining health. According to the Transamerica Center for Retirement Studies, 43% of adults surveyed said their greatest fear about retirement was outliving their savings and investments.

This very fear is what keeps people working well past what might have been their retirement age. It also makes people take certain risks and make questionable decisions.

This fear is understandable. No one wants to run out of money during the time of life when you’re supposed to be enjoying the spoils of years of hard work. However, is this fear truly something we should be stressing about? Financial Samurai think we might be overdoing it.

In fact, perhaps there’s something else we should think about when it comes to money and retirement: the fear of dying with too much money.

Stay with me here. It may seem a like silly thing to worry about, but is there a downside to dying with too much money? Let’s look at what this might mean.

First, dying with too much money means you worked more than you needed to. Perhaps you gave up those vacations and time with family and were left wondering where the time went. You missed out on time you won’t get back for money you didn’t need. For physicians, that might mean that you took those extra weekend or holiday calls for a little extra cash. And of course, one of the greatest regrets older people have is that they worked too hard and too often.

Second, it might mean that you deprived yourself of some pleasures by being too frugal. You’ve had some things on your bucket list, but you were worried about the financial impact of traveling there or buying that certain thing, so you abstained. Because of your desire to save (perhaps for retirement), you missed out on some pleasures in the here and now.

Third, perhaps there are other people who could have benefited from your income but did not. Maybe you thought about giving more, but fear of not having enough money kept you from it. It’s an uncomfortable thought, but when you’re on your deathbed, will you be happy for the money you saved? Or rather, for the difference you made?

The thought of giving more isn’t unheard of among the wealthy – Mark Zuckerberg, Bill Gates, and Warren Buffett are just a few people who have signed a pledge (The Giving Pledge) to give away a majority of their wealth in their lifetime.

The fourth reason is a practical one: you might trigger inheritance or estate taxes. These might sound similar but are two different things. Only certain states have an inheritance tax (up to 18%), which is taxed on an inheritance over a certain designated mount. An estate tax, on the other hand, currently only exists for estates greater than $5.45 million. But this can be a significant amount. I concede that this fits in the “good problem to have” category, but perhaps it would be better to avoid the extra taxes in the first place, especially if it’s for good reasons.

Fifth and finally, you might ultimately hand down your money to someone who doesn’t really need it. With increased life expectancy, people are often passing along their money to their children who are in their fifties and sixties. If you’ve been able to teach them great habits and they’ve been disciplined, hopefully, they’re already financially independent. If so, then your financial gift may mean that they’ll die with too much, and we’re back to square one.

The truth is, even after reaching financial independence, a good number of people find reasons to continue to work (see Physician on Fire’s post on why this is). Look at some of the wealthiest people, like those I mentioned earlier. They’re financially independent, and yet they continue to work. Because of this, they’ll likely continue to grow their net worth more and more. For many people, retirement isn’t the end of their career. You may want to continue working anyway, even if you have more than enough money.

Ultimately, we have to ask ourselves a single question. What is the point of money, anyway? Is it our greatest goal, or the means to an end?

I believe that happiness, both now and in the future, relies on seeing money as a tool, not the goal. Indeed, money doesn’t buy happiness — but it can buy you time and experiences.

Of course, as with everything, balance is key. Savings are important, but it’s up to you to decide just how important. Will growing your retirement fund become your ultimate goal? Or will you live life to the fullest now, enjoying your short time with family, and bettering your community? Can you find that great balance?

What do you think? Do you worry at all about dying with too much money? Think the fear of outliving your money is overblown?

“Passive Income, MD” is a physician who blogs at his self-titled site, Passive Income M.D.

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