Author Topic: "One More Year" strikes the rich the hardest  (Read 35347 times)

sol

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"One More Year" strikes the rich the hardest
« on: January 14, 2015, 08:07:08 PM »
One More Year syndrome is the unfortunate tendency for a person on the cusp of retirement to hold out just a bit longer.  For that added bit of security, people willingly trade a little bit more of their short lives away.  And then they do it again, and again, like a slowly boiling frog, because they can't see when enough is enough.

But since I'm a huge spreadsheet nerd I've been looking at how OMY syndrome affects people of different income brackets, and I've decided that it's much worse for high earners.

If you only make $20k/year and have saved up your nest egg over a 30 year working career, then one more year of your savings contributions is probably dwarfed by the market returns on your investments.  It just won't matter much.

If you make $1,000,000/year and have saved up the same sized nest egg over the past eight months, then one more year of your savings contributions will more than double your nest egg regardless of market returns, and thus have a huge impact on your post-retirement lifestyle.

Most of us are somewhere in between, but I think the end-members illustrate the point well.  The more money you save every year, and the shorter your saving history, the more beneficial OMY is for you.

I'm currently struggling with this problem.  We could probably retire at the end of this year and be just fine, with some modest lifestyle adjustments.  But if I work one more year our total nest egg goes up like 20% and I probably don't need to ever make any adjustments, and I could enjoy a much more luxurious retirement.  If I work two more years, I can live that life of luxury and fund college educations for all of my descendants forever.  If I work three more years I can endow a university fellowship, or build a rural school in Nepal, or save the lives of 1000 children in Africa.

People on this forum like to think they'll be immune to OMY syndrome because they know how much they need survive and they claim they don't see any utility in additional money.  I think that's unimaginative BS.  MMM says money can't buy happiness, but that's only true if you're talking about your own happiness.  It can TOTALLY buy happiness for a lot of people who are less fortunate than you.

My lifestyle wouldn't change, but if I can save the lives of 1000 children by sitting in my cubicle for another 12 months, how many annoying meetings and TPS reports could I suffer through to accomplish that goal?  How many homeless drug addicts or abandoned puppies or acid-burned girls can I help for each awkward performance appraisal I endure?

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with. 

Skyhigh

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Re: "One More Year" strikes the rich the hardest
« Reply #1 on: January 14, 2015, 08:21:11 PM »
What about working one more year and then changing careers to something else?

Emilyngh

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Re: "One More Year" strikes the rich the hardest
« Reply #2 on: January 14, 2015, 08:38:47 PM »
One More Year syndrome is the unfortunate tendency for a person on the cusp of retirement to hold out just a bit longer.  For that added bit of security, people willingly trade a little bit more of their short lives away.  And then they do it again, and again, like a slowly boiling frog, because they can't see when enough is enough.

But since I'm a huge spreadsheet nerd I've been looking at how OMY syndrome affects people of different income brackets, and I've decided that it's much worse for high earners.

If you only make $20k/year and have saved up your nest egg over a 30 year working career, then one more year of your savings contributions is probably dwarfed by the market returns on your investments.  It just won't matter much.

If you make $1,000,000/year and have saved up the same sized nest egg over the past eight months, then one more year of your savings contributions will more than double your nest egg regardless of market returns, and thus have a huge impact on your post-retirement lifestyle.

Most of us are somewhere in between, but I think the end-members illustrate the point well.  The more money you save every year, and the shorter your saving history, the more beneficial OMY is for you.

I'm currently struggling with this problem.  We could probably retire at the end of this year and be just fine, with some modest lifestyle adjustments.  But if I work one more year our total nest egg goes up like 20% and I probably don't need to ever make any adjustments, and I could enjoy a much more luxurious retirement.  If I work two more years, I can live that life of luxury and fund college educations for all of my descendants forever.  If I work three more years I can endow a university fellowship, or build a rural school in Nepal, or save the lives of 1000 children in Africa.

People on this forum like to think they'll be immune to OMY syndrome because they know how much they need survive and they claim they don't see any utility in additional money.  I think that's unimaginative BS.  MMM says money can't buy happiness, but that's only true if you're talking about your own happiness.  It can TOTALLY buy happiness for a lot of people who are less fortunate than you.

My lifestyle wouldn't change, but if I can save the lives of 1000 children by sitting in my cubicle for another 12 months, how many annoying meetings and TPS reports could I suffer through to accomplish that goal?  How many homeless drug addicts or abandoned puppies or acid-burned girls can I help for each awkward performance appraisal I endure?

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with.

This is a very interesting point; thanks for sharing it.

I have no real advice, although if you really truly would use the difference in earnings from staying one more year for doing such good for others, I can definitely see your argument. 

 I can also see a similar argument from others who have perhaps lower income jobs, but jobs they really feel make a difference.

firewalker

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Re: "One More Year" strikes the rich the hardest
« Reply #3 on: January 14, 2015, 08:43:50 PM »
Sounds like it's a variation of the question of what one wants to do with their life. One person sees that they would do well  working to help a cause in a hand-on manner. To give them the time to do so, they plan to retire early from the paying job. The next person sees that they would do well funding the same cause. To do so, they stay with the paying job and contribute financially. Both are doing what they want with their time. What do you WANT to do with YOUR time?

rocketpj

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Re: "One More Year" strikes the rich the hardest
« Reply #4 on: January 14, 2015, 10:31:09 PM »
I see it in my uncle, who is quite wealthy but can't quite manage to retire despite having more than enough assets.  He isn't happy in his work, he just can't quite commit.

It breaks my heart in some ways, he's worked his butt off for decades.  He is badly unhealthy physically, I worry he won't make it.  But I don't know if he can figure out what to do next.

innerscorecard

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Re: "One More Year" strikes the rich the hardest
« Reply #5 on: January 14, 2015, 11:23:14 PM »
If you want to help people, you can almost definitionally do a lot more of it when you're not trapped in an office for the whole day. Throwing money at people isn't the only way to help them.

RFAAOATB

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Re: "One More Year" strikes the rich the hardest
« Reply #6 on: January 14, 2015, 11:43:03 PM »
For high incomes, retirement has a higher opportunity cost.  Although it doesn't sound like it in your case, are higher paying jobs more likely to fulfill an individual's self actualization needs?

steveo

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Re: "One More Year" strikes the rich the hardest
« Reply #7 on: January 14, 2015, 11:43:40 PM »
You are much more altruistic than I am.

I figure I get to FI and then work for at least another couple of years to build up a good safety margin. I intend to simply work less.

Guesl982374

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Re: "One More Year" strikes the rich the hardest
« Reply #8 on: January 15, 2015, 06:56:52 AM »
I completely agree that the OMY syndrome affects more high income earners than low income earners. Even though I am years away from FI, I already know I'll be affected by this. Personally, once my wife and I hit FI we will want to take some time off but I can't see us ever stop producing in some form. The extra money will further accellerate the stash to fund both some extra lifestyle luxuries (travel, classic car maybe?), education for decendents, and other charity work.

Its definitely a balance between one's own selfish desires (time for happiness now or working longer for more luxuries later) vs. selflessness (time to take care of aging parents or young kids, working more to fund charities) that everyone has to answer on the path to FI. There's no right or wrong answer, its a personal choice.

DoubleDown

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Re: "One More Year" strikes the rich the hardest
« Reply #9 on: January 15, 2015, 07:00:02 AM »
Definitely agree that a higher salary makes it harder to leave, along with other "golden handcuff" features like pensions, generous health care plans (especially for Feds who can carry health care coverage into retirement, forever, if they stay until retirement age), company vesting, etc.

Plus in my case (and I suspect others), you can get significant family/spouse or social pressure in the form of, "Are you kidding me? You're giving up that plush job with the outrageous salary -- and for what?!" Other forms are, "I would kill for that job and salary, and you're just throwing it away?!"

I found that not only is there OMY, you can even get into SMM (6 more months -- not S&M, unless that's your thing) or even OMM (one more month). If you earn $15,000/month, just OMM can cover the cost of a new roof on the house, a new car, a year of college tuition, etc.

I don't have the solution. I worked longer than likely needed in order to build up a safety margin. But I suspect I would have been quite uneasy in retirement leaving the exact day or month or even year I hit FI. It's already a difficult enough hurdle without adding in uncertainty about whether you're skating too close to not making it.

brooklynguy

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Re: "One More Year" strikes the rich the hardest
« Reply #10 on: January 15, 2015, 07:11:47 AM »
The corollary to this rule is that the rich can retire much more quickly.  In your example, the million dollar earner can do it in eight months while it would take the $20k earner three decades.  So even if the million dollar earner suffers a multi-year bout of OMY syndrome, he or she has still traded away much less (in both absolute and relative terms) of his or her short life than the $20k earner who is immune to OMY syndrome.  This simply explains why working OMY even after reaching "enough" may be a more rational decision for high earners than for low earners.

As a high earner approaching FIRE within a few years myself, I've struggled with this same issue.  Ultimately I decided that I'm going to pull the FIRE trigger the moment I hit my number (but we'll see if I get gun-shy when the time actually comes).  For me, the primary factor resolving this internal debate is the reality that even a barebones 4% WR retirement plan with a modicum of built-in flexibility provides so much cushion that the odds overwhelmingly suggest that you will still end up with a ridiculous fortune (to use for philanthropic purposes, if you choose) by the end of your life.  And I believe that my generosity may have a tendency to decrease in inverse proportion to the length of time I spend working in a job I'd rather not be doing instead of pursuing my real goals in life.  In an extreme case of OMY syndrome, a frugal high earner in a soul-crushing desk job can spend an entire lifetime working and amass a Rockefeller level nest egg.  But we refer to some jobs as "soul-crushing" for a reason.  When this person emerges from his 50-year cubicle-cocoon, he may have metamorphosized from an altruistic mensch with lofty ambitions of saving the world's abandoned puppies and acid-burned girls into a miserable old fuck who doesn't give a damn about himself or anyone else.

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Re: "One More Year" strikes the rich the hardest
« Reply #11 on: January 15, 2015, 08:26:24 AM »
.........I'm currently struggling with this problem.  We could probably retire at the end of this year and be just fine, with some modest lifestyle adjustments.  But if I work one more year our total nest egg goes up like 20% and I probably don't need to ever make any adjustments, and I could enjoy a much more luxurious retirement.  If I work two more years, I can live that life of luxury and fund college educations for all of my descendants forever.  If I work three more years I can endow a university fellowship, or build a rural school in Nepal, or save the lives of 1000 children in Africa.

People on this forum like to think they'll be immune to OMY syndrome because they know how much they need survive and they claim they don't see any utility in additional money.  I think that's unimaginative BS.  MMM says money can't buy happiness, but that's only true if you're talking about your own happiness.  It can TOTALLY buy happiness for a lot of people who are less fortunate than you.

My lifestyle wouldn't change, but if I can save the lives of 1000 children by sitting in my cubicle for another 12 months, how many annoying meetings and TPS reports could I suffer through to accomplish that goal?  How many homeless drug addicts or abandoned puppies or acid-burned girls can I help for each awkward performance appraisal I endure?

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with.

In your case it's not OMY; your humanity is evolving.

Jon_Snow

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Re: "One More Year" strikes the rich the hardest
« Reply #12 on: January 15, 2015, 08:36:14 AM »
I worked 4 more years after I hit FIRE. I am a very risk averse person and wanted lots of "buffer" in my ER plan. I wanted to limit the "do I have enough?" thoughts as much as possible.

Now ER'ed and looking back, I'm not sure the physical and mental toll of those 4 years was worth saving another 400k or so. In hindsight, probably should have quit my job the MOMENT I hit the number.

Spork

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Re: "One More Year" strikes the rich the hardest
« Reply #13 on: January 15, 2015, 08:48:49 AM »

I think the original post is mostly on target, but I'm going to suggest a twist.

Yes, those that earn more are probably hit the hardest, but I'll wildly postulate it has more to do with the fact they have higher planned retirement expenses.

I wouldn't say I am rich.  I would say that, compared to the more badass around here, I probably have high annual expenses.  (Compared to my peers, I am thought to be over-the-top frugal/cheap.)  At some point I traded several one-more-years to try to maintain something close to my current expenses.  Whether this was a good idea or a bad one is left to the reader as an exercise.

...but I think I've convinced myself I'm good to go now.  I believe OMY is now 5MM.

GoodStash BadStache

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Re: "One More Year" strikes the rich the hardest
« Reply #14 on: January 15, 2015, 10:22:22 AM »
I agree that having a good savings rate while earning significant wages is hard to walk away from, but I think One More Year syndrome can be an evolving psychological battle.  Part of the "problem" my wife and I have faced is advancing in our careers and taking on more responsibility with higher pay.  If a theoretical couple is making $50,000 each at the start of their careers and 10 years later are making $100,000 each while living a similar lifestyle, their savings rate will go up significantly (excluding effects of taxes, life changes, etc.).  By the time 10 years has passed the couple will likely be saving more each year than their combined earnings at the start of their careers, which could be difficult to walk away from.

lackofstache

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Re: "One More Year" strikes the rich the hardest
« Reply #15 on: January 15, 2015, 10:23:08 AM »
I think this is spot on; the older a person is, the longer they've put time towards their goal & the more $ someone is making probably all contribute a bit to OMY. I do think there are other factors than just the $, though. I imagine after 20 years of working your way from $35k/yr up to $125k/yr or something similar it would be difficult to give up once you're there. If you start out making $150k/yr when you're 22, it's probably much easier to stop working at 30...

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Re: "One More Year" strikes the rich the hardest
« Reply #16 on: January 15, 2015, 10:28:27 AM »
...but I think I've convinced myself I'm good to go now.  I believe OMY is now 5MM.

I assume that means 5 more months? Because i first read that as 5 million ("M" being the Roman numeral for 1000) and almost choked on my Dorito.

Tyler

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Re: "One More Year" strikes the rich the hardest
« Reply #17 on: January 15, 2015, 10:33:26 AM »

If I work three more years I can endow a university fellowship, or build a rural school in Nepal, or save the lives of 1000 children in Africa.

...

My lifestyle wouldn't change, but if I can save the lives of 1000 children by sitting in my cubicle for another 12 months, how many annoying meetings and TPS reports could I suffer through to accomplish that goal?  How many homeless drug addicts or abandoned puppies or acid-burned girls can I help for each awkward performance appraisal I endure?

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with. 

Just curious - do you do all of these altruistic things today?  (Sorry if you've talked about this before - I honestly don't know).

If you do, that's great. I can see how maintaining your income to sustain your charitable endeavors remains true to who you are. Even then, I imagine there's room to cut back and continue to help others while finding balance for yourself. Money is not the only way to help those in need, and some of the toughest problems can't be bought out.

If not, it's important to consider that retirement doesn't change you. In my experience, you will be the same person you are today, only with more free time to do what you enjoy. Don't let the thought of who you "could" be with more time or money make you forget who you are today. A vision of the future not true to your nature will not be sustainable.
« Last Edit: January 15, 2015, 10:36:56 AM by Tyler »

CommonCents

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Re: "One More Year" strikes the rich the hardest
« Reply #18 on: January 15, 2015, 10:41:10 AM »
You're assuming the millionaire salary person is saving the same quantity of money as the other person, rather than only saving a similar percent.  I've noticed *most* people with high salaries tend to increase their spending substantially as the salary rises, and thus don't save so much.

That said, what you've described screams utilitarianism to me.  That theory says you should maximize the overall unhappiness.  While it may make you a little unhappy to work one more year, it would make the 1000 in Africa a lot happier not to be starving, so that is the right action to take.  One criticism of that ethical theory is that there is no end point to it so it can be quite demanding.  (Essentially it constantly demands OMY).  If it would make 1000 people in Africa happy to work one more year, it would make 2000 happy to work two more years (or however your numbers work out), and so on.  Probably not the best summary but here you go: http://en.wikipedia.org/wiki/Utilitarianism (scroll to "too demanding")

Spork

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Re: "One More Year" strikes the rich the hardest
« Reply #19 on: January 15, 2015, 10:43:54 AM »
...but I think I've convinced myself I'm good to go now.  I believe OMY is now 5MM.

I assume that means 5 more months? Because i first read that as 5 million ("M" being the Roman numeral for 1000) and almost choked on my Dorito.

Yes, 5 more months, though 5 million would also be fine with me ... as long as I can get that in 5 more months.

rocketpj

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Re: "One More Year" strikes the rich the hardest
« Reply #20 on: January 15, 2015, 11:04:05 AM »
Well, I don't see myself in any danger whatsoever of OMY syndrome personally.  I have no intention of doing nothing when I stop working, so it is more about FI than anything else.  Once I am there then I will not work one more day than I wish to.

Copperwood

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Re: "One More Year" strikes the rich the hardest
« Reply #21 on: January 15, 2015, 11:31:33 AM »
my grandpa was an engineer and made really good money.
when it came time for retirement at 65, his company offered him double his salary for OMY.

he turned them down.

/impressed

sol

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Re: "One More Year" strikes the rich the hardest
« Reply #22 on: January 15, 2015, 11:31:48 AM »
Just curious - do you do all of these altruistic things today?  (Sorry if you've talked about this before - I honestly don't know).

The relevant discussion of this topic has been quiet for a while, but is still full of some interesting perspectives: http://forum.mrmoneymustache.com/welcome-to-the-forum/your-mustache-might-be-evil/

Pigeon

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Re: "One More Year" strikes the rich the hardest
« Reply #23 on: January 15, 2015, 11:48:15 AM »
Quote
You're assuming the millionaire salary person is saving the same quantity of money as the other person, rather than only saving a similar percent.  I've noticed *most* people with high salaries tend to increase their spending substantially as the salary rises, and thus don't save so much.

Also in the OP's hypothetical case, the rich person has only been saving for less than a year.  I would be worried about those frugal habits not being ingrained, because the rich person has a much longer time of being used to living large than the $20K/year person.

stuckinmn

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Re: "One More Year" strikes the rich the hardest
« Reply #24 on: January 15, 2015, 12:13:27 PM »
I'm feeling the effects of OMY syndrome and the OP is exactly right.

I hit my target in July 2014 but due to the fact my salary has a heavy bonus component payable in December, I had always planned to stay through December just to add a margin of safety.  Now I'm in January, sitting at about 112% of my target and i can feel that little voice in the back of my head saying "think of how set you would be if you just stayed through next December." 

It's counterintuitive, but if another year of working did not substantially help my portfolio, I wouldn't be having this problem.   I just need to run the numbers and nut up.   

dude

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Re: "One More Year" strikes the rich the hardest
« Reply #25 on: January 15, 2015, 12:22:47 PM »
Agree with Sol.  I'm pretty sure I won't fall prey to it because I'm probably way oversaving in the first place, but for sure if the market were to crash on or about my intended retirement date (Jan 2020), I'd probably stick it out another year.  But other than that, I'm going as intended, and I'm pretty confident that down the road as I age, I should have significant excess income that I can use to do a lot of good. So I guess that's a way of saying I should have far in excess of 25x expenses, so I won't be cutting it close to the bone when I retire.

Tyler

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Re: "One More Year" strikes the rich the hardest
« Reply #26 on: January 15, 2015, 12:25:38 PM »
It's counterintuitive, but if another year of working did not substantially help my portfolio, I wouldn't be having this problem.   I just need to run the numbers and nut up.   

For me, what pushed me over the edge to retiring was when I stopped feeling the need the run the numbers any more and started thinking seriously about what I really want in life.  While reaching FI unlocked the career door, walking through it was ultimately not about money.  When you're ready, you'll know. 

dude

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Re: "One More Year" strikes the rich the hardest
« Reply #27 on: January 15, 2015, 12:30:47 PM »
Definitely agree that a higher salary makes it harder to leave, along with other "golden handcuff" features like pensions, generous health care plans (especially for Feds who can carry health care coverage into retirement, forever, if they stay until retirement age), company vesting, etc.


Yep, that is my case. The pension and health benefits are critical to FIRE for me, so my FIRE date is a function of that my eligibility date. 

CheapskateWife

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Re: "One More Year" strikes the rich the hardest
« Reply #28 on: January 15, 2015, 12:36:13 PM »
Plus in my case (and I suspect others), you can get significant family/spouse or social pressure in the form of, "Are you kidding me? You're giving up that plush job with the outrageous salary -- and for what?!" Other forms are, "I would kill for that job and salary, and you're just throwing it away?!"


Arrrggghhh!  This idea kills me...as a federal, I can't move up until someone ahead of me retires or gets promoted...so these folks who keep working just because they want to and not necessarily need to, means that there is one more person like me who's potential growth is stunted. 

My last employer had a GS12 who was 79 years old and napping for half the day in his cubicle...but he was given all the defference in the world and noone did anything about it.  So he sits and takes up space, and keeps other folks from being able to move in there and be productive.

Your OMY syndrome doesn't just affect you, it affects all those who want to follow in your footsteps but just need you to get the hell out of the way.

DoubleDown

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Re: "One More Year" strikes the rich the hardest
« Reply #29 on: January 15, 2015, 12:41:28 PM »
For all you fellow high earners, here's our First World Problem


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Re: "One More Year" strikes the rich the hardest
« Reply #30 on: January 15, 2015, 02:09:22 PM »
Building off what Pigeon said above.  There is an overlooked ancillary syndrome that is probably also more challenging for high income earners.  It needs a plucky acronym but essentially the length of time youíve lived on your retirement expense plan. 

I donít know about everybody else but even though Iíve been FI for 3-4 years based on expected withdrawals I wasnít actually living within my retirement budget during the first couple of years.  It wasnít until 2014 that I really lived on my expected withdrawal and have the YNAB data to back it up.    Maybe itís a goalpost definition problem in that I shouldnít have declared myself FI based on expected retirement needs but on actual expenses?   I just know that all the non-expected/work/FIRE prep expenses that you deduct to justify making the math work feeds OMY syndrome as you donít have the confidence in your retirement spend that you should.   

So for me itís not necessarily how much more luxurious will life be if I work another year or two but what will living on that budget actually feel like - the reality of it needed to be experienced.  Which took four OMYs in order to achieve.   Iíve written about fears that feed my OMY syndrome in previous comments which I wonít repeat here but I will say finally having a full year of expense data for 2014 is helping to combat them even more than I expected. 

brooklynguy

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Re: "One More Year" strikes the rich the hardest
« Reply #31 on: January 15, 2015, 03:49:18 PM »
The relevant discussion of this topic has been quiet for a while, but is still full of some interesting perspectives: http://forum.mrmoneymustache.com/welcome-to-the-forum/your-mustache-might-be-evil/

Very interesting perspectives indeed.  That thread appears to be an early entry in the sol canon, many of which (including the thread at hand) share the recurring theme of trying to reconcile our own selfish pursuit of happiness with our moral imperative to improve the world (thankfully, in many cases there is overlap between accomplishing the two).

I agree with the responses above that the best you can do is find the balance that makes you comfortable.

In this thread, you asked a related question focused on the opposite end of the spectrum--not delaying retirement by OMY, but expediting retirement to the soonest practicable date.  If you'll pardon my indulgence in the vice of self-quotation, in that thread I stated:

Sol, the point you are making is a good one but I think the question you are asking is rhetorical.  You could have "retired" before your working career even started to a life of living under bridges and eating cat food and STILL been the envy of a significant subset (maybe the majority?) of the world's population who have an even worse lot in life.  But that's not enough for you, is it?  Since everything is relative, of course it becomes difficult to know where to draw the line.

The same point also applies to your questions here.  Yes, you can buy additional happiness for others by delaying your own retirement.  How much net good can you impart on the world by continuing to work for one more month?  One more decade?  Fifty more decades?  You have to draw the line somewhere.

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Re: "One More Year" strikes the rich the hardest
« Reply #32 on: January 15, 2015, 03:50:38 PM »
Part of it also has to do with how easy it would be to re-enter the workforce at the same income.  If you make $50,000 a year and a couple of years in discover that you are going to have a shortfall, you can probably fairly easily find another job that is close to what you used to make, and even if you can only get a minimum wage job, that will likely be enough to cover any shortfalls.  If you are making $1,000,000 that opportunity will likely be gone forever when you retire.

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Re: "One More Year" strikes the rich the hardest
« Reply #33 on: January 15, 2015, 04:17:48 PM »
I'm currently struggling with this problem.  We could probably retire at the end of this year and be just fine, with some modest lifestyle adjustments.  But if I work one more year our total nest egg goes up like 20% and I probably don't need to ever make any adjustments, and I could enjoy a much more luxurious retirement.  If I work two more years, I can live that life of luxury and fund college educations for all of my descendants forever.  If I work three more years I can endow a university fellowship, or build a rural school in Nepal, or save the lives of 1000 children in Africa.

People on this forum like to think they'll be immune to OMY syndrome because they know how much they need survive and they claim they don't see any utility in additional money.  I think that's unimaginative BS.  MMM says money can't buy happiness, but that's only true if you're talking about your own happiness.  It can TOTALLY buy happiness for a lot of people who are less fortunate than you.

My lifestyle wouldn't change, but if I can save the lives of 1000 children by sitting in my cubicle for another 12 months, how many annoying meetings and TPS reports could I suffer through to accomplish that goal?  How many homeless drug addicts or abandoned puppies or acid-burned girls can I help for each awkward performance appraisal I endure?

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with.

I am with you here; I think about this a lot. $1M is quite sufficient for my own needs. However, if I worked an extra ten or twenty years beyond that we are talking about $10M-$30M. I often think about the greater impact on the world that kind of money would afford me. I could donate huge amounts of money to worthy causes; I could even start my own worthy cause and hire dozens of people to accomplish it. These are not small considerations to me and while I can't wait to have some free time I also wonder if maybe starting a second, more enjoyable career with more free time wouldn't be a better choice while continuing to save for the really big bucks.

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Re: "One More Year" strikes the rich the hardest
« Reply #34 on: January 15, 2015, 06:23:57 PM »
Just curious - do you do all of these altruistic things today?  (Sorry if you've talked about this before - I honestly don't know).

The relevant discussion of this topic has been quiet for a while, but is still full of some interesting perspectives: http://forum.mrmoneymustache.com/welcome-to-the-forum/your-mustache-might-be-evil/

Thanks for posting this! I spent an hour reading it and it gave me great food for thought.

I have to take Bakari's perspective on charity - I view donating with my hands as far more useful than donating with money, and hence view "one more year" as not a big issue for me - the sooner I FIRE the sooner I can have more time to volunteer and make a difference. That's also why I'm heading towards FIRE with less safety margin than some here - I'm fine with 4% withdrawal. My living requirements are fairly frugal ($15-$20K/year), so once I hit $500K I'm out. I see no meaning in working for any additional money if additional money doesn't give more happiness.

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Re: "One More Year" strikes the rich the hardest
« Reply #35 on: January 15, 2015, 06:31:22 PM »
I'm currently struggling with this problem.  We could probably retire at the end of this year and be just fine, with some modest lifestyle adjustments.  But if I work one more year our total nest egg goes up like 20% and I probably don't need to ever make any adjustments, and I could enjoy a much more luxurious retirement.  If I work two more years, I can live that life of luxury and fund college educations for all of my descendants forever.  If I work three more years I can endow a university fellowship, or build a rural school in Nepal, or save the lives of 1000 children in Africa.
I can't build up much enthusiasm for the two hypothetical workers, but in your real situation . . . I think I'd say, "Two more years, and that's it."  Why?  Because the idea of not needing to make adjustments (and being more safe) in retirement appeal to me.  Likewise, I'd be motivated to work another year so that I can gift my grandchildren and great grandchildren with an education.  The other potential goals sound "too far away from me" to motivate me to work a third year. 
I see it in my uncle, who is quite wealthy but can't quite manage to retire despite having more than enough assets.  He isn't happy in his work, he just can't quite commit.

It breaks my heart in some ways, he's worked his butt off for decades.  He is badly unhealthy physically, I worry he won't make it.  But I don't know if he can figure out what to do next.
Makes me think of a relative of mine (she's gone now) who worked super-hard and was very successful, especially for a woman born well before the time when women had real careers.  She really enjoyed her work, but she struggled a bit with leisure activities.  They didn't come as easily to her, and I think it was because she had to focus SO VERY HARD on her career as a young person.  She was always a bit . . . uncomfortable with vacationing, engaging in recreational activities, etc.  I think it made her feel somewhat guilty. 
Well, I don't see myself in any danger whatsoever of OMY syndrome personally.  I have no intention of doing nothing when I stop working, so it is more about FI than anything else.  Once I am there then I will not work one more day than I wish to.
Yeah, I don't think I'll fall prey to this either.  We picked a date based upon our personal circumstances; it's kind of a "sweet spot" between leaving NOW (even though that's possible) and staying one more year, one more year, one more year.  If something were to come up -- an illness, loss of a job, whatever -- we might re-evaluate, but if things run the expected course, I can't imagine us changing our date.


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Re: "One More Year" strikes the rich the hardest
« Reply #36 on: January 15, 2015, 06:40:30 PM »
...but I think I've convinced myself I'm good to go now.  I believe OMY is now 5MM.

I assume that means 5 more months? Because i first read that as 5 million ("M" being the Roman numeral for 1000) and almost choked on my Dorito.

Ha, I read it as 5 More Millennia.

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Re: "One More Year" strikes the rich the hardest
« Reply #37 on: January 15, 2015, 07:12:23 PM »
.........I'm currently struggling with this problem.  We could probably retire at the end of this year and be just fine, with some modest lifestyle adjustments.  But if I work one more year our total nest egg goes up like 20% and I probably don't need to ever make any adjustments, and I could enjoy a much more luxurious retirement.  If I work two more years, I can live that life of luxury and fund college educations for all of my descendants forever.  If I work three more years I can endow a university fellowship, or build a rural school in Nepal, or save the lives of 1000 children in Africa.

People on this forum like to think they'll be immune to OMY syndrome because they know how much they need survive and they claim they don't see any utility in additional money.  I think that's unimaginative BS.  MMM says money can't buy happiness, but that's only true if you're talking about your own happiness.  It can TOTALLY buy happiness for a lot of people who are less fortunate than you.

My lifestyle wouldn't change, but if I can save the lives of 1000 children by sitting in my cubicle for another 12 months, how many annoying meetings and TPS reports could I suffer through to accomplish that goal?  How many homeless drug addicts or abandoned puppies or acid-burned girls can I help for each awkward performance appraisal I endure?

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with.

In your case it's not OMY; your humanity is evolving.

+1

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Re: "One More Year" strikes the rich the hardest
« Reply #38 on: January 15, 2015, 07:54:00 PM »
original post...

Agree. 

In the end it's difficult for many people to to pull the trigger immediately after reaching FI - Harder, particularly I think, if you're under 50, you make good money as you mentioned, simply because of the way the math looks, and you enjoy your job.  Gotta say, if you really enjoy your job and aren't burning up with some desire to go and do something else, you should just keep at it and do exactly what you're thinking of:  Donate tons of money.  That would be incredibly awesome and a way to inject new meaning into continuing to do whatever it is that you do that apparently makes bank.
edited to stay on topic
« Last Edit: January 16, 2015, 05:58:22 AM by Dr. Doom »

innerscorecard

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Re: "One More Year" strikes the rich the hardest
« Reply #39 on: January 16, 2015, 02:10:18 AM »
This is such a liberal Western attitude, by the way. No one in China, or indeed among most in the world, would even think of these concerns, or feel guilty for having money or even spending it on nice things instead of giving it to others. It's not even a thing at all. That's not to say the rich never help the poor. But there isn't that excessive guilt for not giving everything you have to others.

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Re: "One More Year" strikes the rich the hardest
« Reply #40 on: January 16, 2015, 06:27:01 AM »
One More Year syndrome is the unfortunate tendency for a person on the cusp of retirement to hold out just a bit longer.  For that added bit of security, people willingly trade a little bit more of their short lives away.  And then they do it again, and again, like a slowly boiling frog, because they can't see when enough is enough.

But since I'm a huge spreadsheet nerd I've been looking at how OMY syndrome affects people of different income brackets, and I've decided that it's much worse for high earners.

If you only make $20k/year and have saved up your nest egg over a 30 year working career, then one more year of your savings contributions is probably dwarfed by the market returns on your investments.  It just won't matter much.

If you make $1,000,000/year and have saved up the same sized nest egg over the past eight months, then one more year of your savings contributions will more than double your nest egg regardless of market returns, and thus have a huge impact on your post-retirement lifestyle.

Most of us are somewhere in between, but I think the end-members illustrate the point well.  The more money you save every year, and the shorter your saving history, the more beneficial OMY is for you.

I'm currently struggling with this problem.  We could probably retire at the end of this year and be just fine, with some modest lifestyle adjustments.  But if I work one more year our total nest egg goes up like 20% and I probably don't need to ever make any adjustments, and I could enjoy a much more luxurious retirement.  If I work two more years, I can live that life of luxury and fund college educations for all of my descendants forever.  If I work three more years I can endow a university fellowship, or build a rural school in Nepal, or save the lives of 1000 children in Africa.

People on this forum like to think they'll be immune to OMY syndrome because they know how much they need survive and they claim they don't see any utility in additional money.  I think that's unimaginative BS.  MMM says money can't buy happiness, but that's only true if you're talking about your own happiness.  It can TOTALLY buy happiness for a lot of people who are less fortunate than you.

My lifestyle wouldn't change, but if I can save the lives of 1000 children by sitting in my cubicle for another 12 months, how many annoying meetings and TPS reports could I suffer through to accomplish that goal?  How many homeless drug addicts or abandoned puppies or acid-burned girls can I help for each awkward performance appraisal I endure?

At a high earning job, that fire hose of cash can do a lot of good in the world once your own expenses are met.  That's the OMY problem I'm struggling with.

This is a really good point and something that I have thought about and struggled with myself. In fact, I think it is more of philosophical life question that I struggle with. In three years time at the young age of 33 I will be FI and could retire. But I do wonder whether this is the morally right thing to do or if I have a larger social obligation that I should fulfill. If I keep working, then like you say, I could do a lot of good in the world with my surplus earnings. I obviously have been endowed with certain skills and talents and I wonder whether there is something morally wrong with the idea to just accumulate as much as I need and then call it quits, move some place nice and just live of my earnings forever. Part of me feels I should do something greater with the gifts that I have been given and just retiring and not giving a f*ck anymore is kind of wrong.

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Re: "One More Year" strikes the rich the hardest
« Reply #41 on: January 16, 2015, 08:05:47 AM »
Yeah, I don't think I'll fall prey to this either.  We picked a date based upon our personal circumstances; it's kind of a "sweet spot" between leaving NOW (even though that's possible) and staying one more year, one more year, one more year.  If something were to come up -- an illness, loss of a job, whatever -- we might re-evaluate, but if things run the expected course, I can't imagine us changing our date.

Congrats!  You were at the Boston get together, weren't you?  I don't remember you sharing your date then, but I'm excited for you.

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Re: "One More Year" strikes the rich the hardest
« Reply #42 on: January 16, 2015, 08:07:26 AM »
This is such a liberal Western attitude, by the way. No one in China, or indeed among most in the world, would even think of these concerns, or feel guilty for having money or even spending it on nice things instead of giving it to others. It's not even a thing at all. That's not to say the rich never help the poor. But there isn't that excessive guilt for not giving everything you have to others.

In countries in many other parts of the world though, you are expected to take care of other people in a way we don't really do in the west.  In China, for example, it is still pretty common for people to see ageing parents as absolutely their responsibility, particularly for the sons.  Many of my Chinese friends in the US send a large percentage of their earnings back to support the old folk.    In many African cultures, generosity is much more highly valued than it is in the West.

innerscorecard

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Re: "One More Year" strikes the rich the hardest
« Reply #43 on: January 16, 2015, 08:18:15 AM »
This is such a liberal Western attitude, by the way. No one in China, or indeed among most in the world, would even think of these concerns, or feel guilty for having money or even spending it on nice things instead of giving it to others. It's not even a thing at all. That's not to say the rich never help the poor. But there isn't that excessive guilt for not giving everything you have to others.

In countries in many other parts of the world though, you are expected to take care of other people in a way we don't really do in the west.  In China, for example, it is still pretty common for people to see ageing parents as absolutely their responsibility, particularly for the sons.  Many of my Chinese friends in the US send a large percentage of their earnings back to support the old folk.    In many African cultures, generosity is much more highly valued than it is in the West.

But not strangers. Especially those in other countries.

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Re: "One More Year" strikes the rich the hardest
« Reply #44 on: January 16, 2015, 08:44:37 AM »
I get your point, but in some cultures, sharing with even with strangers as a form of hospitality is very much expected, in a way it is not in the West.  I deal with a lot of African students.  They are hospitable in a way we just are not.

Different cultures, different values.

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Re: "One More Year" strikes the rich the hardest
« Reply #45 on: January 16, 2015, 10:34:35 AM »
Yes.  I'm still ~5 years away from FI, but my job is pretty good (love/hate perhaps?), I like most of my coworkers and get paid pretty well...so I know it's going to be difficult to leave. 

#uppermiddleclassproblems

But, ultimately, I think I will choose freedom.  I want to be able to do what I want, when I want.  I want to be outside more during the day and have more time to take long walks and cook.  I may pull a OMY depending on my situation at the time, and if the job is leaning more to the love than the hate that year.  I look forward to having this dilemma!

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Re: "One More Year" strikes the rich the hardest
« Reply #46 on: January 16, 2015, 10:53:06 AM »
My problem is not OMY, but OLY.  I keep reducing our time to FIRE, going "..we don't need that much."  "...we can probably get by on that." etc.  Bringing FIRE in sooner and sooner.

Of course, that's different than what the OP is proposing, based on an ethical argument of OMY to help others.  I don't have an answer for that, yet.
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Re: "One More Year" strikes the rich the hardest
« Reply #47 on: January 16, 2015, 12:19:21 PM »
The ethical dilemma (if there is one) reminds me of Schindler's List, where Schindler keeps spending down his fortune and bankrupting his company finding ways to help "one more."

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Re: "One More Year" strikes the rich the hardest
« Reply #48 on: January 16, 2015, 12:58:35 PM »
The ethical dilemma (if there is one) reminds me of Schindler's List, where Schindler keeps spending down his fortune and bankrupting his company finding ways to help "one more."

I had this thought exactly but questioned whether it was appropriate to start drawing the parallel.  But when I read the rhetorical questions in the closing remarks of the original post, I immediately pictured Sol as Schindler getting down on his knees asking how many more people this gold ring could have saved.

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Re: "One More Year" strikes the rich the hardest
« Reply #49 on: January 16, 2015, 01:03:46 PM »
For me it largely depends on how much you are able to pad the stache in relative terms. If your omy increases stache 5% I can see leaving he workforce a lot easier than say omy increasing stache by 25%