Work, How Much Is Enough?

The majority of Australians are working to age 60 or 65 simply because that is the only way they can hope to accumulate enough capital to survive on in retirement. As a high net worth individual, you have more options and less reason to stay on the treadmill.

Successful investment, like most other rational objectives in life, depends on setting achievable goals and then working out a strategy to achieve them. For most Australians in their 40s or 50s this has become a process of working out the lump sum they will need on the day they retire in order to invest it to deliver today's income. But is this really an adequate answer to an anticipated lifetime of up to 80 years?

In September 2008, the New York Times interviewed 'poor millionaires' in Silicon Valley for a feature. These were wealthy individuals in the information technology business who were still working stressful 50 hour weeks in spite of the fact that they were worth millions.

When asked why he had still not given up his day job. in spite of the fact that at age 51 he owned a $1.3 million house, had another $2 million in the bank and was in the top 2% of American incomes, one of them replied:"I know people looking in from the outside will ask why someone like me keeps working so hard, but a few million doesn't go as far as it used to".

He that is of the opinion money will do everything may well be suspected of doing everything for money. - Benjamin Franklin

What makes the 'how much is enough' equation invalid is that your life and your need to grow your assets is not going to end or change on the day you retire. Thanks to modern medical research you could easily have 25 - 30 years ahead of you at age 50, hopefully in good physical and mental health. In fact, you may not actually stop working until your 70s, though not at the same job you were doing at 60.

This means that you will need to nurture and grow your assets just as diligently when you are 70 as you do at age 50. The need for active investment management lasts as long as you do, so we should correctly regard financial planning as one long continuum stretching from around age 25 when you have your first serious job until your 70s or 80s.