Retirement Myths And Other Terrible Ways To Think About Retirement Planning


A common theme for people that write about finance (whether it be frugality, investing, or early retirement) is that when they peek out from their own writing platforms and enter the world of Yahoo, MSN Money, and Marketwatch, they are immediately met with scorn, disbelief, jeering, and personal accusations.

Pete from the website, whom I have written about previously here, recently ventured out of Money Mustache land to conduct an interview with Andrea Coombes from Marketwatch, which you can read here.

Of the 300+ comments that currently follow the article, it seems that at least nine out of ten were critical of MMM’s retirement strategy, citing its impossibility to their personal circumstances. My reaction to most of it was along the lines of “if you are going to say that something can’t be done, get out of the way of the people who are actually doing it.”

But there were three deep flaws in the logic of a lot of the negative responses that I wanted to point out to you:

(1)    Most of the commenters focused on explaining why they couldn’t replicate Mr. Money Mustache’s strategy exactly, often pointing to student loan debt, a high mortgage, a divorce, or something else that was occupying a large slice of their current income. Exact replication is the wrong way to look at things. When someone shares their strategy with you, the point isn’t to think “How can I do this exactly?” and then dismiss the ideas presented in entirety if you cannot copy them exactly. Instead, you should read and study with this kind of orientation, “Is there even one little nugget of wisdom in this piece of advice that I could apply to my own life to make it better?” The point isn’t perfection—it’s to be better tomorrow than we are today and continue a march of forward progress, and we should have our eyes peeled for absolutely information that will help us move in that direction.

(2)    A lot of people seem to think that retirement consists of sitting around with cats and watching Judge Judy. Because he runs a blog and still does side construction projects, hearty side debates broke out arguing that Mr. Money Mustache wasn’t truly “retired.” Those kinds of labels miss the point of what wealth-building is about. The end game of financial independence isn’t to do nothing. The point is that what you do is on your terms.

 Take the Money Mustache blog, for instance. If Pete had to rely on that income to pay his bills or face homelessness, then he would wake up every day feeling a pressure to write something. But because he is financially independent, he can say, “It’s a great day today. I’m going to go for a long bike ride and do my own thing. I’ll write something when inspiration strikes me later.” Financial independence isn’t about doing nothing, but rather, the shift from being forced to do things to get the bills paid and choosing to do things because you want to do them.

Although this is rarely discussed, being financially independent can actually make you a better, more productive employee. Because there is no stress that he “has” to write, Money Mustache doesn’t have to churn out mindless, meaningless content to keep the advertising dollars flowing. He can write when he finds inspiration, and this likely leads to better posts overall, more traffic, and a higher income base. Financial independence is fertile soil for creating two things: freedom and boldness. When you possess those two character traits simultaneously, you can achieve mind-bogglingly impressive things when you set your sights on a particular work project.

(3)    A lot of the commenters didn’t seem to understand the nature of stock market growth. I don’t remember the particulars of how MMM invests his egg, but I seem to recall thinking that he is one of the few people that realizes the Willshire 5000 is more representative of the market than the S&P 500, and puts his money in a total stock index fund at Vanguard. If you adopt that strategy, even if you spend all of your dividend checks (which he doesn’t do), you are still set for at least 6% long-term growth at a minimum. Even if he cashed and spent every dividend check that hit his account, he’d still see annual income growth that roughly doubled the inflation rate in most years over the very long term.

A lot of the criticism facing Mr. Money Mustache was noise, and I wish that people reading his interview did it with the spirit of “This guy is clearly successful, what can I learn from his life to apply to mine to become more successful?” If people read his Marketwatch interview with that article, they’d leave thinking about the fact that “retirement” means doing productive things because they excite you rather than because you have to do them, and the implicit take home lesson for those that read between the lines would be this: the money you set aside in stock funds will give you business ownership interests that grow at least doubled the rate of inflation in most typical years. The price of the stock may not reflect the business performance at any given moment, and that’s why you get dividends to say “Hey, thanks for sticking around” during the moments when stocks are irrationally priced. Internalizing those two lessons will make you better, and at some point, change your life in ways that you can tangibly observe.