The Fallacy of Enough

I have previously written about why I think we are kidding ourselves with the concept of the safe withdrawal rate.  In review, the SWR is the percentage of your portfolio you can spend every year and not go broke by the end of retirement.  The general consensus is that the number hovers somewhere around 4%.  For example, if your net worth is a million dollars, you can withdraw $40,000/ year adjusted for inflation.  To turn things on their head a bit, the concept of enough becomes the amount of money needed such that an SWR of 4% meets your yearly budgetary needs.  In other words, multiply the annual budget by twenty-five ($40Kx 25= $1M).  Now math is math.  I can’t argue with the truth of these calculations.  Yet I theorize that because of loss aversion, we will never be comfortable with this fallacy of enough.

Maybe enough is not a monetary issue after all.

Maybe it’s an emotional one.

Loss Aversion

It’s no secret that I have been spending my recent months steeped in the building of this blog.  The ins and outs of content creation, search engine optimization, and subscription generation have been forefront in my mind.  So you will have to excuse me if my metaphor is a tad self-indulgent.

Like most beginning bloggers, I track page views fairly closely.  On a good day, my heart soars.  On a bad one, I mope around the house and mumble to myself.  I have been incredibly lucky that my readership is slowly growing.

A few days ago, I posted in a new venue and was surprised to see my page views bump aggressively.  Hoping that it was not just a fluke, I returned the next day with the same result.  Day after day I watched my views increase with glaring regularity.

This was wonderful and unexpected.  But something strange began to happen.  The more my page views increased, the more my anxiety began to rise.  What if this new venue got tired of my links?  What if the algorithm changes?  What if I don’t find opportunities to connect to my work?

A huge win all the sudden became a major source  of worry.

We Hate To Go Backwards

The rational response would have been to realize that the worst that  could happen was that I would fall back to where I had been before.  No harm no foul.  Instead, however, the thought of losing what I had worked so hard to gain, became anathema.

I skulked in and out of this new venue, looking for places to give my opinion.  And it all became unenjoyable.  I wasn’t enjoying the interactions, wasn’t having fun writing new posts, and wasn’t spending enough time detoxing from social media.

So how does this all relate to the fallacy of enough?

Dollars Are Like Page Views

We all start with a goal.  Within personal finance, we call it financial independence.  We assiduously bulk up our W2s, save, invest,  and side hustle.  And low and behold, the closer we get to our goal, the more anxious we get.  Like page views, reaching the top of the mountain can be disorienting.

How else do you explain the one more year phenomena?  How else do we contemplate SWR’s of 3%.

The fallacy of enough is that when we get there, we tend to move the goal post.  This is why we delay retirement.  This is why we monetize blogs and do post retirement side hustles.  We are so afraid of losing our prize after receiving it, that we tend to overshoot.

Loss aversion is a real concept.

We are much happier striving for the prize that is just out of reach, then holding desperately to the one that’s in our clutches.

How about you?  Do you struggle with the fallacy of enough?  Have you found that your concept has changed as you’ve gotten closer?  Once you have gained in some way, does it make you anxious to think that you will lose it again?  Once you reach financial independence, will you be able to avoid the temptation of easy money?  Of one more year?