SMALL CHANGE

Money never enough? Don't fret

Many of my friends in their 40s and 50s still feel financially insecure even though they have squirreled away a tidy sum for their retirement needs.

They have worked hard and this has enabled them to enjoy a much better lifestyle than the frugal living their parents' generation was accustomed to.

But along with the greater material comfort, they also experience more stress and anxiety, often haunted by a fear that they may just be one stock market crash away from losing their fortune.

That is a particularly scary prospect, given that they are in the last leg of their working lives and so they would have little chance to weather the blow from any investment losses.

As a result, many of them feel stuck on a treadmill. They may want to do something completely different with their lives but they dare not get off the treadmill.

My friends are certainly not alone in feeling trapped by this dilemma.

Swiss lender UBS noted a recent survey of its well-heeled clients in the US found that even millionaires suffer from that same sinking feeling of financial insecurity.

UBS noted that millionaires are generally quite happy with what they have earned but with the global financial crisis six years ago fresh in their minds, they doubt they are wealthy enough to feel financially secure.

They also fear that if they lose their jobs or suffer losses in a stock market crash, the lifestyle they are used to will be badly affected. Those with families also want to provide the best education money can buy for their children.

As such, the pressure to keep on working hard simply increases.

The UBS survey quoted a 42-year-old female respondent, who summed up the quandary: "Sure, if I could get down to part-time (work), that would be nice. But I would lose a big chunk of my pay cheque. It wouldn't be feasible. I want my kids to go to the best colleges possible."

The survey noted that even as a person grows richer, the feeling of insecurity may not go away. If anything, it may even rise as the person starts enjoying a more lavish lifestyle and feels the pressure to measure up and fit in.

This may make him want to accumulate even more riches. Based on feedback from those surveyed, a millionaire will aspire to have more than twice what he already has.

The survey said: "Enough is not enough for many millionaires to be fully satisfied. Those with $1 million want $2 million; those with $10 million want $25 million."

To what end, one may ask?

UBS noted that while millionaires say they value their family above everything else, they also believe that they sacrifice too much time away from their family to get to where they are.

They are also frank enough to admit that if they had only a limited time left to live - say, five years - they would do things differently; they may travel more or spend more time with their family. They would also be more likely to take chances, such as doing what they had always wanted to do, rather than let such opportunities slip by.

Sadly, few of them are willing to walk the talk. "Ultimately, millionaires are unlikely to step off the treadmill unless faced with a major life event like a health scare or retirement," said UBS.

So what can we do to lessen our sense of financial insecurity ?

The UBS survey suggested that one source of anxiety - especially for younger millionaires - is the pressure to keep up with their peers, given the incessant desire to compare the wealth they possess and the lifestyle they enjoy with their friends and neighbours.

With the wide availability of social media networks such as Facebook, this problem can be further aggravated as a person boasts about the expensive restaurants he goes to, the big-ticket items he is splurging on and where he is going on his holiday.

Some of my friends solve the problem by living well below their means and not comparing themselves with others. Although they hold high-paying jobs that can fund a lavish lifestyle, they continue to live simply and stay debt-free.

This will help to minimise any dislocation that they may encounter in their standard of living when they finally stop working.

For them, true wealth comes from not having great possessions, but in having few wants, as one ancient Greek philosopher once pointed out.

engyeow@sph.com.sg