Benjamin Graham led a colorful life. He chased women. He loved philosophy, languages, travel and different cultures. He was Warren Buffett’s professor at Columbia University. Today, the Oracle of Omaha says Benjamin Graham was the second most influential man in his life, after Buffett’s father.
But Buffett and Graham couldn’t be more different. Buffett loves to work. The 87-year-old once joked that he would use séances to run Berkshire Hathaway from his grave.
Graham, who died in 1976 at age 82, beat to a different drum. Janet Lowe’s book, Benjamin Graham on Value Investing, summarizes his investment philosophy and his interesting life. I remember one thing he said more than any other.
He said that anyone who dies with more than a million dollars is a fool. Adjusted for inflation, that’s about $4.7 million. Graham’s personal life might ruffle your moral feathers, much as it did with Janet Lowe. But his joie de vivre also exhibits wisdom. Based on Lowe’s description of what the man loved most, I think Graham would have traded money for time…even when he was young.
According to researchers Hal E. Hershfield, Cassie Mogilner and Uri Barnea, most people wouldn’t. They conducted five experiments, asking people if they would prefer more money or more time. In 2016, they published their results in the Social Psychological and Personal Science journal. Even when controlling for factors like age, income level and occupation, all five experiments found the same thing. Most people (about 67 percent) preferred more money.
The researchers also learned something else. Those that preferred more time reported being more self-reflective and they enjoyed life more. But there’s something the research missed. Money can buy time. If somebody works hard and invests well, they might retire early. Benjamin Graham would agree.
But this brings further questions: How much money is enough? Do some people work too hard and save too much money? Perhaps there’s a middle ground. In 2010, psychologists Daniel Kahneman and Angus Deaton said happiness levels increase with income, up to about $75,000 a year. Let’s call it $89,000, after accounting for inflation.
This might be the retirement sweet spot. Assume a retired couple earns combined Social Security payments of $25,000 a year. If their investment portfolio generated $64,000 annually, they would have a combined annual income of $89,000.
If they had an investment portfolio worth $1.6 million, they could withdraw an inflation-adjusted $64,000 a year. That’s based on the 4 percent rule. Retirees could also use AssetBuilder’s abri to determine how much money they would need to provide a desired stream of income.
I’m not saying $1.6 million is the retiree’s Holy Grail. Others might need more or less, depending on their Social Security payments, pension or real estate income.
And if you’re still years away from retirement, you’ll need a lot more money (inflation can be greedy).
Much also depends on where you choose to retire. Money goes further in low-cost countries like Mexico, Malaysia, Thailand, Ecuador and Vietnam. In such cases $50,000 a year might buy a lifestyle that would cost twice as much in the United States.
Warren Buffett might work until his grave. But that doesn’t mean you’ll want to. It’s best to plan how much you need and not go overboard. Financial planning isn’t a perfect science because nobody can see the future. But take a page from Benjamin Graham. There’s more to life than money. After all, time might be the only real asset that we have.
Andrew Hallam is a Digital Nomad. He’s the author of the bestseller, Millionaire Teacher and Millionaire Expat: How To Build Wealth Living Overseas