Last week I posted about military retirees who are exploring bridge careers and others who are planning to retire with adequate cash flow but low savings. “The Military Guide” is packed with more real-life stories from people who have solved these challenges.

One of the themes behind these stories has been making sure that their families were on board with their transition plans, and that everyone could support their new “after the military” lifestyle. Many of us servicemembers have lived with deprivation during our careers, and for some of us it can be a challenge to make sure that our financial independence is based on a balanced lifestyle. Frugality is only meaningful if it matches your values, and nobody wants to live a life of deprivation.

But every once in a while I encounter someone with a problem at the other end of the bell curve.

As some of you may have noted by now, I spend way too much a lot of time reading and posting on Early-Retirement.org. I wish I’d found it before I hung up my uniform, because it helped me analyze retirement financial & lifestyle issues about which I’d only been guessing.

In fact the roots of “The Military Guide” book came from a comment made in February 2004 by another military retiree who had also decided to retire early: “Where are all the early retirees with military pensions?” I’d heard plenty of anecdotes about people who retired from the military and never started a bridge career, but “GDER” was the first I’d ever met. He drifted away from the board a couple of years later, but maybe someday he’ll see the book and realize what came out of that conversation.

Today there are over 60 servicemembers & veterans among the board’s 300+ active posters. (The board has more than 18,000 members but only a minority regularly read the threads– let alone post to them.) A few more veterans have joined its early-retiree ranks since 2004, and many more servicemembers seem to be adding to the discussions every month. Even if they’re planning to start a bridge career after the military, they’re still pushing hard for financial independence. The closer you are to financial independence when you leave the service, the easier it is to find a bridge career you can enjoy. It’s also a lot easier to decide whether that bridge career is what you want to do for the rest of your life. Financial independence gives you choices.

Last month a new member introduced himself with the typical questions about retiring. This member had the usual problems: unhappy with his career, feeling too burned out to switch occupations, not yet financially independent. His annual spending was $230K but he would only have $3M in savings.

Yeah, you read that right. Two hundred and thirty thousand dollars of annual expenses. Three million dollars in cash savings. No mortgage and no other debt. This member just wanted to know what high-yield asset classes would reliably support their expenses. (Hint: none.) From his perspective, anything less than $230K/year would be crossing the line from frugality to deprivation. Yet he wasn’t sure that he could endure the stress of working for long enough to accumulate the savings necessary for their desired 4% safe withdrawal rate: $5.75M.

Take a reading break if you want. I understand if you need a few minutes to regain control of your reactions. I used to feel the same way. But after reading a few dozen of these posts over the last decade, these days my reaction is no longer spewing coffee on my monitor incredulity or laughter. Instead I feel sad.

I know, we should all have to feel sorry for more people struggling through that situation.

The answer seems ludicrously straightforward: cut expenses. So why can’t he accept that response?

I think the issues are rooted in fear and affluenza.

It’s hard to believe that it’s been 15 years since the documentary “Affluenza” was first released on PBS. Back then the stock market was perpetually rising, the media was crowing about permanent prosperity, Congress was paying off the national debt, and a new Gilded Age was at hand.

At the time, the documentary seemed like a lone voice crying in the wilderness. Life was good– why would anyone have to worry about enjoying too much?

The problem is painfully clear in retrospect: affluenza’s not sustainable. Even if you make enough money to afford it in the short term, you have to have an awful big pile of net worth to be able to retire with it.

The PBS “Affluenza” website goes into excruciating detail of the issues behind the affliction. One of its most valuable resources (for you and your family) is the affluenza quiz. Of course it’s not a medical diagnosis– it’s a springboard for a thoughtful discussion about the life you really want to lead. In some cases your spending decisions may be based on a fear that you “need” to live in the right neighborhood, dress your kids in the right clothes, and send them to the right schools. You may “need” to entertain yourself by spending money or by being seen with others in all the right places. There’s an element of truth in all of those wants, but it doesn’t require spending nearly $20K/month.

The trick is to figure out what’s really important to your lifestyle, and then to design your spending around it. You may not need to live in an expensive urban city, but you have to assess the benefits (and costs) to your lifestyle. Are you willing to earn and save the extra assets needed to live in a high-cost area? Can you find a lower-cost area that offers the same benefits? It’s the same decision for schools, clothing, transportation, and food: are you willing to work to earn the money to spend on expensive choices, or do want to make other choices? What do you value? Is it really worth the expense?

Sometimes the answer is “Yes, I really do want to spend all of this money.” Other times it’s more ambiguous: “I want what’s best for my kids.” Maybe that requires an eight-year-old to wear designer jeans and carry a cell phone at a private school. Or maybe that’s just what the parents think is important, and the kid doesn’t really know one way or the other. How do the parents figure it out?

Two other quizzes may help start a family discussion. The University of Minnesota asks: “Are You Affected by Affluenza?” and Westwood Public Schools has an affluenza quiz designed specifically for 21^st century kids (scroll down below the slideshow to the transcript).

The hardest part of overcoming affluenza is dealing with your own fears. If you’re surrounded only by people who are also afflicted with the syndrome then you’ll never see the reality of millions of families who do just fine with smaller houses, modest cars, public schools, and inexpensive clothing. (Some of them don’t even “need” their own cell phones, let alone phones for their kids.) One of the tremendous advantages of discussion boards like Early-Retirement.org is being able to read the stories of those other families, and to find the other resources that will help you deal with your fears.

Many times it’s just a matter of test-driving a different lifestyle. You don’t have to sell all your possessions and stuff the family into an RV for a two-year nationwide tour. You don’t even have to leave the big city for a small town. Instead you can start by making small lifestyle changes and seeing how you feel. This may sound silly, but you could start by skipping Starbucks coffee (or other “gourmet” choices) for Dunkin’ Donuts– or even, heaven forbid, for making your own. Instead of running daily errands in a big SUV, try to group the errands to twice a week. Instead of eating out or bringing fast food home, try cooking for yourself a few nights a week. If you can make your own breakfast and a lunchtime sandwich, then you can figure out how to make a family dinner. Instead of spending thousands of dollars to vacation at a resort in a different time zone, revisit the local attractions that you haven’t been to in at least a year.

The key is to take small steps so that you can assess how you feel about the difference. Small steps don’t add up very quickly, but when you take a lot of them then you can see the difference in your spending. A small step won’t disrupt your lifestyle and leave your family in an uproar, but in a year you’ll notice that a series of small steps adds up to some big changes. You may not see the benefit of trying to reach financial independence by eliminating a $5/day Starbucks habit, but eventually you’ll find yourself replacing $5000 blowout trips with local family staycations. Now you can appreciate how $5/day adds up, especially if you change six or seven of those $5 habits in your daily routine.

Compare it to the trite analogy of eating better food and getting more exercise. When you’re sprawled on the couch in front of the TV, trying to wipe the Cheez-It stains off your face with a beer-soaked napkin, you’re not going to be very enthusiastic about jumping into the kitchen to whip up a nutritious family meal and then go out together for a two-mile walk. You’re certainly not going to go vegan or train for a triathlon.

However, if you start by drinking one less beer, or eating a more nutritious snack, then you’re beginning to learn how to live healthier. In a few weeks you may even be willing to skip the TV for yardwork or a family bicycle ride. You may forego the unhealthy snacks for more nutritious food that actually leaves you feeling less hungry with more energy. If you make the time to research healthy lifestyles then you’ll find even more things to try, and you can decide what works for you. In a few months you’ll notice that you’re eating less, exercising more, losing weight, and generally getting healthier. You could still crash on the couch with a bag of fat-fried sugary carbs and carbonated alcohol, but you might no longer find that very compelling.

In another year you may have completely abandoned those aspects of your former lifestyle– not just because it’s the healthier thing to do, but because you no longer enjoy them. You’ve taught yourself to live better and enjoy life more.

When you figure out how to live better by spending less, your financial life also gets healthier. You no longer feel the job stress of “needing” to earn more money to support your affluenza lifestyle. You can cut your expenses and make huge strides toward financial independence. You can relax to your own living standards instead of racing to keep up with the proverbial Joneses. A year ago you might have felt hugely deprived to have cut out those expenses. You’re right– it would have been deprivation because you didn’t value those changes. Today, though, you have new values that happen to need a lot less money. You no longer have those unhealthy aspects of your finances– you’re living better and enjoying life more.

The Early-Retirement.org poster who started that $3M thread only stuck around for a couple of weeks. He didn’t really like any of the answers he got about cutting expenses, and nobody could tell him how to reliably earn 7.7% annual withdrawals from his retirement funds. I think he’s moved on to search for the asset classes and the financial advisors who can make it happen, and I think he’s going to be looking for a long time. He said that he’d probably sell his company and take a year to spend time with his family, but then he’d start another company in order to save enough to retire in the style to which he’s accustomed.

Maybe during that year he’ll reflect on his own values and how long he’s willing to work for them. Once he aligns his values with his spending, then he’ll be able to find his own solutions to his financial independence. Until he does, he’s not going to be happy with his choices.

Related articles:
Retiring early– with kids?
The transition to a bridge career
Frugal living is not deprivation
When should you stop working?
Retirement budgeting
Military retirement: how much can I really spend?

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