My advice to my parents – spend more money; Reader feedback on achieving financial security

1) In Monday's e-mail, I detailed how my parents achieved financial security. Then in yesterday's e-mail, I shared how I analyzed their full financial picture and the two changes I recommended: moving some of their S&P 500 Index position to an equal-weighted index and closing their account with Charles Schwab (SCHW).

After I finished putting together their financial spreadsheet, I had one more message for my parents (which may sound odd from their heir): "You're not spending enough."

As I explained to them, I wasn't saying they should try to die broke or cut it close enough to run out of money if one of them lives to 100-plus or has an extremely expensive, uncovered medical crisis.

(A huge, extended stock market crash might also make a dent, but nearly half of their liquid assets are in cash, plus their substantial annual income from Social Security and annuities is secure.)

I continued by saying they should look for additional ways to spend to 1) maximize their happiness, comfort, experiences, etc. in their remaining years, 2) do the same for the people they care about, and 3) make a difference in the world through charities and political donations.

I told them they could likely easily double their current spending, and in doing so their net worth – assuming modest stock market returns – probably wouldn't budge (it has been going up every year for the past five years).

My parents are huge penny-pinchers, which, over a lifetime, is the main reason they're financially secure. But now that they've achieved this security, they should enjoy it by spending their money – not on material goods primarily, but rather experiences.

Extensive research shows that this is what leads to the greatest happiness, as outlined in these articles: Buy Experiences, Not Things and Why Experiences Are Better Than Things.

For those who like to travel, go out and see more of this magnificent country. Hop a flight to a new city – some of my favorites are San Francisco, Boston, Seattle, and Charleston. You could rent an RV and do a road trip, as Susan and I did a few years ago. Or you could expand your horizons even further with international travel – there's a vast, incredible world to explore!

And don't forget to include your loved ones. In my opinion, there's nothing better than spending time with your parents, siblings, children, and grandchildren. If you can afford it, pay for your friends and family to join you on a cruise in Alaska or a beach vacation in Mexico – something my in-laws have done for us. Or pay for them to just come visit you to spend quality time together.

Another tip: With the IRS Annual Gift Tax Exclusion, you can transfer thousands of dollars to a child, grandchild, or anyone you want without having it taxed or needing to report it during your annual filing. For 2026, the limit is $19,000 for a single person and $38,000 for a couple.

My parents, to their credit, are listening to my advice...

Regular readers may remember the spontaneous 10-day trip we did to South Africa in January, which they paid for (archive here).

Ditto for their recent two-week trip to Europe, 10 days of which was spent on a mission driving 51 ambulances from Frankfurt, Germany to Kyiv, Ukraine (recaps here and here). They covered all of the expenses for my sister and a family friend to join them.

Next month, they've booked a weeklong cruise on the Danube River from Budapest, Hungary to Vilshofen, Germany. And they've paid for three cabins for themselves, me, my sister, my aunt, and a family friend.

Closer to home, like most foreigners living in Kenya, they employ a half-dozen people to do housework, maintain and guard the property, care for their horses, drive them places, etc. Some of these employees have been taking care of my parents for decades.

Kenyans are hurting due to the double whammy of USAID being shuttered last year and 7% inflation thanks to the Iran war. So my parents are giving their employees substantial raises and making improvements in their living spaces.

You get the idea... If you're fortunate enough to be financially secure, then look for ways to spend money – first on yourself, and then on loved ones and things you care about.

2) Thank you to the many readers who replied to my last two e-mails with their own stories of achieving financial security...

Kathy D. writes:

Thank you for highlighting your parents' financial situation. Everything you described that they did for financial stability I learned and have followed in my own life on an average working salary of $35,000 to $40,000.

My parents, a stay-at-home mother and blue-collar employed father, taught us to live on less than our salaries, drive older cars, and live beneath our means. Frugal is an understatement, yet we had a nice home and comfortable life growing up.

I lost my job at age 59 in the financial crisis, but due to my own frugal lifestyle, I had accumulated a healthy investment portfolio and paid off my home and car, so I just skipped a trip or two overseas and was just fine.

Since that crisis, the value of my investments has doubled, and I am blessed to live comfortably on much less than my monthly Social Security.

I thank my parents every day for teaching us the importance of saving. A true gift.

On my parents' frugality, Marine Corps veteran Paul H. writes:

My wife and I are the same people. My wife still uses coupons despite the fact that our retirement income and assets are such that she doesn't need to. Honestly, I just follow her lead. And you are right: live within your means, invest your money, and let it grow.

Of the financial spreadsheet I put together for my parents, Alliance member Norm R. writes:

I've done something similar for myself, but your approach is much more inclusive and comprehensive. In this one article, you've done an incredible service, both for seniors and their survivors (usually, children). I have a few suggestions for your consideration.

First, repeat this article (or a condensation) once a year, so more people get the benefit of your wisdom. This needs to be in front of the faces of people who can be helped when they see (and need) it. Relegating this to the category of "really good historical articles" will miss its primary potential impact.

Second, I've done something similar, to make things easier for my kids (I'm 88) when I pass. I called it a Financial Survival Kit. In it, I've documented all the things (mostly papers) that I can think of that my kids need to do. It includes accounts, their location and named adviser, places papers are stored, and a sequence of actions to help things go as smoothly as possible. It also includes things around the house that I and my deceased wife have done, or avoided doing, to prevent damage.

Thinking clearly at emotional times is difficult to achieve for anyone. Helping to avoid making emotional decisions on logical issues can save some of the biggest regrets of a lifetime. To me, these aids will foster the smartest decisions to be made at critical times. Let questions be your friend and assumptions your enemy.

Steve S. has some good suggestions for things I could add to my spreadsheet:

Your step-by-step process on how you organized your parents' financial position is excellent. As you mention, it will provide for easy analysis of risk during their lives and knowledge of the assets for heirs upon their passing. I have also done something similar for my mother and me.

If I may suggest, I included the following columns to further assist the heirs with the tax implications and who to contact to make sure accounts are locked down and protected upon the asset owners passing:

1) How the asset is currently being held (Trust, Individual, Joint etc.)
2) The primary beneficiary for those assets not held in Trust, such as 401(k)s and IRAs
3) The secondary beneficiary, if applicable
4) The cost basis of the account, particularly for those assets where gains are subject to taxes
5) Accounting treatment (step-up in basis, gains taxable, etc.)
6) The contact information for the bank, brokerage, etc. – name, phone, e-mail

Thanks for sharing... Hopefully your followers will heed this solid advice.

Eric A. wishes his father had done a spreadsheet, as it would have saved him from a lengthy "financial discovery mission." As for the cost of keeping cash in a low- or no-interest account, he discovered:

My father had accounts at two banks paying 0.03% interest. They could have contacted him to move to a money market, but didn't.

There were also three certificates of deposit at Truist (TFC) that were being auto renewed at 0.05% interest every six months for the past 15 years.

The total for these accounts was about $600,000, so at the current rate of 3.3% my brokerage is paying, he was forgoing $20,000 in annual interest.

Regarding Schwab, Robert C. writes:

Thanks for exposing Schwab's ripoff. Both my daughter and I have accounts there. I have less than $2,000 in cash in my account, but my daughter recently sold some appreciated stock and has about $35,000 in her account. This will change ASAP.

Rob S. also comments on Schwab versus Fidelity:

I have accounts with both entities, and have found Schwab is looking to monetize wherever possible versus doing what is correct for clients.

Besides Schwab's inexcusable sweeping cash into a non-interest-bearing account for clients (I literally have to buy a short-term money-market fund for interest on my cash), I used to watch how dividends were withheld an extra day by Schwab versus Fidelity's immediate payout.

Similar to you, I have had many conversations expressing my discontent to Schwab about their way of looking for the additional dollar versus Fidelity doing what is the correct thing. I have moved money out of Schwab into Fidelity and have a much smaller footprint there because of Schwab's egregious behavior.

I also want to thank you for your financial education for readers. They are often simple, yet transformative messages, beautifully illustrated with your notes about your parents' finances... Once again, thank you for all the good you do!

Thank you, my wonderful readers, for your feedback!

Best regards,

Whitney

P.S. In last Friday's e-mail, I wrote about the upcoming SpaceX IPO – and how it could spell disaster for the retirement savings of 115 million Americans...

This is part of why I took the time and effort recently to review my parents' finances. I didn't want them to be impacted by what's to come in the weeks ahead. Because no matter how safe your investing approach may be, SpaceX's IPO will have dire consequences for the market... and your retirement portfolio.

On June 16, at 1 p.m. Eastern time, I'm giving a special presentation to explain exactly what's at stake... and how to protect your wealth before it all unfolds. Click here to reserve your spot.

P.P.S. I welcome your feedback – send me an e-mail by clicking here.