Thursday, January 9, 2014

Mindless Accumulation

Mindless Accumulation
Matt Richel wrote an excellent article in the New York Times about a term I've never heard of before, but now absolutely love: "mindless accumulation". Mindless accumulation refers to the human instinct to earn past the point of our needs, or even our wants, and to simply work until we cannot work any more. The article centers on research that notes that, because of new technologies and greater productivity, the current generation can work fewer hours or less diligently than the prior generation, but still achieve the same standard of living. But, typically, they do not. The theory is that humans have a desire to earn and acquire more than they possibly could use: leading to another great term, "overearning".

From the abstract of "Overearning":
High productivity and high earning rates brought about by modern technologies make it possible for people to work less and enjoy more, yet many continue to work assiduously to earn more. Do people overearn—forgo leisure to work and earn beyond their needs? This question is understudied, partly because in real life, determining the right amount of earning and defining overearning are difficult. In this research, we introduced a minimalistic paradigm that allows researchers to study overearning in a controlled laboratory setting. Using this paradigm, we found that individuals do overearn, even at the cost of happiness, and that overearning is a result of mindless accumulation—a tendency to work and earn until feeling tired rather than until having enough. Supporting the mindless-accumulation notion, our results show, first, that individuals work about the same amount regardless of earning rates and hence are more likely to overearn when earning rates are high than when they are low, and second, that prompting individuals to consider the consequences of their earnings or denying them excessive earnings can disrupt mindless accumulation and enhance happiness.
The researchers used a particularly cool experiment, in which subjects were given a piece of chocolate for listening to a piercing noise a certain number of times. They could continue to listen to the noise and acquire chocolate as often as they liked within five minutes, with the catch being that they could not take home any of the candy. They could eat as much as they liked within the next five minutes, but any chocolate left over at that point had to be given back.

The experiment had two groups: high earners and low earners. High earners earned chocolate for listening for fewer times; low earners had to listen to the noise more often to earn a piece of candy. The results? The high earners, on average, earned nearly three times more chocolate than they could actually eat within five minutes. Additionally, individual high earners also chose to earn more chocolates than they, themselves, estimated they would be able to eat within five minutes. They voluntarily subjected themselves to pain, just to earn more candy than they believed they possibly could eat or would want to eat, and that they would have to give back.

Oddly, both high earners and low earners seemed to listen to the piercing noise the same number of times, leading to only the high earners overearning. Low earners did not seem to overearn at the same rate, or at all. Low earners acquired less chocolate than they estimated they could consume. But as both groups listened to the noise the same number of times, regardless of how much chocolate they earned, the authors' conclusion is that people will earn as much as they can, regardless of their pay rate. Their desire to earn is not based on how much someone wants or needs, but on how much work someone can perform...or withstand.

The concept of humans working more than is necessary, and acquiring past the point that would increase their happiness, is at the root of early retirement and financial independence. Because modern technology allows us to be more productive than previous generations, we are presented with a choice. We can either be more productive and (hopefully) continue to earn more, or we can work less and enjoy some "lesser" standard of living that always was, and still is, just fine. The latter choice might be working fewer hours right now, or ending one's working career early. The prior choice is just continuing to work hard for a typical career length, regardless of whether the total amount earned well surpasses the amount you'd need to live and be happy with.

But there's a rub here, too. For the thousands (or millions?) of people working towards financial independence or early retirement, and us hundreds and thousands of personal finance bloggers doing the same, what assurances do we have that we won't also succumb to mindless accumulation? (In our case, the accumulation is, I suppose, of money.) What will keep us from continuing to work when we reach the point that we have more than enough? The temptation, for me, is to look at this research and think, "I'm smarter than those people in the experiment. I'll know when to stop working and earning. And when I reach that point, I actually will stop." But when the time comes, and the spreadsheets and calculations state that my wife and I have enough to stop working, will I? Or will I go out and find research that says it's better to be cautious, and find justification to work another year...or five? You know, just to be safe.


*Photo is from BuzzFarmers at Flickr Creative Commons.

57 comments:

  1. Fascinating study, but unfortunately this isn't surprising to me. Work seems to be enshrined as one of the principal virtues in our society, at the expense of leisure. It's nice that studies like this are getting attention, though. Hopefully with more exposure we collectively can be more aware of this phenomenon and restructure our expectations to help shift the work/life balance more toward the life side of the scales.

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    1. I hadn't thought about the impact of our culture might be having. We certainly do value work here. Maybe it's not an innate human drive, but a temporal, cultural one.

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    2. Ever heard of the book "The Protestant Ethic and the Spirit of Capitalism"? It says so much about the Puritan and Capitalistic values our country and culture was built on.

      Unfortunately, I think production has become decoupled with accumulation and that's part of the problem. I doubt Mr PoP and I will ever truly stop producing, but hopefully the accumulation aspect will be less important to us.

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    3. I haven't heard of that book but I like the premise, being raised with the protestant work ethic myself. Cool idea about the marriage of production and accumulation. Maybe that's a more natural pairing.

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  2. Great topic. This is why most statistics show that many people do not feel they are prepared for retirement.

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    1. Thanks for the comment, Michael. My guess is that that feeling is probably justified in a lot of cases though. While people have overearned, they've probably undersaved.

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  3. Interesting. I wonder how it would've turned out if real money were used somehow! But, chocolate works too since most people would see earning a sweet treat as an incentive.

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    1. I had the same thought, Holly. But the results would have been too muddled. It's hard to know what is enough 'money' to a group of people. I suppose, though, if you only had a certain amount of time to spend the money, you could replicate the experiment.

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  4. This is fascinating stuff, thanks for writing about it. "Mindless accumulation"--a wonderfully descriptive and apt term I think for modern society in some developed countries.

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    1. I love the term, too, Kurt. Maybe my favorite, ever.

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  5. This was an interesting read. I have a tendency to doubt how financially secure I am, even though I probably have more than enough in my emergency fund. I remember reading a statistic that says earning over $75k (I think) hasn't been proven to increase happiness; it just plateaus. Hopefully we will find happiness and security if my boyfriend and I ever reach that point.

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    1. That research was later expanded in another study which said that increased earning do increase happiness, almost indefinitely. Of course, each additional dollar delivers a bit less utility, but the point was that at 75k the switch doesn't just flip to satisfied.

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    2. Interesting stuff, EM. I remember reading that on Mr. Money Mustache. But like Jacob notes, I think the reality is that increased earning can almost indefinitely increase happiness, just with diminishing returns.

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  6. Ah, really great article, like always! I never thought about this from this perspective, and you might be right: we might never stop earning. Which, in my opinion, is not necessarily a bad thing: when I am saving, I am not only thinking about my well being, but I'm also thinking about my kid's well being. Although I do hope that I won't have to support him forever and I will encourage and help him to earn his living, if, God forbid, an unexpected problem appears, I would not think twice about throwing away money to help him. So, in the end, we're not preparing only for ourselves and out well being into early retirement, but also the good of our loved ones... and maybe this mindless accumulation is not that mindless, but a survival instinct :)

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    1. Great comment, C. I bet there is something hard wired into us from tens and thousands of years of evolution. This time of plenty is very new and fairly rare, even today. Over the course of history, it probably was good to get as much of a resource (food, water, whatever) almost regardless of whether it was 'too much'.

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  7. I also wonder about the emotional component to it. Mindlessness often occurrs for a reason -- we don't want to deal with emotions, so we just stop thinking about them, or anything at all. I think it plays a great deal into how we spend what we earn, or why we spend instead of save.

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    1. Thanks for the comment, Zoe -- good you stopped by the blog again. Really insightful thoughts there. I agree that the accumulation ad infinitum really is mindless, but maybe it's a symptom of some other root cause.

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  8. I read this research a couple of days ago, which is funny because I am thinking of posting on the topic as well. Good article and great research. Like you, I question if I understand what "enough" looks like.

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    1. Thanks, Jacob. Would look forward to reading your thoughts on the subject. I linked to hullfinancialplanning because, while I often think I know how much will be 'enough', Jason is quick to point out that I might be underestimating. Maybe by a lot. Then there are these other financial bloggers who have other ideas. The 'safe' thing is just to acquire more, invest more...but that has its own risks.

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  9. I think that is the main question we will all face once we get there. It's one think to just see the goal number on a spreadsheet and think that it's enough. It is entirely another to make the leap and live off that amount. The fear of the unknown is a very powerful thing and one that will keep many people complacent with a current way of life rather than seeking alternatives. I think that's why so many people seeking financial independence have that side hustle. Part of it is to just simply keep boredom at bay but part of it is also that fear that you don't have enough. Something bad could happen and you may need that source of income to supplement the nest egg.

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    1. That sure throws some water on the side hustle image, doesn't it, Micro? I wonder if one of the main motivations is just fear that the nest egg isn't large enough.

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  10. DB40,

    I notice even people within the early retirement/FI realm tend to have a tough time knowing when to throw in the towel and realize they have enough. It seems like the "more is better" mantra is alive and well in all corners of our culture. And speaking of which, I think our culture has a great deal to do with this idea of mindless accumulation. It seems that people tend to identify themselves by a job, and it also seems that our culture places one's devotion to his/her job high on the totem pole. People admire someone who works hard, even if they're not really working smart. I certainly value hard work and do my fair share of it, but at the same time I work hard because it's providing me a means to an end....rather than the work being the end.

    I once wrote about people needing to identify themselves in a manner other than a job title. I identify myself as a son, brother, loving partner, friend, investor, writer, artist, philosopher, fitness enthusiast, and one day hopefully a philanthropist. Not identifying yourself by a job title makes it easy to walk away instead of accumulating more and more because you're scared of what else you might be.

    Best wishes!

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    1. Great thoughts, Dividend Mantra. I tend to get a lot of my identity from my career role. It also ties in to some other family roles that I like, like provider...in some ways, protector.

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  11. Does it factor people's past experiences? My goal is for passive income to eventually exceed anything greater than I ever earned working. Growing up poor with different influences has made me determined to move up, while others are willing to settle for a fraction of that. In future posts I'm going to write about some of my childhood experiences which greatly influence my views of the world and money.

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    1. Hi, Charles. I think in the candy experiment it just differentiated between high earners and low earners, but background wasn't really considered. The application of the candy experiment to money is kind of a leap, and with actual funds, I agree that there are going to be a lot of nuances based on personal experience.

      That said, we all have some figure that, if we had this amount of money, it would be "enough". My enough might be more or less than yours. But in both our cases, it wouldn't make much sense to continue earning and working way past that "enough" point.

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  12. Fascinating but not really all that surprising at the same time!

    With regards to knowing when is enough, as soon as I think I have even slightly enough I'm out of the door! With the caveat of course that there is nothing to stop me engaging in projects during early retirement that happen to bring in a little money, and can always get a part time job or even go back to a career if things really go down the pan.

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    1. You are the third person to note that the results don't seem that surprising...which, I think, means I'm gullible because I was totally surprised. :)

      I'm glad you have a plan and will be executing. Maybe I can steal your techniques to leave the workforce, when the time comes.

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    2. Gullible is probably a bit harsh, maybe you just always expect the best in people, which is definitely a good trait to have! I try my best in that category but with some things I have given up :)

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  13. WOW. Eye-opening study, DB40! It scares me, honestly, knowing that we pretty much all are obsessed in this way. I will be reflecting deeply on this post.......

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    1. That was my response, too, Laurie. In some ways, we're all susceptible to the urge to get as much as we can, not just get what we need. I don't think we personal finance bloggers are necessarily any more immune than the populace at large.

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  14. Very interesting. I feel like I'm going through something similar. As a freelancer, you never know when you are going to have a bad month, so there are times where I work myself into the ground because I want to make as much as I can this month in case next month sucks. But...everyone has a threshold and I think mine is lower than some because I don't like my main freelance gig. It makes working on it a huge drag, and at a certain point I tell my producer that he needs to hire another editor because I'm going to lose my mind. He tells me to "think of the money" but at some point I just don't give a flying _____ about money. I need my sanity, and more importantly balance. As a freelancer you always walk that line.

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    1. I knew eventually I'd be really tired and put the wrong website in. :) You're like Tonya from where? :)

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    2. That's a great angle, Tonya. I'd love to hear more about how a freelancer deals with this particular issue (maybe a post idea?). I do like that you understand the threshold, for you, when you have enough money. I feel the same way a lot of the times (and, I guess the downside is that I'm not 100% motivated to get side income).

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    3. And I know of your other site, too! I'm down. :)

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  15. Interesting for sure. One key difference between life and the experiment is that we get to keep the money at the end of the day. You still feel like you're getting something. Even if that is only money. I think that the fact that they knew the chocolate would be taken away if left unconsumed skews the experiment to have people get as much as they can as fast as possible, then consume it regardless, or it will be wasted. In life, we know it can be saved. Now, many people might just be hoarding their cash. Others though, I'll wager, at least have it in their financial plan to make that money do some good once they've died, or can no longer use it - whether that's charitable donations or simply giving it all to your loved ones. I'm not necessarily advocating for overearning. I'm quite young still, and am slowly convincing myself that I don't necessarily need to chase that 6-figure salary I've always dreamed of. All I'm saying is that hopefully, even if you can't use everything you earn in life, perhaps someone else can. Two cents. Thanks for the thought-provoking post as usual, Mr. DbF.

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    1. Great distinction, MSquared. Money's usefulness can definitely outlive our own, so to speak.

      But I wonder if people are consciously thinking of that altruistic end when they overearn? My gut says they aren't, and that they're simply on autopilot due to the mindless accumulation instinct. Getting more without considering what is 'enough'. Just a feeling though.

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  16. Really interesting study! I think eating the chocolate to the point of pain is like going to a buffet (main reason why I avoid it) - overstuff themselves to get the most bang for their buck, even at the expense of their waistline. I'd like to think that I would be in the camp of being okay with having enough, but realistically I tend to be on the 'just in case' side and would probably work past the point of necessity (but, check back with me when I'm 50, would probably have a change of heart! ;)).

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    1. Great analogy, Anna: the researchers created a weird kind of timed buffet.

      I get the feeling I may lean towards the 'just in case' side, too. Maybe the title of this blog will nudge me to take a risk though.

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  17. I do a pretty good job at not mindlessly accumulating things, but money is a whole different topic. I don't really need more, but fall in the "just in case" scenario you describe. The high earners are used to producing more than they can chew and many won't have time to spend it over their lifetime but it takes a strong mind to change that. My cousin has been making high 6 figures in finance at a very stressful job, claiming he would stop at 40 and now that he is 40 it is obvious he'll never stop. It has to be tough when you don't know anything else.

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    1. That's an intriguing example, Pauline. I think if I were earning in the high six figures, I'd also have a hard time just walking away from that income. I know it's a weird & envious problem to have, but it puts the term 'golden handcuffs' in context.

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  18. Fantastic post. I wonder what would happen if they repeated the study for several days in a row with the same participants. Would they learn their chocolate consumption limits and revise their "work" down?

    It's also certainly more complex - since we do temporarily get to take our chocolate home - for "just in case" our spouse goes on a chocolate binge or inflation drives up the cost of chocolate.

    I would agree with several of the comments around productivity being part of who we are. As a group, it seems that the problem is shifting from income-producing activity to other forms of productivity that are much more satisfying once we hit our earning needs.

    I love the term mindless accumulation. I also heard another term last week that plays well with this conversation - conspicuous consumption. I think this socially-driven need has a big impact on the tendency of the masses to overearn, overspend, and undersave.

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    1. All good points, Emily. We really do get to take the chocolate home. And I love the question of whether the overearners would learn the pointlessness of overearning after a few repetitions.

      You might be tapping into the real motivation with conspicuous consumption. Maybe it's not about the "chocolate" at all.

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  19. I think the study is right on. I'm working a lot less than when I had a full time job, but I'm still working. I just don't have a lot of time to work because I'm a stay at home dad and the kid keeps me busy. When the kid goes off to school full time, I don't know if I can really keep work at the same nice level. It would be tempting to work more and more.

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    1. Hey, Joe. I can see how that presents a unique challenge. Having your son around all the time forces a work life balance. But when your son's gone, that counterbalance on the other end of the seesaw might need to be replaced with something else.

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  20. Weird, I was thinking about this exactly as I put my key into my front door on a Friday afternoon. The answer is likely in the unknown - the how long will you live and how much will things cost. And for that reason, we work more, and save more, and hope to earn more. For the unknown. At least that was my conclusion in that moment.

    In another vein, but similar, I work as much for the great pay, but it fills my day, gives me productivity, sets me goals (for the company, not for my greater good) and I react well to structure and goals. I don't feel my work hours or work load prevents all the other things I want in life - travelling, entertaining, eating nice food etc. To me, I am content. I'm not in the early retirement camp either.

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    1. I love your perspective, Sarah. Work deserves a positive spin, and early retirement doesn't mesh with all of us. I do wonder how happy I'll be when I don't have the benefits of work: clearly defined goals, daily structure, positive feedback for a job well done...

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  21. Very interesting... I'm reminded of an incident that CatMan often likes to refer to. I don't remember the details, but this was from his days working as a community therapist. As the story goes, at one point their clinic had a bunch of visiting psychologists who were working with a "rewards" model as opposed to the "social systems" model that the clinic generally employed. The psychologists were big on handing out "M & M's" to the kids as a reward for the behaviors that they wanted to encourage - which CatMan generally though was idiotic. It wasn't that he didn't believe that people respond to rewards, it was that to him it was blatantly obvious that the kids were already responding to a set of rewards that were a heckuva lot bigger and more meaningful than chocolate candies - things like feeling accepted by their peers or loved by their parents. Those were the "real M&M's" as far as he could tell.

    So I guess when I look at the study, and the general tendency that people in this culture have to work WAY more than is necessary, I have to ask myself what the "real M&M's" are. While I would certainly agree with some of the commenters that the Protestant work ethic comes into play, I also think that in general people just want to be "successful" whether or not that "success" is beneficial to them. I mean, cripes, look at the number of hours people spend playing Candy Crush - it's really hard to tell what the reward there might be, other than succeeding at the game.

    So the question then becomes - how is success defined? In the study, "success" was accumulating candy - whether you could eat it or not. And I think that in this society "success" and status are very highly correlated. So perhaps people keep working and accumulating beyond what they need, because on some level they fear that even if they have plenty of money, retirement will lead to a loss of status. I know for myself personally I struggled with this one when I first quit my job. On the one hand I was SOOOOOO happy to be out of the land of employment, but on the other I had horrible fears that I would become completely "irrelevant" - whatever that means.

    Sorry for the long blathering comment - clearly this topic is very interesting to me! :-)

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    1. Such a great comment, EcoCatLady. The real M&M's metaphor works really well. Like you, and Emily, noted above, conspicuous consumerism (or, I guess in this case, conspicuous careerism?) might be the thing really driving the behavior. The chocolate is a false M&M...

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  22. Some people, such as my boss, continue to work, even though he is "retired." He only works about 8 hours per week but he still feels like he needs to work.He is 70 years old, but looks like he is in his 50s. His father lived to be 106. I don't know if working keeps him feeling young, but I assume he will keep working until something more important to him comes along.

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    1. I kind of like that set up though: only working 8 hours a week sounds pretty good to me. I'd love to find a corporate job that would allow for some very light consulting, or something along those lines. I bet you get a lot of the psychological benefits from working and achievement, without having a huge sacrifice of time.

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  23. I recently had a similar conversation with the boyfriend. In his field, theatrical carpentry, people work hard and party hard. They work one job from 8am-6pm then another from 7pm-Midnight, then go out... And they rarely take vacations. After meeting me, the bf took two long vacations- but still worked quite a bit. When reflecting on the year he was thinking about how much less he made, but then I asked, well, was it worth it? And he said, absolutely. Having that time off to enjoy was so much more worthwhile than the extra money that wasn't exactly necessary.

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    1. Those hours are no joke! I can imagine how valuable that time away from work is when the norm is to put in manual labor for fifteen hours a day!

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  24. Great study and there are many valid points made. However, it misses the point that working and being productive and helping others through one's work are some very important and compelling considerations that may trump over-accumulation. Thanks for the thought provoking post.

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    1. I think those are all compelling reasons to continue working, but there are many roads to Rome. It's important to stay productive and to help others, but the traditional work model requires 40 hours a week to get those benefits: might they be achieved with many fewer hours worked? Or from an endeavor other than work?

      The main problem with the traditional model of employment is that it simply takes up too many waking hours: assuming you have a commute of one hour per day and one hour of 'prep' (grooming, ironing, changing, etc.), ten hours out of, say, seventeen waking hours, are going to that one activity. That leaves a minority of only seven weekday hours to devote to everything else in life: family, friends, personal improvement, community, church, etc. etc. Of course, you get more time on the weekend. But I think it's a poor balance, long term. Those things, I believe, trump the benefits of work...not the other way around.

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  25. Hi DBF! I got a bit burnt out and took a little break, but I'm back now! Hope you're doing well friend. I loved this article - I too worry that I won't be able to pull the trigger when I have enough.

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    1. Phoebe! So glad to hear from you, and glad you're back!

      I thought you might fit in the high earner category, but given the old title of your blog, I'm positive you'll have a great chance of stopping once you have 'enough'.

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  26. "mindless accumulation" = winning!
    "enough" = nebulous concept :-(
    because what you "win" can be taken away later..

    You don't always get to keep the money you earn.
    In retirement, there are often unexpected expenses, and financial reversals.
    There is nothing guaranteed in life, so what is enough can be very hard to define.

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