The Temptation to Compare Ourselves to Others, by Scott Stolz, CFP, RICP (week 15)

 

My wife and I spend the summers at Lake of the Ozarks in Missouri.  We are fortunate to have a home on the Lake that my wife inherited from her parents.  While we typically have some extremely hot days there in the summer, it’s much more pleasant than the Florida summer heat.  Not surprisingly, most people associate Lake of the Ozarks with the show “Ozark.”  If you’ve watched the show and never been to the actual Lake, you would assume that it’s a pretty rustic place with mostly small cabins and the occasional boat or two.  Nothing can be further from the truth.  Even after 5 summer stays at the Lake, I still marvel at the number of mega mansions and $500,000+ boats.  The picture below belongs to our next-door neighbor.  Trust me, our house pales in comparison.

A large house with a pool

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While this house is the largest by far on our street, if you take a short boat ride in either direction from our house, you will see countless houses that are comparable.  And if you have a house like that, you have to have a large dock with 2 if not 3 boats.  And at least one of those boats will likely have 4 or even 5 motors.  For many of these people, this is their vacation home, and they are only in residence a couple of months a year if that.  We see the same thing in our primary city of St. Petersburg, FL.  Condos that sell for $1,000 per square feet sit vacant much of the year.  These too are second or third homes for many of the owners.  I can’t help but wonder how so many people seem to have so much money.  The key words here are “seem to.”  Maybe they do and maybe they don’t.  Unless we live next to Elon Musk, Jeff Bezos, or Bill Gates, we never really know how our neighbors are doing no matter how big the house is.  But that doesn’t stop us from making comparisons.

A group of boats on a body of water

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Typical Summer Weekend at Lake of the Ozarks

 

Author and Podcaster Mogan Housel has a theory about how this makes us feel about our own situation.  In fact, he covers this is his most recent podcast (Two Big Stories That Help Expl… - The Morgan Housel Podcast - Apple Podcasts.  Basically, his theory is that we judge how well we are doing by comparing ourselves to others.  If they appear to be doing much better than we are, we feel left behind – even if we are doing just fine.  Forty years ago, this comparison would be made against our neighbors and close peers.  Since they lived in the same neighborhood, sent their kids to the same schools, and hung out at the same places, everyone seemed to be on an even footing.  And think back a moment.  How many of you took family vacations to Europe or fancy cruises?  My family only went to places that were easy to get to by car.  I can only remember taking one plane trip before I was in college.  In short, our world was much smaller than it is today, so these comparisons were made mostly against our peers.  Housel points out that in the world of the internet and social media; we are now comparing ourselves to people all over the world.  We can now follow their lifestyle in real time.  It’s easier than ever to assume that we are falling behind.  This in turn can lead to much of the divisiveness that is so prevalent in our world today.

This can be a trap for retirees in particular.  We all want that perfect retirement that we see in the commercials and the brochures.  We want to take that fancy trip abroad, buy the big summer home or the fastest boat.  That can cause us to either overspend in retirement or become bitter if we feel as though we are missing out.

A person and person looking at a computer

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We all know that this is not the frame of mind that leads to a happy and satisfying retirement.  We may not have the mega mansion on the lake or the fastest and baddest boat, but we have a perfectly nice house that we love and boat we enjoy.  And that’s more than enough.  I often have to remind myself of that when I go by our neighbor’s house.  As the Rolling Stones famously said, “You can’t always get what you want, but if you try sometimes, you just might find you get what you need.”

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