KEY TAKEAWAYS: 

• An experience today is worth more than the same experience pushed off to later because health, circumstances, and the people you'd share it with can all change.
• Meaningful memories pay you back. Research shows recalling a happy memory can measurably buffer stress.
• Delaying a desired experience for a specific goal makes sense, but delaying "just in case" is usually where under-living becomes the real risk.

What's a dollar worth when it comes to living your ideal life?

Finance has an answer for what a dollar's worth over time in a foundational concept called the time value of money (TVM): a dollar today is worth more than that same dollar received later, because a dollar in hand today could be spent now or invested and grown. 

If one decides to delay the utility that dollar could provide today and instead decides to invest it (say at 4% risk-free), they would need to receive at least $1.13 three years from now (1.04 x 1.04 x 1.04) to make not using that dollar today worthwhile. TVM gives you a framework to compare the value of a dollar received at different points in time and it is used regularly to make all kinds of decisions in finance.  

But that question about what a dollar is worth gets a lot more interesting once you stop asking it about money and start asking it about your life. As retirement specialists dedicated to helping people live their best lives, we tend to think about the cost of delaying experience (such as the things that go on a retirement bucket list) in a similar way. We think there's a parallel to time value of money worth taking just as seriously: time value of experience.  

In this Insight, we explore why and give you a framework you can apply when making decisions that have the tradeoff around spending on an experience today versus saving that money for later. 

Does Experience Have a Time Value As Well?

We firmly believe that an experience that could be enjoyed today should be worth more to you today than at some future date. While the math may be less quantitative and clear than TVM, we believe this for three reasons:

1. The future is not guaranteed
2. Feelings and circumstances change
3. The experience dividend

Let’s look at each in more detail.

1). The Future is Not Guaranteed

Delaying an experience that can be gained in the present until a future date is risky. Far more risky than the 4% risk-free rate alternative that could be earned in the TVM math. Here’s why: There is no risk-free return equivalent to life and health.  

We’re not trying to be morbid, or stoke fear, just pointing out the reality that the future is full of unknowns.  Death and disability can and does happen unexpectedly. Keeping this reality in mind helps to place the proper weight on just how much of a tradeoff it is to delay an experience to the future. 

2). Feelings and Circumstances Change

Many people make the unfortunate mistake of delaying current wants and experiences thinking they will just get it or do it later. The problem with this logic is that it assumes you will feel the same about the things you want today in the future. 

That cool car when you’re 18 just doesn’t fill you with that same sense of pride and joy when that car is not such a big deal in your 30’s. That adrenaline pumping thrill of skydiving out of an airplane with your friends in your early 20’s doesn’t sound all that appealing in your 40’s as you’re supporting a family. That adventurous international trip to Bali or the Maldives in your 50’s isn’t worth the 20+ hour flight in your 70’s.  

Your feelings evolve because your circumstances do. Assuming your future self will want the same things your present self wants is a bet that usually doesn't pay off. Every one of those missed windows is a positive memory you didn't get to make, which, as you'll see next, has a real cost. 

3). Experience Dividend

Bill Perkins popularized the term “memory dividend” in Die with Zero (2020) to describe the ongoing value of meaningful experiences. The idea of a “memory dividend” is that a meaningful experience delivers value beyond the moment it happens. You of course enjoy the trip, event, adventure, time with loved ones when it occurs, but then you continue to receive value through the memories, stories, and relationships it creates.  

Decades later, you can still call up the feeling just by thinking back on it. Certain experiences also change you as a person or perhaps allow you to meet people you would’ve otherwise never met. 

Investing in an experience (or memory) today that can yield an emotional dividend over your lifetime that continues to bring you joy throughout your lifetime. And, it turns out this isn't just a nice idea but that there's real research behind it. A 2017 study out of Rutgers University found that people who recalled a happy memory after a stressful experience had a smaller stress-hormone spike and felt better afterward than people who recalled a neutral memory. A follow-up study from the same researchers found something else worth knowing: memories shared with other people did more to buffer stress than memories made alone. In other words, it's not only that you remember something good but also who you were with. 

“A meaningful memory isn’t just something nice to reflect on, but also something your mind and body draw on for strength later when life gets hard.” - Anthony Watson, CFP®, CFA, RICP®

A Framework for Deciding Whether to Invest in an Experience or Hold Off

Our point is not to encourage reckless spending or to encourage retirement before one is mentally and financially ready to do so. Rather, we want to help you recognize and avoid postponing meaningful experiences until a period when they may no longer be feasible or valuable in the same way. You do not get the time back and you will forever lose an opportunity to create a positive memory, which will continue to pay off.  

We provide a short framework that allows you to compare the value of an experience undertaken at different points in time so you can apply it to your decision making. So if you’re not sure whether to invest your money into a certain experience now, here is the four-question framework: 

1. Is this something you can still do later? 
   Some experiences don't care much about timing. A cruise you take at 65 looks a lot like the one you'd take at 80. Others are tied to a window that closes: a physically demanding trip, time with aging parents while they're still able to travel, or watching your grandkids at an age they'll only be once. The tighter that window, the more delay actually costs you.
    
2. Will you still want this later or does it just feel that way now? 
   Not every want has staying power, and it's worth being honest about which kind you're dealing with. Some fade on their own; others don't. The question is whether the value of this particular experience depends on doing it now, or whether it would mean just as much a few years from now. Is this a memory that your future self will be proud or happy to look back on if you do it now?
    
3. Who's this with — and does that change if you wait? 
   This is the part people miss. An experience shared with your spouse, your kids, or your grandkids while everyone's healthy and available carries more weight than the same experience taken alone, or taken later once schedules, health, or relationships have shifted. Sometimes the limiting factor isn't your money or your body but also the health and schedules of your loved ones.
    
4. What are you actually saving this money for? 
   In considering whether to save money for retirement (or for other future goals) versus investing in a current experience, this question matters most. If you're delaying an experience for a specific goal — a number, a date, a plan you can point to — that's a reasonable tradeoff, and this framework isn't arguing against it. But if the honest answer is "just in case," with no number attached, that might be worth reconsidering because this is usually where under-living and underspending becomes the real risk.

We also want to point out that delaying an experience is not a linear tradeoff. The longer you push an experience off, the more you need to gain in return to make that delay worth it — not just a little more, but proportionally more. How much more will be dependent on each person’s unique situation and financial resources. This has practical implications. If you're grinding at work for two extra years to build a cushion out of an abundance of caution, the true cost of that delay may be higher than it feels at the moment. 

So, what's a dollar worth when it comes to living your life? It depends on what you're trading it for, and when. Money set aside with a real purpose behind it is worth protecting. Money held back out of vague caution, while a meaningful experience slips out of reach, may be worth less than you think. The goal was never to spend without thought but to make sure the tradeoffs you're making are the ones you'd actually choose, if you stopped to ask.

If you're weighing a decision like this right now or just aren’t sure how much you should be saving towards retirement, get in touch with one of our retirement planning specialists to help you see the full picture so you can decide without making unnecessary sacrifices.