Archive for the ‘Retirement’ Category
It’s OK To Live A Little In Retirement is the first thing I sent him. Fortunately, he and his wife have been great savers and are in a position to enjoy the fruits of their labors. This can often be harder than you would expect as chronic savers can sometimes find it hard to shift gears and relax the purse strings on discretionary spending.
“The rest of the world sort of laughs at the United States — how can a great country like the United States get so many things wrong?” said Keith Ambachtsheer, a Dutch pension specialist
From the NY Times’ “No Smoke, No Mirrors” on the excellent Dutch pension system. At the end of the article is an interesting debate that is growing in the Netherlands, pitting younger workers who want growth from their pension assets vs. the retired who want safety. Not unlike mufti-generational family trusts, writ large
Given that we are living longer than ever and that many of us will not be able to afford a post-career of 30 years without additional earned income (and what would we do with all that free time anyway – more than 10,000 days…), how about taking a year off every 5 years or so while you are still young enough to do the really interesting stuff? NPR tells this fascinating story of Winston Chen, who at age 40, took a year off to live with his family on a remote Norwegian Island.
Of course, the story avoids addressing the practical matter of career disruption that would disrupt the lifetime earnings potential for most of us. For now it would seem. this intriguing model is restricted to tenured professors and a few others. But as the realities of our having to work many years longer, perhaps social norms around work will progress to permit this sort of mid-career sabbatical for the typical worker.
Many, many, years ago, a colleague who happens to be an actuary complained to me at every opportunity about what the emerging change from pensions (defined benefit and social security) to retirement schemes like 401ks was going to mean for the future of retirement savings. “No good will come of this,” was the essential message. He groused that individuals would make poor investment choices, save insufficiently and only discover the resulting shortfalls when it was too late. Of course, this was the mid-1990s. Stock markets were routinely going up 20-30% per year and individual retirement accounts were soaring. Richard’s was a lonely voice indeed. Since then of course, we have had the Dot-Com collapse and the 2008 financial crisis, which combined to bring us the infamous phrase “201K.”
Duncan Black (aka the political commentator Atrios) writes in a USA Today editorial with the above title:
The 401(k) experiment has been a disaster, a disaster which threatens to doom millions to economic misery during the later years of their lives. Proposals to improve our system of private retirement savings — even good ones — will offer little to no help for the baby boomers who are currently nearing retirement, and are also unlikely to be of sufficient help for current younger workers….
Black’s op-ed is just one more voice adding to the chorus of concerns that baby-boomers, and even worse, those who follow, are facing a very much less financially secure future than that of their parents’ generation. In hindsight, this is just one further manifestation of the persistent over-spending (under-saving) we as a nation indulged in from 1980-2008. In this morning-after our twenty-plus year party, the bills are just starting to come due. And I do not see these fiscal imbalances being easily resolved or without considerable pain. The vitriolic political fights that are our steady diet are simply a factional debate over how to apportion the burden of these accumulated obligations.
Richard, it was 1995 and you were so right.
One of the biggest challenge for a financial planner is “longevity risk.” Simply put, we generally do not know how long we will live. The typical response of most individuals when told they could easily live into their 90s, “Oh, I won’t live that long.” But the truth is more and more of us are living that long and this possibility can have a major impact on the financial choices one makes earlier in life. For those readers who may be underestimating their potential for longevity, I recommend taking this 10-minute quiz at Living To 100. (Note: I recommend using a dummy or rarely-used email address for the required sign-up as the site will send a fair amount of age related email solicitation.)
This Marketwatch article provides a quick overview of the issues that will affect a US citizen who retires overseas, and it provides links to useful resources. A good place to start for anyone considering this move.