Tag Archives: retirement savings

By Age 35

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Earlier this month, Marketwatch published an article stating that by 35 years old, a person should have twice their salary saved for retirement.

In my view, an imminently sensible goal, but the Millennial blowback on Twitter was fast, furious, and funny. You know what “they” say, goals should be achievable.

Cases in point:

  • By age 35 you should have at least one fork in your cutlery drawer that you just don’t like, and actively frown at if you accidentally grab it.
  • By age 35 you should have a huge box of cables but you can’t throw them out because you’re pretty sure you still need a couple of them but you’re not sure which ones.
  • By age 35 you should have a kitchen cabinet dedicated entirely to plastic bags that contain other, smaller plastic bags.
  • By age 35 you should have approximately 10 times the existential dread you had when you graduated high school.
  • Listen. Meghan Markle wasn’t a duchess til age 36 so stop telling me what I should have by age 35.
  • By age 35, you should have hoarded more books than any human could possibly read in three lifetimes.*
  • By age 35, you should have a big bag of socks that have no matches that you are afraid to throw even one of them away because as soon as you do, you’ll run into its match.
  • By age 35 you should stop paying attention to condescending life advice from strangers writing think pieces.
  • By age 35 you should have a shitload of books. Some of them you have read and are too sentimental to give away. Others (you know in your heart) you will never read and yet you will keep these as well. All of these books have followed you through multiple moves.*
  • By age 35 you should have one pair of jeans you like and a four shirt rotation.
  • By age 35 you should be able to re-watch Bridget Jones and think ‘You’re only 30 and you manage to afford to live alone?’
  • By age 35 you should have a list of documentaries you tell people you want to watch but you don’t watch them because you just never feel like you’re in the right mood.

Go ahead, give it a go, by age 35. . .

*Alison

 

When to Retire?

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Most people retire as soon as they think they can afford to. Every week personal finance periodicals run stories about people delaying retirement due to the housing correction, health insurance inflation, and in the end, insufficient savings.

Look around and you can’t help but see older workers. Prepare to see more and more. A boatload of sixty, lots of seventy, and even some eighty something half or full-time employees.

While tossing the majority of my mom’s office files last week, I came across a remarkable memo my dad wrote on December 3rd, 1990 to the two owners of the major corporation he was running at the time. Here it is:

The three of us should sit down and have a talk. I’m 65 in 1991, and as we have discussed pensions around the office we’ve used 12/31/91 as my retirement date. We should discuss the future leadership of S&E. I find myself ambivalent about retiring or staying on.

He then listed the “PRO’s for staying” including “we are an organization that works and we have good sales and profit growth.” Then he shifted gears:

The CON’s are: I will have been at the helm for 7 years, and a change in leadership could bring fresh ideas, a different approach and faster sales and profit growth.

Age slows one. It’s something none of us avoid. I find myself like the aging ballplayer—I don’t want to stay on when new leadership could take S&E forward more effectively. Others see the slow down before you do.

I feel too strongly about the company and its future to become an impediment. What are your feelings?

The more I reflect on this memo, the more unique I find it that he’s putting the company’s interests before his own. No one enjoyed his work more than my dad and no one out worked him. Yet, he acknowledges “new leadership could take S&E forward more effectively.” That’s like President Obama saying someone else might have a better working relationship with Congress and accomplish more on behalf of the American people. Or an aging college professor saying students might benefit more from an energetic, 30-something academic.

I don’t begrudge any older, moderate income person their decision to work past their prime, but for older, financially secure people, my dad provides a selfless example worth emulating. The question isn’t just what’s best for me, but what’s best for the company or even the community.

Footnote to the story. The owners did sit down with my dad. Shortly afterwards they extended his contract and also named him Chief Executive Officer of a second corporation they owned.

Breakfast With Marvin

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Mother Dear just moved into a very nice apartment building for seasoned citizens in Tampa, FL. My Betrothed and I are ensconced in a guest apartment on the third of five floors.

Mother Dear isn’t answering her door and the Gal Pal is on a walk. So I’m recovering from my “hot as Hades” morning run by watching the Olympics in the internet cafe. Next, I head to breakfast with the Tampa Tribune sports page. Dallas Clark, the Bucs new tight end, is healthier than expected.

I eventually glance up, and when I do, there’s a grey haired man staring blankly at me. I set the paper on the floor and chat up Marvin, a former technical writer from New York City. He’s happy to answer my questions, but doesn’t ask any. Come on Marv, work with me.

On one level, Marvin is living large. There’s about four or five women for every man in this joint and he’s more mobile than most. But on the other side of the ledger, his memory is failing him. That, in combination with being surrounded by elderly people, makes me think about getting older.

I ask Marvin how old he is and the wheel in his head spins wildly just like when I asked about his apartment number and what his daughter teaches. He was embarrassed he couldn’t remember either one. He also couldn’t recall his age, but he knew he was born in 1933. I told him he was 79 and that brought a smile of recognition. In hindsight, given all the eligible women he’s constantly surrounded by, I should have written his apartment number down for him.

The end of life isn’t really funny. The body breaks down. And the mind. The past, a source of strength for most people, inevitably blurs. Friends die. Loneliness looms. And there’s no promise of watching future Olympics or seeing grandchildren marry.

But with the support of family and friends, it doesn’t have to be overwhelmingly sad either. My sister has pressed pause on her own life and taken my mom under her wing for the last month. Spending day after day wading through her too many possessions, the move would have been impossible without her. My sister’s daughter, my niece, decided to attend the University of Tampa in part to provide Mother Dear moral and practical support. She’s partnering with my sister to smooth the move.

Sitting here, post-waffle, back in the internet cafe once again watching NBC commercials interspersed with athletic competition, I can’t help but think about my own future. How long will I live? How about my Betrothed? Will I lose my ability to walk unassisted? To drive? To live independently? Will I lose my memory? The answer to the last four questions is most likely yes. The passing of time is the great equalizer.

I don’t want to be a burden, but when the time comes that I can’t remember my age, will my daughters press pause on their lives long enough to help me pass into the final chapter of my life as peacefully as possible? More importantly, will I live this next week, month, and year to the fullest given the limits of time? Will I take risks, teach well, love deeply, live purposely?

A sunny, early August Tampa morning filled with many more questions than answers.

Save or Spend?

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There are three types of people in the material world: savers; spenders; and somewhere, someone, who perfectly balances the two. Too bad young lovers rarely get around to asking, “Saver or spender?” because mismatched partners no doubt deal with more than normal stress and conflict.

A consummate saver, I’m a distinct minority. News outlets have been churning out report after report about Baby Boomers not having saved nearly enough for their impending retirements. Look for older and older employees in the workforce.

Recently, a Wall Street Journal writer (article link—Want to Retire Wealthier?) asked, “Why is it so difficult for people to set aside money for the long-term future?”

Then answered, “Low earnings and high temptations are obvious reasons. But perhaps the most basic cause is a fundamental human frailty: We view our future selves as strangers.”

The intriguing article continued:

Estimating with any precision what you will want 30 or 40 years from now is almost impossible. You don’t know your future desires, because you don’t know your future self. What will you want or need when you are 65 or 70 or 80 or older? Who knows?

Viewed this way, it isn’t surprising that the young typically don’t want to save for their retirement, since that stage of life feels as if it will be lived by someone else. And when you save money today on behalf of your remote future self, you deprive your immediate present self of cash you could use right now.

Of course, if you spend tomorrow’s savings today, you won’t have cash when you need it in the future—but that day of reckoning is decades off. That is true for those of all ages, but the lost opportunity is greatest for young people, because money set aside at an early age has more years to grow.

Yet it is highly unusual for people to think more vividly about their future selves than about their present selves, say psychologists.

The project underway at Stanford seeks to close this gap between the present self and the future self, without turning young people into misers. By enabling the young to see themselves as they will be when they are old, virtual-reality technology can transform their urge to spend for today into a willingness to save for tomorrow.

Interesting finding. Pictures of people’s future elder selves inspire them to save more.

Reminds me of the “marshmellow study” described here.

In that study, researchers learned that young children who couldn’t wait to eat one marshmellow (“low delayers”) and thereby sacrificed receiving a second one, seemed more likely to have behavioral problems, both in school and at home. They got lower S.A.T. scores. They struggled in stressful situations, often had trouble paying attention, and found it difficult to maintain friendships. The child who could wait fifteen minutes for a second marshmellow had an S.A.T. score that was, on average, two hundred and ten points higher than that of the kid who could wait only thirty seconds.

You and I know S.A.T scores are inconsequential in the bigger picture, but it’s hard to underestimate the importance of delaying gratification.

I wonder, what’s the secret to striking the best possible saving-spending balance? Put differently, how should one balance living in the present on one hand and in the probable future on the other? And if virtual-reality technology holds promise for helping spenders save more, what might help hyper-savers strike a better balance?