We baby boomers are confronting retirement. From microscopic interest rates to longer life expectancies to the government’s pending insolvency, we don’t like what we see. From Charles Hugh Smith, at oftwominds.com:
Looks Like I’ll Be Able to Retire Comfortably at Age 91 (January 30, 2015)
My advice is to focus not on retiring comfortably, but on working comfortably.
You’ve probably seen articles and adverts discussing how much money you’ll need to “retire comfortably.” The trick of course is the definition of comfortable. The general idea of comfortable (as I understand it) appears to be an income which enables the retiree to enjoy leisurely vacations on cruise ships, own a well-appointed RV for tooling around the countryside, and spend as much time on the golf links as he/she might want.
Needless to say, Social Security isn’t going to fund a comfortable retirement, unless the definition is watching TV with an box of kibble to snack on.
By this definition of retiring comfortably, I reckon I should be able to retire at age 91–assuming I can work another 30 years and the creek don’t rise.
Since I earned my first real Corporate America paycheck at 16 in 1970 (summer job for Dole Pineapple), I’ve logged 45 years of work. Now if I’d been smart and worked for the government, I could have retired 10 years ago with generous pension and healthcare benefits for life.
But alas, I wasn’t smart, so here I am, a self-employed numbskull.
The articles and adverts usually suggest piling up a hefty nestegg to fund that comfortable retirement. As near as I can make out, the nestegg should be around $2.6 million–or maybe it’s $26 million. Let’s just say it’s a lot.
This presents retirees without generous government pensions two basic problems. One is making enough money to pay the bills of survival and set aside the two million or whatever the number is to retire comfortably.
The average full-time earned income in the U.S. is around $50,000, depending on how the statistics are massaged. At this income, the worker would need to to save every dime for 40 years to assemble the nestegg. Needless to say, this isn’t practical (unless you inherit a trust fund, in which case you don’t even have to bother with earned income.)
The magic solution is unearned income, i.e. dividends, interest, capital gains on investments, etc. If the worker aiming for that comfortable retirement socks his/her retirement nestegg in high-yielding investments, the nestegg will grow over time to the sky (i.e. the $2 million needed to retire comfortably.)
This raises the second problem: identifying those magical high-yielding investments that won’t suddenly turn to dust when the long-awaited retirement approaches.
To continue reading: Retire Comfortably at Age 91
