Generating retirement income is laughably easy—as long as you have one piece of information: how long you’ll live.
REVIEW THIS YEAR’S SPENDING. Which expenditures do you remember with a smile—and which prompt a shrug of the shoulders and maybe even a wince? To jog your memory, look back through your bank and credit card statements. Lavishing dollars on stuff you don’t enjoy? Maybe it’s time to change the way you spend.
OTHERS ARE LUCKY. But we deserve every penny we have, right? The distinction between “just deserts” and “just plain lucky” strikes me as far messier than we might initially assume. Consider just some of the ways that we can be financially lucky or unlucky:
Birthplace. If we were born in the U.S. or another part of the developed world, we’re pretty much starting the 100-meter sprint within a few strides of the finish line,
I HAVE MADE SOME glaring investment mistakes over the years. For instance, in my 20s, I was too conservative. I opened an individual retirement account and regularly invested the maximum annual contribution in a mortgage-backed bond fund. I still think about how much further ahead I would have been, if I had invested more of the money in stocks.
In my 30s, I received a $5,000 performance award from my employer. I wanted to invest the money,
IN THE 1990s, when I started working fulltime, conventional wisdom suggested two possible routes to a comfortable retirement: Find a public sector job that offered a traditional pension plan or, alternatively, join the private sector and set aside 10% of my salary each year in my employer’s 401(k) plan. I was led to believe that if I followed either recommendation, I could sit back, let compound interest do its magic and achieve a financially secure retirement.
Jonathan Clements is the founder and editor of HumbleDollar. He spent almost two decades at The Wall Street Journal, where he was the personal finance columnist. His latest book: How to Think About Money.