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Posted by on April 30, 2007, 5:00 am
It appears that some people think so
http://postgazette.com/pg/07119/781935-68.stm
As stated at the end of the article, it is difficult to predict what
unknown expenses you may fact when you reach retirement especially in
regard to health care costs. When looking at it in this way, it's
easy to argue that you can never save too much. However, I do think
each person has to find a balance between saving and spending. A
person has to have some "fun money" to maintain a healthy lifestyle.
If I had a choice though, i'd err on the side of saving more not
less. Thoughts?
Josh
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Posted by joetaxpayer on April 30, 2007, 7:36 am
joshbilsky@gmail.com wrote:
> It appears that some people think so
http://postgazette.com/pg/07119/781935-68.stm
> As stated at the end of the article, it is difficult to predict what
> unknown expenses you may fact when you reach retirement especially in
> regard to health care costs. When looking at it in this way, it's
> easy to argue that you can never save too much.
> Josh
Given the articles we all read, "the savings rate in the US is below
x%", "only X% of 40 yr olds have begun to save for retirement", etc, it
seems to me that Mr. Kotlikoff's article is dangerous. Those who save
obsessively will continue to do so, and the undersavers will cite his
article as 'proof' there's no need to panic. As with any situation,
there is a bell curve. There current exists some small fraction of
people who will actually have too much money saved up. Too bad for them
(that they might have 'enjoyed life' more).
Let's not miss the fact that his writings promote a product he is
selling, ESPlanner, at $149 for the home version.
I am guilty of oversaving, pushing 25-30% when we can. When I can
comfortably replace my income through investments, it's time to retire.
Maybe it'll be when I'm 50 or 55 instead of 62. Better that, than to
find myself 62 and 'needing a few more years' to make up for what I
should have saved.
JOE
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Posted by John A. Weeks III on April 30, 2007, 8:32 am
joshbilsky@gmail.com wrote:
> As stated at the end of the article, it is difficult to predict what
> unknown expenses you may fact when you reach retirement especially in
> regard to health care costs. When looking at it in this way, it's
> easy to argue that you can never save too much. However, I do think
> each person has to find a balance between saving and spending. A
> person has to have some "fun money" to maintain a healthy lifestyle.
> If I had a choice though, i'd err on the side of saving more not
> less.
You never know what the future is going to bring you.
You might end up disabled or sick and not able to work in your
normal profession. If that is the case, you might suddenly
lose your ability to save for retirement. Like the farmers say,
make hay while the sun shines.
At the same time, if something does happen, you don't want
to end up home bound or bedridden, and not having had a chance
to do the things in life that you dreamed about as a youth.
As a result, the retirement savings question is a matter
of balance, and that balance point is going to be different
for each person. Do what you are comfortable with.
-john-
--
======================================================================
John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
======================================================================
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Posted by Daniel T. on April 30, 2007, 8:32 am
joshbilsky@gmail.com wrote:
> It appears that some people think so
> http://postgazette.com/pg/07119/781935-68.stm
> As stated at the end of the article, it is difficult to predict what
> unknown expenses you may fact when you reach retirement especially in
> regard to health care costs. When looking at it in this way, it's
> easy to argue that you can never save too much. However, I do think
> each person has to find a balance between saving and spending. A
> person has to have some "fun money" to maintain a healthy lifestyle.
> If I had a choice though, i'd err on the side of saving more not
> less. Thoughts?
I don't know or care what it is like for the "average american". I'm 43
and my wife is 45, and our net worth is less than zero. I'm worried
about my own problems.
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Posted by on April 30, 2007, 9:04 am
> I don't know or care what it is like for the "average american". I'm 43
> and my wife is 45, and our net worth is less than zero. I'm worried
> about my own problems.
Your net worth may be negative, but depending on your age, you can be
OK. You might have a big mortgage, say, which means your 'gross'
assets are a reasonable number, even if your net assets are not. And
you might have a significant employer pension scheme which is an asset
in and of itself.
If you are on track to pay off your house by your late 50s, and you
are making regular contributions to a 401k or other retirement vehicle
(or you are in a good employer sponsored defined benefit pension plan)
then your gross wealth has a good chance of getting there.
This is if you are in your early 40s, say, and much of your cash flow
is going into equity investments.
The big issues for most in such a situation are:
- eeking out a bit more cash flow, to pay off non-house related
consumer debt, This means taking a hard look at where the pennies
go. $50/month can make a big difference to how much interest you pay
on the life of a loan (and to the size of your retirement portfolio,
once you start investing).
- making sure there are regular contributions to a retirement savings
vehicle, and that those are invested in low-cost equity (stock) mutual
funds. When you have paid off any non-mortgage debt, that is the
place to turn the extra cash flow.
- enough life and health insurance.
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