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I came across this article which results from a behavioral economics and psychology study. According to the study, people tend to save more if they can picture themselves in retirement.
a lot truth in that. we are a funny people we are so disconnected from the old age and death experience that we really are able to stay in denial about it all under the last moments.
or maybe it's just hard to think of the future when you find it hard to pay living expenses today.
Define living expenses. A lot of people think thats a brand new car and every shiny gadget the feel they should have. People always seem to have money for what they want but never for what they need.
our goal was always to live better in retirement than we did working ,saving and raising a family.
as humans don't need much except a tent ,a loin cloth and food.
The converse of that is that a lot of people save for future retirement because they have an unrealistic picture of their future selves. They imagine themselves being rich retirees, when their nestegg has been eroded not just by inflation, but by at least one serious downturn in the value of securities during their working lifetime. I know plenty of people who expected to retire at about 50, and then lost a sizable chunk of what they thought was their retirement.
They also fail to consider the fact that when they reach 70, they will lack the stamina and enthusiasm and even the basic sound body or an energetic mate to be able to do all the things that they will wish they had spent their money doing when they were younger. Your seventies is no time to start backpacking through South America or climbing mountains or driving a Porsche -- it just isn't in you anymore, and you've let it all slip through your fingers. And you just wind up in a high-class nursing home, dimly aware of your surroundings.
Truth.
My wife and I meet the employer match on 401k and max our IRAs each year. We do not know anyone else that does this.
That's a lot of coin every year. Most people don't have that much to begin with. The rest have a more typical either/or choice to make. As illustrated by society, we continue to choose our life, family and the valuable opportunity called health and youth to pursue our avocations, desires and emotional wants with that money instead. I certainly don't regret it. Its an investment into my own sanity and economic future.
Saving everything I made and living like a miser would be the quickest way to cure me from wanting to get up in the morning and working at all. By spending the money I make to do the things I want to do today, I'm investing in the motivation to wake up in the morning and contribute to society. Im not being hyperbolic either. If all I had to show for my troubles is a bank account in my 60s and a monastic life, considering my level of intellect and self-drive, I'd probably be doing pretty detrimental things for society (life of organizaed crime, terrorism et al). That's not a threat either, that's rational human motivators.
But that's me of scarce resources. If I could max those contributions and pursue my avocations and family expenditures simultaneously, then sure, there would be world peace and flying unicorns. Alas, most households make 60K. Good luck making sunshine on that.
Define living expenses. A lot of people think thats a brand new car and every shiny gadget the feel they should have. People always seem to have money for what they want but never for what they need.
Truer words have never been spoken. People don't seem to understand that coffee, cigarettes, booze, eating out all the time, new cars every few years, iPhones, iPads, and memberships to Netflix and Redbox aren't NEEDS. It drives me nuts when I see people like this complaining about how they don't make enough money and can't save for retirement. People who pay $100 or more a month for a cell phone plan or $200 or so per month for smokes and then complain that they can't save JUST DON'T GET IT.
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