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Here's what I have seen first hand. At retirement try to be debt free and have a decent nest egg to go with social security and the IRA and pension if you have one.
Just be debt free. Oh yea also have a spouse if possible to go with you on doctors a appointments. You want to know where the guaranteed income is going to come from. Old age is no joke.
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.
or maybe it's just hard to think of the future when you find it hard to pay living expenses today.
That is because people are too quick to over-commit to taking on big expenses before they are ready (kids, cars, houses, rent too high). There is a thread started on one of these forums where the OP complained that landlords requiring rent to be no more than 1/3 of income was unreasonable. . People just love to hang themselves financially and then blame it on everyone and everything but themselves.
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.
The benefits to saving come long before retirement. I'm only 43 but if I lost my job tomorrow, I know I could live for several years without ending up on the street. I'm getting fairly close to the point where I could probably retire in a nicer 3rd world country without having to work again (although it would be a pretty minimal lifestyle). Just knowing that I've got options adds a lot to my sense of well being.
There is a more simple explanation.... people can always afford things they want... they can never afford things they really need.
Said another way...the default program in our brains is wired for short term thinking. You have to override that program if you want to be well off financially. If you don't override the program, you will buy a lot of stuff you really don't need that really does not make you happy and then will want someone to bail you out when you're old and can't work any more (if not sooner). You'll also probably insist that it was just not possible for you to save.
The default program in our brains is also wired for short term survival, not health or happiness. So those things also require overriding the default programming in our brains.
Said another way...the default program in our brains is wired for short term thinking. You have to override that program if you want to be well off financially. If you don't override the program, you will buy a lot of stuff you really don't need that really does not make you happy and then will want someone to bail you out when you're old and can't work any more (if not sooner). You'll also probably insist that it was just not possible for you to save.
The default program in our brains is also wired for short term survival, not health or happiness. So those things also require overriding the default programming in our brains.
I think desires are more emotional than cerebral. Greed and fear drive economic decisions more times than intelligent thought.
As a society, we spend the majority of our time…
working jobs in which we feel trapped...
in order to get money to buy things we don't need....
in order to impress people we don't really like....
Said another way...the default program in our brains is wired for short term thinking. You have to override that program if you want to be well off financially. If you don't override the program, you will buy a lot of stuff you really don't need that really does not make you happy and then will want someone to bail you out when you're old and can't work any more (if not sooner). You'll also probably insist that it was just not possible for you to save.
The default program in our brains is also wired for short term survival, not health or happiness. So those things also require overriding the default programming in our brains.
i think you are very correct about us being wired for short term survival. our brains always deal with things off in the future like they will never happen.
That is because people are too quick to over-commit to taking on big expenses before they are ready (kids, cars, houses, rent too high). There is a thread started on one of these forums where the OP complained that landlords requiring rent to be no more than 1/3 of income was unreasonable. . People just love to hang themselves financially and then blame it on everyone and everything but themselves.
i think if i was waiting for the right financial moment none of our kids would have been born.
much of our lifes are just swapping priorities assuming we do have an income with some discreationary spending in it and that is the key.
then we just shift gears from eating out , gym memberships etc etc to diapers and formula.
that is how most families afford kids. the real problems come up when no one has jobs,spouses or discreationary income.
Said another way...the default program in our brains is wired for short term thinking. You have to override that program if you want to be well off financially. If you don't override the program, you will buy a lot of stuff you really don't need that really does not make you happy and then will want someone to bail you out when you're old and can't work any more (if not sooner). You'll also probably insist that it was just not possible for you to save.
The default program in our brains is also wired for short term survival, not health or happiness. So those things also require overriding the default programming in our brains.
That's a great point. After all, our ancestors never had to worry about living too long. There were always things to kill people early like diseases and wars. Biologically and mentally adapting to the new life expectancy takes generations to happen.
You can't afford not to - period. Look, I've been there, and I'm telling you it can be done. I don't make a lot of money - less than $70K last year, and my wife only works a few hours a week. We have 4 kids, and yet we still manage to live comfortably and save a decent amount every month. I've been on the other side of the fence, and it was only a matter of making a conscious decision to charge our financial habits that did it for us. If you want to do it, you can, you just have to make it a priority - and no amount of arguing will make me believe otherwise.
I understand that, and I'm not talking about myself. I'm just saying there are people who just don't have anything extra to save, period. Less than $70,000 is a whole lot different than someone who makes less than $20,000.
I do agree that most people can make choices that free up money to save.
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. People just love to hang themselves financially and then blame it on everyone and everything but themselves.
