December 4, 2023
In writing Reflexions On A Retirement Fund, my primary intent was to give anyone with the means the ability to build a meaningful retirement fund. That is, large enough to provide you with a prosperous and well-deserved retirement for as long as you may live while providing a more than worthwhile legacy for your loved ones. Or for any other purposes you might fancy.
I will show that it is relatively easy to build this retirement fund even though it is as hard as can be. Only a minority manages to do so, and I think anyone could be part of this should they have the conviction they can do it and give it enough time.
Secondly, we can all easily understand that not putting some money aside for retirement is not the best bet you can make. Sure, you might not get to retirement age, but regardless, it is still a bet on your life you will have to make, just in case you do make it. Hopefully, you are already on your way. The average life expectancy is about 85 years, meaning you have a better than 50\% chance of reaching it.
I read recently that some of the Gen-Z crowd (18-24) would prefer "soft saving", meaning mostly only doing the minimum (link). Most likely, they have not done the math. Otherwise, they would immediately see how costly such a decision may be.
They advocate using most of the money they make for immediate gratification. They intend to save only a little for their retirement while delaying the process as much as possible. They have the attitude: I will look at it when I get older, when my income will be higher, maybe in my forties or fifties.
It is like they do not understand the math, do not care since they might not be there, or think other people will provide for them when the time comes. There is also the possibility that they aspire to a simple and low-income retirement life with barely enough to get along (read voluntary or imposed simplicity).
It is not a good idea to not save for your retirement for various reasons. True, you may not be there to retire at all and would have had no need for a retirement fund.
There is a prerequisite to retirement: you have to be alive to enjoy it. So, since you might not get there, then go for it. You might as well use most of the money you make before that dreadful and permanent retirement day.
The thing is, not all people reach retirement age. However, if they did not prepare for it financially, well, as the saying goes: they're done and royally. Only people who like their "job" might be interested in working after retiring. Most others work by obligation - if able to - to make ends meet.
What's wrong with "soft saving"? You could reach retirement age truly unprepared for what will follow and with a much lower income than what you could have had by starting earlier and saving more. The Gen-Z "soft saving" crowd could have done something about it while they were younger and able to do so. Later in life, options and ability to remedy the situation might be more limited.
Starting investing early can make quite a difference in how you might live your retirement years. We will elaborate more on this later on. At least we will put some math behind this endeavor.
Before going further, I need to point out you will be the center of it all. It is not something I will do for you; it is something you will do for yourself. It will be your investment decisions and your money. And it will be totally under your control. All of it is dedicated to your self-interest. I hope to be clear on this and show it should become your thing. I will also stress the urgency of it all since your clock is ticking. You will put years into it, money, patience, and perseverance with only a little work.
These reflexions are like a continuation to my paper: The Age Of The Individual Investor, which ended up suggesting that at least 400 million people, if not more, could benefit from it; not only for themselves but also for their children and grandchildren. Hoping you will be one of them.
We will be looking at your future and the future of the planet. I will consider only one side of it, the money side. The questions are:
How much wealth can you accumulate before retiring?
How much more can you generate while in retirement?
It separates the problem into two parts. Both could be considered investment plans.
We will have a build-up phase where you accumulate appreciating and tradable assets up until retirement and a retirement phase where you enjoy the benefits from your investment portfolio as you start withdrawing funds for yourself.
Reflexions On A Retirement Fund will not be about you buying annuities or government pension plans. It will be about you building your investment plan, which will later have part of it acting as your retirement fund, providing you with a more than worthwhile income stream.
I have no product to sell except this idea, an equation, a concept entirely designed for your benefit and under your control. You will have to do the work required (even if it is not much), have the money to do the job, and have the perseverance and determination to carry it out for decades.
Before embarking on such a journey, you have to gain the conviction that you can do it, not as a leap of faith, but by understanding what you want to do and how you can do it. However, as I have observed over the years, understanding is not enough. You need the conviction that what you will do will work, not as a maybe it might, or it could, but simply as it will.
It is as if common sense is not a driving force anymore. Verify the stuff I put out like with anything else. Be sure that the foundation of your convictions is grounded in facts. I like equations to express financial stuff. The reason is simple. I have an equal sign on the table, and it is a brutal statement. It says: it is true, or it is not. So, redo, at will, all the presented calculations to make sure you agree with them.
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Created: December 4, 2023, © Guy R. Fleury. All rights reserved.