“Shoot Low, Boys—They’re Riding Shetland Ponies”, the funny title of a book by the Southern humorist Lewis Grizzard, captures a concealed truth that one’s actions need to fit the circumstances. Retirees and near-retirees increasingly need to “shoot low” as they plan ahead.
Income Growth and Lifestyle Creep. Recent research shows that most income growth occurs early in working careers, and that income growth flattens out—or even declines in real terms—by the early fifties. These findings have important implications about the lifestyles that are affordable in the future. The clear message is to keep an eye on “lifestyle creep.”
The Race to Zero and Still Racing to Zero. If interest rates are low, either you need to work longer or you need to accumulate more assets. Demographic factors are driving many of the key economic and market trends in the world, according to demographic expert Richard Hokenson. Aging populations crush inflation. These predictions were made in 2011 and affirmed in 2013 in interviews for CFA Magazine.
Estimating Long-Term Market Returns. If your return estimates are too optimistic, you run the risk of not being able to retire on time or pay for a child’s education. If you’re too pessimistic, you may needlessly sacrifice some of your current lifestyle by over-saving for retirement. Each year Charles Schwab calculates long-term return estimates for stock, bond and cash investments.
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J. Mark Nickell & Co.
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