## Wednesday, November 23, 2011

### Using Elementary Math When We Grow Old, Part II

The subtitle of this blog is normally using elementary math when we grow up. This week it's using elementary math when we grow old. We're talking retirement. Ouch!

Yesterday I provided some obscure formulas that were truly intended to model the growth and shrinkage of retirement funds, and suggested that most retirement decisions were not math-based.

Why retire?
Here are some reasons people give for retiring at the age that they did; only a few involve money:
• I am in poor health and can't perform my job well, or I no longer enjoy my job
• I have lots of
• outside interests and hobbies
• charitable work to do
• I want to move to a new place (city, state, country)
• lower taxes
• better weather
• more family and friends
• I want to use up my children's inheritance savings
Why not retire?
Here are a few reasons that I've found; not all are math-related:
• too many bills right now (house, car, kids, credit cards)
• not enough income or savings for future expenses
• fear of losing friendships at work
• fear of dying after stopping work
• fear of boredom and stereotypical senior activities
What will I do if I retire?
Will I be walking in the mall with a bunch of other folks?

Will I be sitting out on a tropical beach while my hair goes white (if I have any left)?

Will I gather with my fellow seniors on our recumbent tricycles and terrorize our trailer park retirement village?

Or will I be working as a greeter in a discount store?

Notice these are not necessarily financial issues. However, it's true that retirement raises many financial questions. The primary one seems to be:

Will I outlive my money?

At the moment, our country is in debt and we can't continue to pay all the pensions, Social Security and Medicare benefits we once thought we could afford. Some of us won't have as much retirement wealth as we had hoped, because the markets are depressed. So we have more questions:

Where do I live? In what things do I invest? How much do I save? When do I withdraw my money and how much? How can I minimize my taxes?

If I had those answers I would not be writing elementary math curriculum!

The simplest response is to say "Watch your spending, watch your income and balance them. Spend less than you have coming in." That's probably not the best approach for the economy at large, but in my opinion it's the best strategy for a household.

When you look at the big picture, even having the opportunity to consider retiring before we die is an indication that many of us are living in a stable country, above a subsistence level. And for that we can be very grateful.

Have a nice Thanksgiving.