The bad news is that you are probably thinking about it all wrong. The good news is that you are probably better off than you think.
Whatever you’ve been told about your retirement, odds are that it’s wrong. Saving enough for your retirement, and investing the right way, are truly among the hardest of all financial problems. In many ways, it’s more difficult than running a large endowment or hedge fund — and yet we all must do it.
The challenge is to make your money last a lifetime while facing uncertainty about the future of markets, your income, your health and your longevity. Meanwhile, all the misinformation and bad advice out there makes retirement finance harder than it needs to be. In an effort to make things a little easier — and with full knowledge that one column can do only so much — here are three myths about retirement.
The idea of maximizing returns is the original sin of retirement investing. I blame the evolution of wealth management. For many years, most Americans did not invest in financial markets. In 1962, only about 23% of US households owned stock, and most tended to be very rich. Their goal was to keep their pile of money as big as possible. There were pension funds that invested for retirement, but they did so on behalf of many people of different ages, so they had more scope to diversify.
Continue reading the entire piece here at Bloomberg Opinion (paywall)
___________________
Allison Schrager is a senior fellow at the Manhattan Institute and a contributing editor of City Journal.
Photo by sculpies/iStock
