Why You Shouldn’t Bother To Save For Your Retirement
July 06, 2017

Why You Shouldn’t Bother To Save For Your Retirement

“I don’t want to invest money,” said the young, bearded schoolteacher. “Do you have a trust fund?” I asked. He said no. “Have you married a wealthy spouse, or perhaps someone who’s going to be eligible for a defined benefit pension?” He smiled and said no. It was a weird conversation, considering the venue.

A group of American teachers had flown me to Kuwait. They had asked me to teach a workshop on saving and investing. During a 5-minute break, that young man thanked me, smiled, and stood up to leave. I wondered why he came. But I also figured there might be something I could learn.

What are the arguments against investing? Perhaps I needed to know. After all, I have long felt that responsible voters should be able to argue convincingly for two opposing political candidates. Only then, I figure, are they qualified to vote. Why should thoughts about investing be different?

In one sense, I’ve bridged two contrasting worlds. I write about investing. Many of my friends and colleagues think much as I do. But I’ve also broken bread with Bohemians who claim to hate investing. Some of their points might be valid.

Many wonder why they should save money for a future when that future might not come. Business Insider published mortality graphs using data from the Social Security Administration. There’s a 20.7 percent chance that a 40-year old male won’t see his 70th birthday. That’s almost one in five. For women, there’s a 14.5 percent chance.

Most of us have lost friends or family members early. Last week, I met a 51-year old woman named Kate. She and her husband haven’t saved for their retirement. But twice, they’ve saved enough money to take a year off to travel. “We were young enough to enjoy it,” Kate said. “Some of my friends died young. They never had that chance.”

There are also things mortality charts don’t show. Sure, a 40-year old man has a 79.3 percent chance of one day turning seventy. But what are the odds of him having the strength to hike the Grand Canyon? Could he handle the hundreds of steps around the majestic temples of Petra, Jordan? Would he have the knees to climb to Everest’s base camp or walk China’s Great Wall? Could he ride his bike across town or play soccer with his friends?

Plenty of retirees in their 70s and beyond can do all of this, and more. But large numbers of them can’t. That’s another reason why Kate and her husband want to do it while they can.

Perhaps they’ll feel regret if their health holds out–if they don’t have enough money to enjoy their golden years. But my friend, John, might argue otherwise.

He didn’t save. Today, he’s in his 70s. He and his wife sailed around the world when they were in their 40s. They traveled coast-to-coast in an RV when they were in their 60s. They saved money just to spend it. Neither of them has a defined benefit pension, a 401(k) or an IRA account. Instead, they earn a combined $33,000 a year from Social Security payments.

The couple lives in Mexico. Their lifestyle would cost them four times more in many U.S. cities. They’re also debt-free. Money might not buy happiness. But a University of Wisconsin study titled, “Household Debt and Adult Depressive Symptoms,” says debts are linked to misery. A Purdue University study said much the same thing. Perhaps people who strive to be debt free can enjoy retirement without investing money.

Still, I would never recommend this for someone who is young. Time is the friend of compound interest. Investing small sums, over long periods of time, can reap huge rewards without sacrifice. Last year, I wrote about a woman in her 30s who has about $300,000. She has never invested more than $5,500 a year. That’s about $15 a day. It hardly counts as sacrifice.

This brings me back to that bearded young man who didn’t want to invest. I understand the points that he might argue. But he’s young. He still has so much time. Not investing for his future, when time can make him money, might be something that I’ll never understand.

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