Beloit College has once again issued its annual “Mindset List,” this time for the class of 2014.
While much of the press uses this list as a way to emphasize new college students’ youth and inexperience, Beloit describes it as a look at the “touchstones” that may color collegians’ thinking now and in the future.
I’m often asked what I think about the “4% rule” for spending in retirement. According to this rule of thumb, an individual who is planning on a 30-year investment horizon and is holding a broadly diversified and balanced investment portfolio of stocks and bonds, can—with a reasonably low probability of running out of money over 30 years—spend an amount equal to roughly 4% of their total retirement portfolio in the first year, and then adjust that withdrawal every year thereafter for inflation.
For those of you who watch or have heard of the hit series “Mad Men,” you’ll know that the show provides an interesting story line, some fascinating characters, and great commentary on the social mores and gender differences of the late ’50s and early ’60s.
I’ve been watching lately with an eye toward the financial side of life in that era. There are no credit cards to speak of—Don Draper, the main character, peels off cold cash when he asks his secretary to buy Christmas presents for his children. This is pre-401(k)s and IRAs, and Don and his band of not-so-merry marketers left behind whatever pensions they had coming to them when they broke with their old advertising agency to go out on their own. There is little if any dialogue concerning personal investing at all.
The long-term budget outlook for the federal government is bleak. What is surprising is that this is considered news.
The forces driving the U.S.’s long-term budget problem have been known for decades. We’ve also known for years that sometime in this decade, the outlook would begin to worsen considerably. And now it has. And no, the deteriorating fiscal situation has little to do with stimulus spending, bank or auto bailouts, or the wars in Iraq and Afghanistan.
Here’s the good news: Half of Americans are “on track” financially for retirement.
The bad news? The other half aren’t. Read more »
