Quote: (02-20-2013 06:28 AM)cool Wrote:
Quote: (02-19-2013 12:47 PM)scorpion Wrote:
Our modern idea of retirement is a total historical anomaly. It has only existed for a few decades. Through history, most people never retired. They worked until they were physically unable to continue working, then they moved in with their children and made themselves as useful as possible around the house until they died.
The idea of slowly accumulating and investing money over a 30-40 year period and then living off the interest/dividends is not a bad one, it's just not as foolproof as people think. It makes a lot of assumptions which don't always happen in the real world. The main thing is that it requires a great deal of financial and market stability, and relatively low inflation. That has been the environment for the past few decades, but the future looks much more uncertain.
You could work for 30 years, living frugally and investing your money carefully, only to have your entire nest egg wiped out by hyperinflation or a market collapse. You would have lived your entire life for a day that would never come. The emotional toll that would take would be devastating. Many men have killed themselves when faced with that kind of spectacular loss.
I think it's important to remember that life is lived one day at a time, and that day is always today. Don't become so focused on a future that may never arrive that you fail to enjoy the present, because ultimately that's all you will ever have.
I met an American in Medellin who fit this type. He worked as an engineer in Silicon Valley and lived frugally saving a great percentage of his take home pay each month. Then in 2008, after he had essentially retired, the stock market crashed and he lost something like 50% of his nest egg. I think he worked like a donkey all through his 20s and 30s with this dream of living off his investments as an expat.
It seemed like he sacrificed a lot pursuing this dream of financial freedom in later years. That would be quite a bitter pill to realize your dream and then lose it.
And now, 4 years later, his stocks should be right back where they left off, assuming he wasn't a dumbass and sold off at the bottom...