William Bernstein explored the fears of many people such as the retiree, and the young
savers as this people ponder on their saving and investment patterns. The author asked if
an individual will have enough when he or she retires. We all seek to defer present
consumption by saving for tomorrow because nobody can predict the rainy days. The ways
an individual spends his or her saving is paramount in determining asset allocation. Apart
from future consumption, one also save for a child’s education, a home, emergencies and
retirement. Bernstein advice investors or young savers to manage all their assets as one
portfolio such as personal savings, retirement, emergency and college. By so doing,
investors or young savers will simplify their financial management, reduce expenses, and
increase his or her chances of success.
Saving for retirement is one of the basic reasons people endeavor to save. Various market
scenarios affect young savers and older retirees in different ways. The author
recommended that retirees need to plan or save for more than 35 years of retirement and
they need $40,000 per year in retirement. Older retirees only need to spend at the most
3-4% of their portfolio nest egg to ensure they don’t outlive their saving. To arrive at a
close amount of one’s retirement, estimate your living expenses, including any taxes you
own on your retirement withdrawals, and adjust from social security and divided by
expected real rate of rate. Risk and inflation should be taken into consideration. Young
savers or old retirees cannot expect to receive the same return each and every year.
