I am in my mid-twenties, and often think about how much I need to be saving for retirement. I never feel like I am putting in enough money for retirement. This article from CNN Money had some ideas for retirement I didn’t know about. The article didn’t specifically put the information in economic ideas, but these are mine.
I had never thought of retirement in an economic mindset before. Marginal costs could be seen as your spending, and marginal revenues could be the amount that is to come out of you retirement account. To maximize the benefit of your retirement account, marginal costs should be about equal to marginal revenue.
Having a set amount of money in a retirement account doesn’t mean you are going to have a perfect retirement. Natural disasters, accidents, illness, inflation, and rising costs all take their toll on your time to relax. Retirement involves risk.
In retirement, you typically live off an investment account that has been accruing money over the time you were working. There are many types of retirement accounts and ways to invest. The article talks more about a specific way to have money to spend, called an annuity. An annuity is receiving an amount of money over a number of periods. In the retirement aspect, you can purchase an annuity to guarantee yourself some cash flows.
An annuity can hedge the risk faced by retiree’s. The CNN article says a typical $100,000 annuity can bring in $555 a month for a man and $530 a month for a woman. The type and amount of the annuity you pick depends on preferences and needs. The point is “to ensure that you won’t run out of income late in life” (Updegrave, 2015). By spending some money early in life for an annuity, you can still have money in savings for retirement and the risk of casualties.
Updegrave, W. 2015. Make sure your retirement savings last a lifetime. Retrieved from:http://money.cnn.com/2015/11/25/retirement/retirement-savings-annuity/index.html?iid=SF_LN