Good morning, good afternoon, good evening. Depending on the part of the world you’re in. This is Jonathan Satovsky of Satovsky Asset Management, and I want to talk about the importance of saving.
According to Goldman Sachs, reportedly 51% of retirees are living on less in retirement than their pre-retirement lifestyle. 51%. Now, some of it is due to early retirement because of health concerns or layoffs, or other conditions outside of someone’s control. So it reminds me of the importance, whether the markets are up or down, why it’s so critical to save in good and bad times.
In fact, for 2022, the markets for a balanced stock and bond portfolio are down sharply, a lot more than what people expected. This is the fifth time in 94 years. That means 89 years this didn’t happen. Pretty good probability, pretty good odds of positive outcomes, but fifth time in 94 years that both a balanced stock and bond portfolio would be down, and down of significant magnitude. So that’s something outside of our control. You’re not going to necessarily outsmart the five years of 94 that they’re going to go down because you may end up missing out on 89 really, really good years.
So what do we need to do? We need to control the controllables. What we save, how much we set aside, and our spending relative to what we save is what makes people sustainable rather than having to outsmart the world. And that sustainability is getting to a point where you can spend under 2% to 3% of your investable assets. Hard to conceptualize. Start early, start often, and keep at it, because life and longevity are risks that people have to be mindful of.
Have a wonderful day.