Funding your retirement
When most people think about finally cleaning out their desks (or toolboxes, or whatever the case may be) for the last time, the first exhileration of finally being “free” is quickly tempered with the not-quite-so-fun question about how they are going to support themselves. For people who do not have pensions, or whose pensions are not adequate to fund their retirement fully, savings for retirement are an absolute necessity. Broadly speaking, there are two models for funding your golden years: retirement nest egg, and retirement cashflow.
Historically, the more common model has been the nestegg. You try to make pile of money that is big enough that it will last longer than you do. I remember a great-aunt of mine who followed this model. She (somewhat morbidly, although always with good humour) used to say that she could only live until she was 92 because that was when her money was going to run out. The good news, if you can call it that, is that she timed things right, and passed away early in her 91st year. Still, I can’t help but think that even if she didn’t seem to feel too much stress at the thought of running out of money, I certainly would. (Then again, maybe she didn’t share all of her financial worries with a teen-aged grand-nephew.)