The Flinchum File
Thoughtful Economic Analysis and Existential Opinions



As people contemplate retirement, they often go to a bank broker to see if they will be prepared for it, financially.  The broker will plug a few numbers into his laptop and tell you the odds or probability that you will be prepared, measured to two decimal places, such as a 72.84% probability, for example.  This is called a Monte Carlo analysis, and it is ridiculous to believe that every broker’s laptop can predict the future in such detail.  Maybe, qualitative issues are more important that quantitative issues.

Looking for “THE MAGIC NUMBER” too early can obscure more important considerations.  A useful early exercise is to assume you have a stroke today and can no longer work.  If your home is paid for and you have enough income already, then why are you still working?  Just to fatten your retirement?  For what?  When would be the earliest convenient time to have that stroke?  Is it possible that you like your work more than  you realize?  Instead of fattening your nest egg, should you be buying disability income insurance instead?

This exercise should be a conversation with a trusted family member.  Without a verbal conversation, your thoughts won’t get the air-time they deserve.  Don’t just think about it.  Talk about it!

But, don’t even try to have that conversation with your bank broker and his laptop!

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