RRJ

Reference:


LIEBER, R. (2009, August 28). How retirees can spend enough, but not too much. The New York Times, Retrieved September 6, 2009, from http://www.nytimes.com/2009/08/29/your-money/individual-retirement-account-iras/29money.html?_r=1&scp=1&sq=).%20How%20Retirees %20can%20spend%20Enough,%20but%20Not%20Too&st=Search


Summary:


Lieber’s (2009) article “How retirees can spend rnough, but not too much” discusses the problems of retirees’ spending in the future. He says that the savings of retirees may not be sufficient to cover their expenses in the future, so some of them used to buy stocks and bonds to get financial returns. However, the changing prices of investment portfolio makes achieving these returns uncertain; also, these returns are affected by inflation. In fact, nobody could estimate how much better or worse stock market returns could be in the future. According to the relationship between the investment portfolio and inflation, if the portfolio lost money in any given year there would be no raise for inflation. In addition, retirees have to wonder whether the market will behave in the future as it has in the past. Experts say that to solve retirees’ problems they should create a separate discretionary fund.


Reaction:


Some retirees enjoy spending their savings for travelling, visiting their relatives, or making life more fun. However, most of them are concerned about the future, and they have to wonder whether their savings will cover future expenses, such as food, rentals, and treatment. Because of increasing prices, retirees try to achieve some profits by entering into the financial markets. In other words, retirees might lose their savings, rather than make profits, because of a lack of knowledge of financial market conditions. In the real world, I suggest that retirees should figure out stocks and bonds which make up their investments before investing; also they should divide their investment portfolio correctly between cash and stocks and bonds.