Most retirees work because they need the money

Some work for other reasons, of course, but most simply don't have enough money for retirment: Retirees back at work (USA Today, 6/8/05)

According to a CNN Money columnist, many Americans may be happy with their paltry retirement savings because they are unrealistic about the amount of money required for their retirements:

Our low savings levels in part may be due to the fact that a lot of us are laboring under false notions about how much money we need to finance a retirement – which for many of us will not include a company-paid pension with health benefits.
According to the survey, 10 percent of workers think they will need less than 50 percent of their pre-retirement income to live comfortably in their golden years; another 28 percent think they'll need somewhere between 50 percent and 70 percent.

What's more, 6 out of 10 workers said they do not expect their standard of living to decline, while nearly 5 out of 10 workers who have not saved at all feel at least somewhat confident about their ability to have a comfortable retirement.

Now I need an Advil. Maybe my next column should be about logical reasoning.

Retirement savings falling far short

Job Satisfaction Advice

In Marty Nemko's latest column, the career/job advice expert lays down his "6 most important career tips", one of which is:

Don't focus on finding a so-called dream career. Focus on getting your career non-negotiables met. It's extraordinarily competitive to land a well-paying job in most so-called dream careers -- for example, law, investment banking, acting, art, sports, nonprofit work, fashion or TV. And once in, dream careers so often turn out to be disappointing. Because so many people want to be in those careers, bosses can demand absurd work hours, be unkind, etc.

Sure, if you're brilliant, driven, winsome and/or well connected, all options may be open to you, but let's say you're a mere mortal. In a less-competitive career, you're more likely to find the things that lead to true career contentment: a kind boss, nice co-workers, opportunities to keep learning, a reasonable commute and a middle-class living.

As long as the compensation is middle-class, your contentment won't be impeded by a lack of income. Study after study shows that wealth doesn't increase contentment. Yes, the extra income may enable you to buy that new suit or new car, but the happiness derived usually fades quickly. After that, you'll seek another material fix and that too will soon wear off, whereupon you'll need yet another fix. Dan Pink, author of the new book, "A Whole New Mind," calls this, "The Hedonism Treadmill." Ultimately, contentment comes mainly from love and from good work.

Bad news for those who want to follow their dream, believe in doing what they love for a living, or who want to live a middle-class lifestyle that includes owning an average-priced home in many parts of California, apparently:

[T]he California Association of Realtors' monthly affordability report for March saw San Diego County again sink to its lowest level ever. The association said the affordability rate for the county was 10 percent, which is the percentage of households earning enough money, $137,758, to buy the median-priced home [$484,000, up 10.3 percent from a year ago] with a 20 percent down payment on a 30-year, fixed-rate loan. Santa Barbara and the Northern California Wine Country had the lowest affordability level of 9 percent.

County housing market decelerates San Diego Union-Tribune 5/13/05

See also 18% able to afford home Los Angeles Daily News 5/6/05 (18% of Californians earn enough to afford a median-priced house: "The median-priced California home -- with half priced above and half below -- cost $495,400, and it took a minimum annual income of $115,910 to buy it.")

What Money Can Buy

Living well is the best revenge. - Gerald Murphy

One man's take on what money can buy:

Socrates was right: ultimately, of course, possessions cannot bring sustained happiness. But houses, cars, artworks, elegant clothes can nonetheless be amiable distractions until such time as one figures out how to attain the real thing, genuine happiness. And for those not in contention ever to receive happiness via truth at the Socratic level, they offer some of the best entertainments the earth has to offer. For those of us not operating on the Socratic heights, possessions can rank high among life's pleasures....

I try to remember when I first recognized that that the world contained superior goods and that I didn't possess them. I half suspect this sad knowledge came with leather. As a kid on the playground, I did not have one of the best baseball gloves, all of which were then, and apparently still are, made by a firm called Rawlings. I had a decent glove, mind you, but not a Rawlings, and I also sensed that I probably could not persuade my father to spring for the extra money, perhaps ten dollars more, that a Rawlings glove cost...

When I went off to college, I didn't have wretched luggage, but I began to run into people who had much better luggage than I. They had tan suitcases, smooth or grainy, often monogrammed... with strong zippers and good locks, a pliant but solid feel. Such luggage hinted at the good things within: soft fabrics beautifully tailored, swell colors, stylish clothes. I have read Catcher in the Rye only once... but in my dim recollection of the book I remember a scene that had to do with luggage. I now discover that I misremembered it, thinking that Holden Caulfield, the book's hero, had poor luggage and that his cheesy roommate Stadlater had splendid luggage. But on rechecking I find J. D. Salinger gave Holden good luggage (Could he not bear to send the kid off to school without those excellent Gladstone bags?). At another prep school, an earlier roommate of Holden's envies it, hiding his own ragtag luggage under the bed and claiming to people visiting the room that Holden's bags are really his....

Mark Cross is now out of business, but I can recall passing its shop in Manhattan when I was young, taking in its unmistakable feel and smell of deep tanned leather; it was pure swank, and then seemed awfully expensive. I now regret that I never went into minor hock to buy something there (a wallet perhaps, or a kery case), but I never took the plunge....

Not much later, in Chicago, I became enamored of a cigarette lighter, a gold, pebbly-grained Dunhill that sold for $45, at a time when $45 represented close to half a week's salary. I was then a professional smoker, a two-pack-a-day man, punctuating everything in my life with a cigarette. I would take myself to Dunhill's, three or so blocks away from the office where I worked; inside, lifting the ligher, turning it over in my hand, I felt its texture, its heft. Flick it open and a spirited flame leapt before one's eyes. I must have thought about that lighter for the better part of two weeks -- thought more about it than I did about world events, my family, my work, even my brilliant future. Enough, I thought, buy the freakin' lighter and get on with your life, friend.

And so I did. The lighter gave me great pleasure. Every time I reached into my pocket to light a cigarette, I felt a miniscule but real jolt at the thought of my owning such a lighter, a small thing but the best and most elegant of its kind. I don't believe I looked down my nose at poor devils forced to use Zipps and other coarser instruments, not to speak of paper matches. But I felt a certain contentment knowing that in one department in life, the lighting of my cigarettes, I had achieved the untoppable sublime. Forgive me -- do not turn away from me as irretrievably lightweight 0 if I say that, in some inexplicable way, this game me a limited but quite genuine happiness.

After a year or so -- try to hold back your tears here -- I lost the lighter. But the pleasure its possession conferred determined me henceforth to be extravagant, in a selective way, in minor things. I could not and cannot now afford the grand things: the second home in Tuscany, the small but perfect Matisse over the fireplace, the $2,000 suit. But I have boughtt the $300 fountain pen, the occasional $70 bow tie, the cashmere jacket. A little voice within says "let 'er rip," and I do. Piker stuff to some, I realize, but the element of petty extravagance somehow lights my fire even now.

Joseph Epstein, Snobbery: The American Version (2002)

Epstein also notes in his excellent book that, for those into such things, it is quite difficult to be with-it, trendy, hip, up-to-date, fashionable, or whatever one calls it, without a certain accompanying inve$tment:

Exhibit A: My old Burberry. I owned a tan, single-breasted Burberry raincoat, in good condition. One day I put it on and discovered that it was no longer, well, quite right. I hadn't outgrown it, but suddenly this excellent coat -- not inexpensive when I bought it four or five years before -- seemed a bit tight, skimpy, slightly yet definitely inadequate. I hadn't changed -- grown no heavier, surely no taller -- but fashion had, and raincoats, including newer Burberry raincoats, had grown longer and fuller, giving the look and feel of greater amplitude. My old raincoat felt somehow off, wrong, and because of this -- you'll have to take my word on it -- uncomfortable. Not long afterward I bought another raincoat, not a Burberry this time around but an Aquascutum. Does this make me a slave to fashion? Probably. ....

The expenses -- the outlay of cash -- of being with-it are never low. Once cannot hope to achieve with-it-ry in comtemporary America on an income of less than six figures, probably the middle to high six figures. Consider real estate. Can one claim to be anywhere near with-it and live in, say Minneapolis, Salt Lake City, or Tulsa? With-it American cities today include Chicago, Los Angeles, San Francisco, Portland (Oregon), Seattle, New Orleans, Key West, Santa Fe, Princeton, Jackson Hole, maybe Austin, and above all and primarily New York....

Within the with-it cities one then has to find the right neighborhoods in which to live, those SoHos, NoHos, Tri-BeCas, none of which comes cheap. Moving on to wardrobe, one has to hit this just right, too: wear that $200 Prada T-shirt, the right jeans, jacket, shoes, eyeglass frames. Probably best also not to walk around with too droopy -- that is to say, too old -- a face, for which, in cosmetic surgery, remedies, also not cheap, are at hand.

Money Not Important, but...

On today's Laura Ingraham show, the popular conservative talk radio host(-ess?) remarked that her recent breast cancer surgery served to put money in perspective for her -- it's not really that important, she said.

Ingraham, whose show regularly features "but monkey" soundbites (replete with cartoon monkey sound effects) from journalists and politicians who start to say one thing, then insert a BUT big enough to change the meaning of their thought entirely, then added:

'But you do have to have health insurance, that's for sure.'

See also:

New hope against breast cancer Kansas City Star 4/28/05 (Anti-cancer drug Herceptin effective, but typical treatment $120,000, in addition to surgery, chemotherapy and radiation)

New Cancer Drugs Are Driving Up Cost of Care Los Angeles Times 5/14/05 ("[The two drugs that Mary Vaughan takes to specifically target her breast cancer cells (unlike chemotherapy, which also targets healthy cells),] Avastin and Herceptin, would cost her nearly $8,000 a month — more than Vaughan says she can afford, even with her insurance.... The average life expectancy of [colon cancer] patients has doubled to 22 months ... but the cost of treatment has swollen 500 times to $250,000.")

Cost of Cancer On the Rise American Cancer Society 4/19/02 ("'Everybody's talking about cost controls... But the consumer needs to be sensitive to the idea that certain types of cost controls may impact the ability to keep your cancer from growing.'")

Update January 2007: Rich, young, educated women get better breast cancer care than poor, older women, BMJ, 1/27/2007: "Three US studies show that the treatment of breast cancer is influenced by a woman's education, income, and age."

Cartoon: Women

Just for fun on this Friday the 13th...

http://www.wimp.com/smooth/

(includes cartoon violence and other non-PC stuff)

Africa the Worst Contient for Mothers, Children

According to a recent Save the Children study, Africa is the worst place on Earth for mother and children.  As reported by ABC News:

Scandinavian countries sweep the top rankings for the best places to be a mother, while countries in sub-Saharan Africa dominate the bottom tier, the report said.  Out of the 10 worst countries to be a mother or child, seven are in Africa.

In Sweden, which tops the list, nearly all women are literate.  In Ethiopia, only 34 percent of women are literate.  A mother in Ethiopia is 37 times more likely to see her child die in the first year of life than a mother in Sweden.

The United States ranked 11th. ...

"The Mothers' Index clearly shows that the quality of children's lives is inextricably linked to the health and education of their mothers," MacCormack added.  "In countries where mothers fare well, children fare well; in countries where mothers do poorly, children do poorly."

The low-ranking African countries identified by the study are of course poor and the Scandinavian countries that outrank them are comparatively wealthy.

Laura Rowley: Money DOES Buy Happiness, But...

Financial author Laura Rowley was interviewed recently on NPR/Motley Fool radio while promoting her book, Money & Happiness: A Woman's Guide to True Wealth, and asked if money buys happiness.

Her reply - on the air, at least; we haven't read the book - was that "a certain amount of money does buy happiness."  That is, the difference between having no money and having enough money to meet one's basic human needs of food, clothing, shelter, was enormous.  Beyond that, she felt based on the studies she had reviewed, such as those showing enormous increases in wealth in countries like the United States but only marginal increases in the happiness reported over the same time frame, that additional wealth buys little, if any, additional happiness.

Vaguely referencing various studies, some of which are mentioned in other posts and links here (this being radio, there were no "cites"), she adds that lottery winners and even Forbes list-ers are only somewhat happier than the average person.

So how much is enough, according to Rowley?  Depends in part on your expenses, she says.  With the median U.S. income being $43,000 per year, she says, those earning $50,000 and more annually report fewer "blue days", according to another unnamed study.

She says scientists/economists have found the pursuit of money as a primary or number two goal in life has negative consequences such as relationship trouble, depression, and low self-esteem.  And that any increase in standard of living is quickly adjusted to, with only more and bigger looking appealing thereafter (e.g., after moving from an apartment to a house, one then wants a bigger house, one with a pool, in a better neighborhood, etc.).  Thus, more and more money is required, with presumably more work and less job options available to finance this newfound lifestyle.

If you can't buy happiness, can you win it?

Money, if won, can cause and increase in one's happiness.  Or so says a study by Professor Andrew Oswald:

Winning just £1,000 [about $1,900] can be enough to change a person's outlook on life.

However, less than £1m is unlikely to have a lasting effect on personal happiness and experts found a strong marriage and good health were more likely to make people feel content than money.

The researchers looked at 9,000 families in Britain throughout the 1990s.

They observed the impact of windfalls on individuals using standard strain indicators to gauge their levels of happiness.

The BBC report on the 2002 study went on to note that

Professor Oswald advised that money was not the only factor affecting good mental health and happiness.

He said:  "There are lots of other factors in life, especially personal things like getting married and so on."

The research found that women tended to be happier than men, and people in their 30s were least likely to be content.

Professor Oswald said happiness followed a U-shaped pattern, with people beginning life happy but becoming discontented in their early 30s, before their happiness recovered and continued, increasing into their 60s.

Money = Happiness? One study says no

I've been rich and I've been poor.  Rich is better. - Sophie Tucker

Does more money buy more personal happiness?

According to surveys conducted by University of Southern California economist Richard A. Easterlin, no.

Instead, his research indicates -- as explained in layman's terms by Fool.com columnist Dayana Yochim -- that being married rather than single or divorced, and having friends and good health are more important to happiness than money (though money does indeed have some effect, both authors acknowledge:  She notes that "[T]he most prosperous among us -- the Forbes' 100 wealthiest Americans surveyed by University of Illinois psychologist Ed Diener -- are ... slightly happier than average.").

Easterlin concludes that

people allocate a disproportionate amount of time to the pursuit of pecuniary rather than nonpecuniary objectives, as well as to "comfort" and positional goods, and shortchange goals that will have a more lasting effect on well-being....

[M]ost individuals spend a disproportionate amount of their lives working to make money, and sacrifice family life and health, domains in which aspirations remain fairly constant as actual circumstances change, and where the attainment of one's goals has a more lasting impact on happiness.  Hence, a reallocation of time in favor of family life and health would, on average, increase individual happiness.

In one of Yochim's other columns, however, she quotes research summarizing what retirees who are looking back on their lives wish they had done more of, were they able to have a "do over" on their retirement planning:

• Nearly 60% said they would start saving earlier.
• One-third would reduce expenses to save more for retirement.
• A third would be more disciplined about retirement income.
• 25% would work longer.

Not exactly compatible with not focusing on earning money during one's lifetime.  And perhaps indicative of the fact that many underestimated the importance of money until retirement (but prior to retirement mau have answered university professors' subjective happiness surveys by indicating that they had enough money and were overall quite happy with their financial situations).

Overall, the conclusion here seems to agree with Sophie Tucker's quote:  Rich is indeed better and does indeed make one somewhat happier, but given limited time to devote to relationships/family/health versus finances, the typical person will experience higher marginal utility in pursuing the former over the latter.

Study: Wealthier Nations Generally Happier

Wealthier nations are generally happier ones; and, although the correlation is far from one-to-one, it is quite striking overall.

The study by Ronald Inglehart and H-D. Klingemann, "Genes, Culture and Happiness," MIT Press, 2000, compared GDP versus the mean percentage of the population subjectively happy with life as a whole, as determined by surveys.

The richest nations, the United States and Switzerland, in that order, had average happiness levels of 85% and above.  The poorest nations, Nigeria and Bangladesh, respectively, had happiness ratings of around 75%, though these nations were actually anomolies -- most nations with comparable wealth levels ranked lower on the happiness scale, as examination of the chart shows.

It is perhaps not surprising that the happy and prosperous countries also tend to be democratic with free markets.

See also Wealth and Happiness Don't Necessarily Go Hand in Hand, Wall Street Journal 8/13/04 via Van Sloan (sq.4mg.com).