My sense is that perfunctory analyses like
these are scaring people to the point where
they feel the situation is hopeless and simply
give up trying to actively save for retirement.
Does that mean we should all take comfort
in the rosy picture painted by the McKinsey
report? No.
There’s no doubt that figuring out how much
you’ll need to fund your retirement is not
easy. That’s because there are many unknowns,
like how long you’re going to live, what the
inflation rate is going to be, how well your
investments will perform, and how much
you’ll actually spend during retirement. But
relying on general statistics, surveys, rules of
thumb, or rough calculations—whether pessimistic or optimistic—is no way to plan for
your own retirement. That’s because each of
our personal financial situations is as individual as our fingerprints.
Knowledge is power
You won’t be able to plan effectively for your
retirement if you don’t start by looking carefully at your financial picture as it is now.
That’s why tracking your spending is step
one of the five-step plan I’ve outlined in The
Procrastinator’s Guide to Retirement. Here’s
an outline of the plan:
1. Track your current cash outflows
Expense tracking is vital, and yet hardly anyone
does it because it’s not required—there’s no
government agency mandating us to keep
track of our personal spending. But it is the
key to getting ahead financially. Think of a
business—would anyone dare to project what
a business was going to make in the future
without first performing a detailed analysis
of i