In the free Sunday Wall Street Journal, Jonathan Clement's article "Harder than Building Wealth"...
Getting Going - WSJ.com
... states that the annual standard of living grows by COLA plus another 2% due to wage increases for those still working, and that retiree portfolios cannot stay up with that.
This seems to contrast with the statistics we've been seeing about wages not keeping pace with inflation over the last 30 years. Since his whole article is based on this opening point, it'd seem like a good idea for him to comment on the apparent discrepancy. Maybe he's assuming that workers are promoted fast enough to achieve "COLA + 2%" and leapfrog the wage-growth average. That must be hearty consolation in the segments of the economy that aren't seeing those numbers.
The "annual standard of living" improvement may reflect a bigger house, a second car, a TV in every room and a chicken in every pot, but that's discretionary spending and not a requirement like buying groceries or heating oil. I'm trying to imagine a scenario where I'd comment to my spouse "Honey, my standard of living just isn't keeping up with the rest of the neighborhood. I really want a cell phone, so I think I'm going to get a job."
My remarks are that explains why family fortunes often last only three generations...
I think it's also frequently the case that the third generation has no idea how to build a fortune, let alone maintain it. I can live like a starving college student if I have to because I used to, but the third generation rarely has that experience to fall back on.
I think that the first two generations also rarely invest the time or the effort required to give the third generation the wealth-preservation skills they'd need. And why should they? Once the parents have taught kids the basics of money management, let 'em figure out how to build their own fortunes. That's the responsibility of the third generation. As a member of the first or second generation I'd rather give the wealth to charity than to watch the third generation fritter it away on consumer consumables.
... and that I'm willing to endure some life style decrease to continue to stay retired. Keeping up with the Jones' lifestyle was impossible for FIRE and most certainly after FIRE. I'm missing the part of expecting to maintain parity all through retirement. That is a presumption from the WSJ article.
Yep. Not enough of a deprivation to mandate a return to work. And I'm not sure that the putative deprivation exists in the first place.
Clements makes me glad that I'm not paying for a WSJ subscription. Not that I expect Clements to ever retire. He'll probably join forces with Scott Burns!
