What Scrooge Can Teach You About Retirement Planning
Most people think of A Christmas Carol’s Ebenezer Scrooge as a cold-hearted, greedy, skinflint, a man so miserly he makes a tightwad seem like a spendthrift. But if you’re willing to overlook a few flaws, good old Scrooge can actually be a pretty decent role model for how to achieve a secure retirement.
I can hear the cries of outrage already. How can Scrooge, the man Charles Dickens described as tight-fisted, squeezing, wrenching, grasping, scraping, clutching and covetous, possibly be a paragon of retirement planning? Bah humbug! If anything, he’s a role model for how not to live one’s life!
And I agree, up to a point. But twisted and shriveled though he may be, Scrooge also had qualities that we would do well to emulate, albeit in moderation, to improve our retirement outlook. Here are three of them.
1. Scrooge had a phenomenal work ethic. When the novel opens, Scrooge is at work in his counting-house late in the afternoon on Christmas eve. He didn’t duck out early to do some last-minute shopping. He wasn’t posting Happy Holidays photos on Instagram. He was putting in a full day’s work.
Granted, in recent years millions of people who would like to do just that haven’t had the option. Perhaps the recent upbeat employment report signals a more vibrant jobs market ahead. But the fact remains that the commitment to work that Scrooge displays is crucial to a successful retirement for two reasons: you can’t build a nest egg without regular income; and the amount you earn and number of years on the job largely determine the size of a key source of retirement income: your Social Security benefit.
Note too that Scrooge was still working relatively late in life. Dickens doesn’t give Ebenezer’s age, but many people estimate he was in his late 50s or 60s, which is getting up there considering life expectancy was about 40 in mid-19th century England. So we can take a cue from Scrooge on this score as well. For example, in their new book Falling Short: The Coming Retirement Crisis and What To Do About It, authors Alicia Munnell, Charles Ellis and Andrew Eschtruth point out that just a few extra years on the job can go a long way toward improving one’s retirement prospects. And if that doesn’t do the trick, you can always supplement your income by working in retirement.
2. The man was a prodigious saver. Scrooge definitely knew a thing or two about saving a buck. He didn’t do it with gimmicks like an app that rounds up credit card purchases to the nearest dollar and deposits the difference in an investing account, giving you the impression you’re saving while you’re actually spending. He did it the old-fashioned way by keeping his everyday living expenses down.
He went way, way too far, of course, what with living in the dark, keeping a very small fire and eating gruel from a saucepan. But he had the right idea—namely, if you live below your means by not splurging on over-the-top vacations, expensive cars and big houses with mortgage payments to match, you’ll have a better chance of saving the 15% a year that can lead to a comfy retirement. And while Dickens doesn’t get into Scrooge’s investing habits, my guess is that ol’ Ebenezer wouldn’t fall for pitches for dubious or expensive investments. I think he’d be an index-fund kinda guy who realizes that reducing investment fees boosts the size of your nest egg and the amount of income you can draw from it.
3. Scrooge (finally) understood what really matters. This may very well be the most important lesson we can draw from Scrooge. Sure, it took visits from his dead business partner Marley and a few ghosts to transform him. But by the end of the novel, Scrooge has morphed from a pinched and selfish man into a generous and compassionate man who anonymously sends a turkey to the Cratchit home for Christmas dinner and eventually becomes like a second father to Bob Cratchit’s son, Tiny Tim. In short, he realizes that wealth brings happiness only when we share it with our families and others in ways that improve all our lives.
So while it’s important to focus on making good financial decisions, we should never forget that retirement planning isn’t just about the bucks. Ultimately, it’s about creating a retirement lifestyle that has meaning and purpose as well as financial security.
So if your thoughts happen to stray to your retirement over this holiday season and you find yourself wondering how you might improve your planning, ask yourself WWSD—What Would Scrooge Do? Whether it’s the stingy Ebenezer or the benevolent version, he just might provide the inspiration you need. (12/17/14)
Walter Updegrave is the editor of RealDealRetirement.com. If you have a question on retirement or investing that you would like Walter to answer online, send it to him at email@example.com.