Understanding Economic Equilibrium

CHAPTER 36

An Expert Wife’s Advice

“If you work half your life, save half of what you make.” The formula for a comfortable retirement is the premise of a lecture on personal finance by Rosemary Cunningham, Ph.D., economist and professor at Agnes Scott College in Georgia. Her precept is: If you start earning in your mid-twenties, retire in your mid-sixties and live the average lifespan of a U.S. citizen, near 80, you will work half your life, so you will need to save half your earnings to maintain your standard of living in the other half.

There are nuances to the formula, including complications with contributions to and from parents and children, and influences like compound interest and rates of return on investments. Still, as a society, we ...