A book I found useful on retirement 9 years ago was Burton Malkiel’s “Random Walk Down Wall Street”. Chapter 14 had a section on investing over the life cycle and a good section on “longevity risk” – the possibility that you might run out of savings prior to carking it (or indeed that you might save too much which is a common issue). The case for a switch toward much lower return but less risky assets as you shuffle towards boot hill was interesting and more strikingly conservative than I had imagined. Even if you don’t like this material I have, for 30 years or more, found Malkiel’s work to be the best book on finance I have ever read.
I did some window shopping for the retirement hermit cave. You can get a nice ethnic hammock for under $200, and it’s hard to spend more than $500 on a home espresso coffeemaker. The pricy items are all about the Sage’s mountaintop tea. A Song dynasty teapot could set you back $5,000. The tea that goes with it, Da-Hong Pao, refreshes the old joke “if you have to ask the price, you can’t afford it”. It comes from just six old trees up a remote mountain somewhere, and the reported price is $1.2m per kilo. Mao gave Nixon 200 grammes of the stuff. Best wishes anyway.
Re Harry’s risk-averse policy: I discovered that ordinary mortals can buy Spanish government bonds online, saving most of the commission. I now have an account with the Banco de España, which has a welcome policy of offering no advice whatever. If that’s too dull for you, the Ukrainian government has a similar scheme – obviously much higher risk, but correspondingly higher yield.
Happy semi-retirement. Don’t think that is the planned result of going on the link?
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Responding rather belatedly
Harry, I’ve also been much influenced by Malkiel. I’ve been keen on the idea of annuities as a hedge against longevity risk, since I don’t have a defined-benefit pension. But they are hard to find. For the moment, I’m relying on earning a salary as long as I can, while still enjoying the benefits of retirement.
James, you’d be surprised how much you need to spend on a really good coffee machine. I got my current machine (a Jura super-auto) as a demonstrator for $1000, which was around half-price. But compared to what I would otherwise pay in coffee shops, I amortized that in a few months.
Hix, I’ll try to get this link working.
I stand corrected on the coffee machine, but it shows I was thinking on the right lines.
In between pruning the cherry tree, catching trout in the nearby stream for breakfast, and preparing exquisite tea for the occasional pilgrim seeking enlightenment, the retired Hermit Sage is expected to ponder the Big Questions.
A suggestion. JQ’s riff on Hazlitt’s Economics in One Lesson was a success. How about a parallel reprise of Keynes’ famous essay from 1930, The Economic Possibilities for our Grandchildren? Keynes was writing at a time when both the fascist and the communist dystopias were very real possibilities for the future, so his substantially justified optimism came as a shock. We now face an even wider range of imaginable futures, from climate hell, genocidal wars of mass migration and the collapse of civilisation, to a Utopia of plenty and the end of all forms of drudge labour, from ditch-digging to financial hypertrading, driven by super-cheap sustainable energy and ubiquitous cheap AI. A good result is more likely if we can imagine it more clearly. The bad result can be extrapolated from the TV news.
The literary reference is to Robert van Gulik’s Judge Dee mysteries, IIRC the Judge’s visit to Master Crane Robe in The Chinese Maze Murders, 1957. Van Gulik was a scholar and I expect he was drawing on much older Chinese sources.
Holds up pretty well, except – unfortunately – for the prediction that people will choose smaller cars. Even in relatively rational Spain, the car park at the local shopping centre features tank-like SUVs trying to squeeze into narrow slots designed for the more frugal norms of twenty years ago.
It’s a pity that 1930 Keynes left his piece as a short essay, and I feel the same about 2012 Quiggin. A few disconnected jottings for the tentative upgrade book file.
Both argue from simple economic history, without much of a connection to economic theory. This is a plus for reception by the general public, but a minus for reception within the trade. Besides, there are real theoretical problems in the long-term perspective: intertemporal equity and the principle of zero pure time preference; the question whether the goal is maximum aggregate welfare, or maximum average welfare; the shifting boundary in the observed economy between traded and non-traded goods (housework, child and elder care, sport, music); the design of a welfare indicator or indicators that takes a reasonably good account of both, and is not impossibly subjective.
Quiggin 2024 would need to give more space to environmental goods and constraints. The project is not a good box for a discussion of the current climate crisis, which – like the competing totalitarianisms in 1930 – has to be solved in the next two decades for there to be a long term future worth imagining. I produced a sketchy but so far unrefuted argument that it is technically and economically feasible in one. Still even assuming this large can-opener, a proper and sustainable relationship with the natural world has to be a big part of any utopian vision. The Raworth doughnut is a good place to start. Another is the discussion on the dematerialisation of growth.
A hobby-horse observation. Excessive working hours are a simple corollary of Stiglitz’ theory of efficiency wages under imperfect mutual information in the labour market. IIRC where his theory is incomplete is in ignoring that the imperfection runs both ways, and jobseekers typically do not know what their immediate future boss will be like. So they too will often settle for second-best working conditions, including the suboptimal hours proposed for their own reasons by employers.
John Quiggin 
A book I found useful on retirement 9 years ago was Burton Malkiel’s “Random Walk Down Wall Street”. Chapter 14 had a section on investing over the life cycle and a good section on “longevity risk” – the possibility that you might run out of savings prior to carking it (or indeed that you might save too much which is a common issue). The case for a switch toward much lower return but less risky assets as you shuffle towards boot hill was interesting and more strikingly conservative than I had imagined. Even if you don’t like this material I have, for 30 years or more, found Malkiel’s work to be the best book on finance I have ever read.
I did some window shopping for the retirement hermit cave. You can get a nice ethnic hammock for under $200, and it’s hard to spend more than $500 on a home espresso coffeemaker. The pricy items are all about the Sage’s mountaintop tea. A Song dynasty teapot could set you back $5,000. The tea that goes with it, Da-Hong Pao, refreshes the old joke “if you have to ask the price, you can’t afford it”. It comes from just six old trees up a remote mountain somewhere, and the reported price is $1.2m per kilo. Mao gave Nixon 200 grammes of the stuff. Best wishes anyway.
Re Harry’s risk-averse policy: I discovered that ordinary mortals can buy Spanish government bonds online, saving most of the commission. I now have an account with the Banco de España, which has a welcome policy of offering no advice whatever. If that’s too dull for you, the Ukrainian government has a similar scheme – obviously much higher risk, but correspondingly higher yield.
Happy semi-retirement. Don’t think that is the planned result of going on the link?
“Sign in to John Quiggin’s Substack Newsletter
This page is private – try signing in with a different email, or letting the author know they’ve linked to a private page.”
Responding rather belatedly
Harry, I’ve also been much influenced by Malkiel. I’ve been keen on the idea of annuities as a hedge against longevity risk, since I don’t have a defined-benefit pension. But they are hard to find. For the moment, I’m relying on earning a salary as long as I can, while still enjoying the benefits of retirement.
James, you’d be surprised how much you need to spend on a really good coffee machine. I got my current machine (a Jura super-auto) as a demonstrator for $1000, which was around half-price. But compared to what I would otherwise pay in coffee shops, I amortized that in a few months.
Hix, I’ll try to get this link working.
I stand corrected on the coffee machine, but it shows I was thinking on the right lines.
In between pruning the cherry tree, catching trout in the nearby stream for breakfast, and preparing exquisite tea for the occasional pilgrim seeking enlightenment, the retired Hermit Sage is expected to ponder the Big Questions.
A suggestion. JQ’s riff on Hazlitt’s Economics in One Lesson was a success. How about a parallel reprise of Keynes’ famous essay from 1930, The Economic Possibilities for our Grandchildren? Keynes was writing at a time when both the fascist and the communist dystopias were very real possibilities for the future, so his substantially justified optimism came as a shock. We now face an even wider range of imaginable futures, from climate hell, genocidal wars of mass migration and the collapse of civilisation, to a Utopia of plenty and the end of all forms of drudge labour, from ditch-digging to financial hypertrading, driven by super-cheap sustainable energy and ubiquitous cheap AI. A good result is more likely if we can imagine it more clearly. The bad result can be extrapolated from the TV news.
The literary reference is to Robert van Gulik’s Judge Dee mysteries, IIRC the Judge’s visit to Master Crane Robe in The Chinese Maze Murders, 1957. Van Gulik was a scholar and I expect he was drawing on much older Chinese sources.
PS: free pdf of Van Gulik’s book here: https://fs1.oceanofpdf.com/OceanofPDF.com/The_Chinese_Maze_Murders_-_Robert_van_Gulik.pdf Dee’s encounter with Master Crane Robe and his special tea is in Chapter 19.
Oops, dud link. Try https://readerslibrary.org/wp-content/uploads/The-Chinese-Maze-Murders.pdf First publication was actually in 1951 in Japanese, 1957 is for the English version.
Time for your family, for yourself, for writing blog posts?
James W. Great minds think alike!
https://aeon.co/essays/the-time-is-right-to-reclaim-the-utopian-ideas-of-keynes
John aka Master Crane Robe:
Holds up pretty well, except – unfortunately – for the prediction that people will choose smaller cars. Even in relatively rational Spain, the car park at the local shopping centre features tank-like SUVs trying to squeeze into narrow slots designed for the more frugal norms of twenty years ago.
It’s a pity that 1930 Keynes left his piece as a short essay, and I feel the same about 2012 Quiggin. A few disconnected jottings for the tentative upgrade book file.
Both argue from simple economic history, without much of a connection to economic theory. This is a plus for reception by the general public, but a minus for reception within the trade. Besides, there are real theoretical problems in the long-term perspective: intertemporal equity and the principle of zero pure time preference; the question whether the goal is maximum aggregate welfare, or maximum average welfare; the shifting boundary in the observed economy between traded and non-traded goods (housework, child and elder care, sport, music); the design of a welfare indicator or indicators that takes a reasonably good account of both, and is not impossibly subjective.
Quiggin 2024 would need to give more space to environmental goods and constraints. The project is not a good box for a discussion of the current climate crisis, which – like the competing totalitarianisms in 1930 – has to be solved in the next two decades for there to be a long term future worth imagining. I produced a sketchy but so far unrefuted argument that it is technically and economically feasible in one. Still even assuming this large can-opener, a proper and sustainable relationship with the natural world has to be a big part of any utopian vision. The Raworth doughnut is a good place to start. Another is the discussion on the dematerialisation of growth.
A hobby-horse observation. Excessive working hours are a simple corollary of Stiglitz’ theory of efficiency wages under imperfect mutual information in the labour market. IIRC where his theory is incomplete is in ignoring that the imperfection runs both ways, and jobseekers typically do not know what their immediate future boss will be like. So they too will often settle for second-best working conditions, including the suboptimal hours proposed for their own reasons by employers.