Question: What does the average person fear most? (The answer may surprise you.)
The correct answer is … running out of money before running out of life!
Here’s the sad truth. 75% of people run out of savings within five years of retiring!
But, that wasn’t always the case.
Just two generations ago, in the 1970s, the average life expectancy for men was 68 … and for women, 74. Back then, men needed enough money to fund an average three years of retirement, and women needed enough to fund nine years of retirement.
Fast forward to the 2000s, and the picture has changed dramatically. Due to medical advances, life expectancy has increased to 80 for men and 85 for women. The average man must be prepared to fund at least 15 years of retirement! And the average women must have the resources to fund at least 20 years of retirement.
Yet wages have been stagnant for nearly five decades. After adjusting for inflation, today’s hourly wage has about the same purchasing power as it did in 1979!
The math is pretty simple.
Incomes haven’t budged in decades for most people. Yet prices have gone up, year after year. And life expectancy increases with every medical research breakthrough. How in the world can the average hard-working person ever hope to bridge the gap … and create a financial surplus to pay for all the years down the road when she won’t be working? Without a financial surplus, she will run out of money before she runs out of life!
Fear not, there is a solution. It begins with my first Money Principle.