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Hoping to Die Now Because You Won’t Have Enough Money in the Future Isn’t a Very Good Financial Plan

Okay, so this joke is funny, I guess, but it’s also pretty tragic since it defines a good portion of Americans today…

If this describes you, what can you do to turn the joke around? I urge you to do a trial calculation to determine what “might” happen to you in the future financially and forecast an amount of money you need to get started on the road to taking care of yourself as a new goal in the new year.  As they say, “It is better to shoot for the stars and hit the moon, than aim for the moon and hit a rock.”

Here’s how to do a little trial calculating:  

  1. Take you parents and grandparents and average their age upon death.  Add 10 years to this number and then subtract the age you plan to retire.  This answer is what you can use to plan for how long you will need income.  I will use the example of a person I’ll call Mark Jones throughout this post. For him, he will need 18 years of income.
  2. Calculate how much money you will need to last until this estimated age of death. Assume you will earn 3 percent each year on any investments or savings, and that you need $1,000 a month for the next 18 years. This additional need will be on top of what you will receive from Social Security benefits, from any savings you already have put away for retirement, and any perpetual income you can count on like income from a rental property, for example.  Using Mark Jones’s numbers, the total amount he will need to save by retirement age will be $166,743.  If earnings drop to 1%, say, then he will need $197,600.  But maybe he will be lucky and achieve a 7% growth on savings/investments. In that case,  he will need $122,623.  Figure out your own numbers using these scenarios.
  3. Now you know what goal to shoot for and can divide this amount into years and months and find out exactly what you need to be doing each month to at least get started preparing for the future.

Okay, so it may not be perfect, you may lose money along the way. You must consider what will happen if you were to run out of money at age 78 for example. Or perhaps consider that everything goes as planned but unfortunately you live 23 years longer than you had expected. What happens then? But with an idea of what you need to get started preparing for retirement by running these calculations you will get motivated to at least get begin actually saving this money and I can assure you, this motivation will lead you to even greater desires to make more happen with your money, exploring lots of options that will provide a more predictable retirement that  you cannot outlive. Contact me today for a no obligation discussion about your future and what you can do to jump start your desire to work on it a little more seriously:  peter@moneymastery.com.

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