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in this video, im going to break down 3 scenarios to explain if you should save for retirement or if you’re better off just investing all your money, which to the average person sounds like a financial crisis.
Now: If you ask me the:
– The average lifespan in the US is around 78 years old, which is 4 years less than Canadians and they retire at 65
– The average person starts working at 22 years old with a bachelors degree and 24 with a masters
– Worked for 43 years at 22 | avg salary = 50k = life earning 2.15m
– Worked for 41 years at 24 | avg salary = 60k = 2.46m
So if you only have 13 years after retirement to live it up: you’ll only need around :
– 50k * 13 years = 650k ( would have to save 15k per year:43 years of work)
– 60k * 13 years = 780k ( would have to save 19k per year: 41 years of work)
But if you invested this money for that same amount of time:
– 15k for 43 years at 7% = 3.7million
– 19k for 41 years at 7% = 4.07million
Fun Fact: Don’t forget about taxes, if you want this, you’ll have to live on nearly 25k per year.
Should you Save for Retirement or Invest it all
Person A: Risky Guy
Story: So this guy says screw it, I don’t want to save retirement I’m going to invest it all into my business, real estate, and other ventures to create passive income.
Only two things can happen here:
1. He makes it: He invest into his business, he makes money, uses that money to invest into more passive income like real estate and then retires early from the rental income or from his passive business income
2. It doesn’t work out, his business fails and now he never saved, so now he’s living in a shelter at age 65.
3. But, there was really the 3rd option: I’ve never heard of some that are failed at the business for 43 years straight: so if he keeps improving he should make it work.
– And if on his 10 years of trying he gives up, he can always go back to a normal job and save for retirement.
Tip: That’s why absolutes don’t work, they assume people cant change their minds.
Person B: Does Both
Story: This Person invests and also saves for retirement and if im being honest this person is me. I found through the experiment that its the best way. And if I keep investing 500 for 43 years at 7% that’s around 1.4 million
Only two Thing happen here Again:
1. I grow my business create more passive income and also invest more towards retirement
2. My business fails and I get a job and still invest towards retirement
But to Be Honest: The key in life is to always live below your means and as long as continue to live like that kid that was making 60 bucks a week, I will always bounce back
Person C: Traditional Boring (this is the guy at your local bingo complaining about how his retirement is worthless)
Story: This is the riskiest the person that barely invest in their 401k, or has savings and lives above their means. And when its time to retire cant live off social security so get a job being a greeter at Walmart but it turns out Walmart canceled that job so now they’re a greeter at “you had 43 years to figure it out”
Only 1 thing Happens here
1. Statistics show that the average 60-69 years old has around 195k set aside for retirement.
Example: As we know you’ll be around for 13 years and that’s an average living Yearly wage of 15k per year, without fracturing inflation
Tip: theirs also a large fraction of people that aren’t even bothering to save for retirement, and that’s the scariest part
Oh and if you facture in inflation at 2.5% that 195k is only worth $67k
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