You’re 25 years old. You have a great job making great money and you are making so much money, you buy yourself a car, a house, you take lavish vacations, buy lavish things — you have to have the best of everything. It’s an amazing life, right? Some of us get to have that while others don’t.
40 years later, you’re now 65 years old. You put nothing away for retirement at all.
The house you have is your greatest asset. It’s market value went up around $200,000.
The car(s) you bought — well, they’re antiques now. Some work, some don’t.
All those lavish things you bought? Over the years, it’s just stuff. Not that important.
You retire on your social security. By then, however, the government has done a lot of shady things — because that’s what they do — you actually cannot collect your full “social security” until you’re 70 years old, but you decide to retire at 65 making you eligible for 50% of your social security.
In the now, at 65 years old, what do you wish you did when you were younger? Any regrets about not saving as much as you could have?
Now let’s understand the next scenario, which is almost the same.
You’re 25 years old. You have a great job making great money. You decide to put away the percentage of your age every year (each paycheck), 25=25%, 30=30%, 35=35%, etc.
The reason you put away more — is because as you age, you care more about your older self because guess what? That’s your best friend right there — 25 is closer to 26 is closer to 27 …. is closer to 50.. is closer to 55.. is closer to 65 — crazy to think you’d be putting away 60% of your paycheck towards retirement at 60 — but in 5 years, that’s your reality — you’re retired! Your 25 year old self didn’t care about your 60 year old self as much as your 55 year old self, and so on. And guess who has money because you, at every age, decided to take care of yourself so that you could retire?
You do have a nice house. You do have a nice car. You do take a few nice vacations, but you’re conservative with your money. You keep putting more money away for your retirement.
That age now comes. Over the years, the 401k or IRA has had a few bumps, but for the most part, it has grown around a steady annual return 6% – 7% if you average out the lifetime of that 401k. It’s not particularly the most exciting, but it’s realistic.
If you started saving at 25 years old and retired at 65 years old, putting away an average of 1% more each year, you’ll retire with around $2,000,000 or so.
You’re also eligible for your social security check at 65, but you decide to use the $2 million to live off of and then you claim the full benefits of your check at 67 (for now) — Congress is trying to raise it to 70 so most of us die before we are eligible.
Now you need to look at your grandparents and your parents history: you aren’t far off from when they pass away. In my case, my grandparents both died at 75 years old. Both my parents are nearing 70 years old. Both have moderate health issues. I can assume that if I eat relatively healthy and try to live a somewhat more-than-sedentary lifestyle, where I take 20–30 minute walks everyday, I have a chance to live until 80 or hopefully longer.
There are two types of older people I’ve seen: those who enjoy their retirement and those whose health decline almost immediately (my dad worked with a guy who was a heavy drinker and smoker — the day after he retired, he had a heart attack and died).
I’d like to think I’ll be in the former, and I am sure risking money right now by putting more away with the assumption that I’ll be able to enjoy it when I’m older, might be worth the risk. It’s like gambling that I’ll live that long… but it’s just money. However, when you’re alive: money matters most. When you’re dead… some of us die with nothing, some of us die with some things. And then there are others who have so much money — they have no idea what to do with it. One thing we all have in common and the only thing that’s true in the end: we’re all going to die.
I have seen both sides:
- People who put money away for retirement
- These types of people go on multiple vacations in retirement and once they are unable to vacation anymore, they choose to pay for home health care aides and live and die in the comfort of their own home, often surviving for at least 10 years after their health starts to decline — if they don’t live at home, they go into a well-funded assisted living center where they live out the rest of their days independently but with a nurse on staff just in case
- People who didn’t
- These types of people go into a nursing facility and usually never leave — they often lay in a hospital bed for days, months, possibly even years at a time — family might or might not come to visit — the nurses they are surrounded by are like their family from now on — they have a higher risk of disease and other illness because they are surrounded by other sick people
Most people do not put away for retirement as much as they should at all. They would prefer to think the government cares about them, but unless you’re taking care of yourself and doing things for yourself — the government loves money, but more time is spent regulating it rather than doing anything with it, other than, of course — spending it on well, techncially our highest expense: war. Imagine if the government spent more time putting its money to other resources? Only the lucky few have been chosen to leave the planet when it dies… but that is for another answer.
It’s up to you, but have a conversation with your 65 year old self. There’s only three possibilities that come from that conversation:
- We have no money, you need to work and put money away for me (because I can’t do it)
- We are on track, but you should put a little more away
- We are living an amazing life, you’re doing great!
Up to you on which one you want to be. No one can force you to put more money away. But relying on the government — they have their best interests at heart, not yours 😉
Essentially what you ask is this: “Why should I waste money on my older self?” The answer really is this: “Because you choose to do so to give your older self a better life. Unfortunately, your older self cannot work for your younger self, only your younger self for your older self. If you choose not to do so, there is no one who owes you anything towards the last 20–40 years of your life when you aren’t working.”
The hardest part of our lives is accepting the fact that we’re going to grow old and we’re going to die. No one is exempt. I’m sorry. Some of us die from old age, most of us die from our hearts just giving up, and the unfortunate are killed by external forces. You are going to get your first gray hair, and it won’t be the same excitement as the first hair you got on your balls, or maybe it will. Depends on how you look at it. You did live long enough to see it. I have friends that didn’t make it past 25 or 30 — no gray hairs for them. No old age or life for them, either.
By not saving for our future selves, we think we’re going to stay young and live forever. Everyone thinks that way. Unfortunately, you have to have a new reality: “I’m young now. I can work.” vs. When you’re older: “I’m old now. I can’t work.” But unfortunately, you’re now forced to work until you can’t physically do it anymore. Except the truth is: someone has to take care of you — your money will help you have better care. If you got kids who’ll step up to the job: great, but that’s just you being a dependent asshole. Let everyone live their own lives… brighter future knowing the past has taken care of itself.
Do yourself a favor and start treating your 65 year old self like they are a real living person, because — just because you can’t see them, due to the “time reality”, they really do exist at the same time you do. Your past self only exists in memory after this moment, but your future self… is always being written until you die. How you want that future self to be — is what you do now, and that is the beauty and mystery of time.