A 2015 report from the Government Accountability Office found that 41% of households, age 55-64, have no retirement savings. Now, you may be one of these folks or you may not... Either way, I want to make sure you’re aware of your own situation. The U.S. nanny state won’t be there to protect you. And if you’re wealthy, the U.S. government is going to try and take your money away from you. Most Americans say they’ll depend on the government to provide for them in their old age... Of course, here’s what the Social Security Administration had to say in a recent Annual Report: Neither Medicare nor Social Security can sustain projected long-run program costs in full under currently scheduled financing, and legislative changes are necessary to avoid disruptive consequences for beneficiaries and taxpayers. It means these government promises will not stay around forever. That means... You must take personal control of your wealth... and you can start today. Remember, saving is just spending a little less than you take in. Start small at first. But if you can save a higher-than-average amount... say, 20%, 30%, even 50%... I guarantee you will be wealthy in a modest number of years. The only person left to take care of you is you.
Let me repeat this... I guarantee it .
The best part is that it doesn’t really matter how much you make. It only matters how much you save. That’s the part most people don’t appreciate. Assuming modest after-inflation investment returns of 5%... The average American has to work for more than 65 years with a 5% savings rate before accumulating enough wealth to replace their income without touching the principal. And in our baseline scenario – saving 10% of your income – you should expect to work for more than 50 years before accumulating enough wealth to never have to work again.
Your retirement... and wealth that you accumulate across your lifetime... depends almost entirely on just one factor.
But if you can bump that savings rate up...
Take a look at the table below:
Years to Retirement
65 50 40 30 20
10% 20% 30% 50%
If you can save 20%, you will be wealthy enough to retire after less than 40 years of work. If you save 30%, you can retire in less than 30 years. And at 50%, you can stop in less than 20 years.
The numbers are shocking, but clear.
No matter how skilled you are as an investor, upping your savings rate is more powerful to your wealth than either increasing your
64 | October 2017
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