3 Things 6-29-26

Thing One

A Sobering What If

Back 2005, President George W. Bush proposed allowing workers to put $1,000 worth of their payroll taxes per year into an S&P 500 fund.  Predictably, his opponents in Congress came out against the idea as a scheme for the rich to get richer and it failed to gain any traction.  The following excerpt from the Wall Street Journal provides the details on what would’ve happened had his idea been allowed to be implemented.

“…But what if Congress had passed President Bush’s proposal to let workers invest $1,000 from their payroll taxes in private investment accounts? In 2011 workers could have begun benefiting from the growth in diversified stock and bond funds. If a worker had invested $83 per month in an S&P 500 index fund and reinvested dividends, the account would have grown to some $55,000 by now.

That 2011 start date was a nod to Congress’s squeamishness about any reform. If it had been politically possible to start offering investment accounts in 2005, rather than waiting until 2011, such an account would be worth at least $105,000 today. And that money would continue to grow as a worker’s personal property, unlike Social Security benefits that have no property right and depend on the whims of politicians.

If you were 22 years old in 2011, you’ll miss out on more than $800,000 that you could have accumulated under the Bush plan by the time you retire. This assumes a retirement age of 65, a starting contribution rate of $83 per month, actual market returns since 2011, and the S&P 500’s historical average 10% annual return into the future. Workers would be benefiting in their personal accounts from the wealth creation now occurring from artificial intelligence and biotechnology. Stock-market wealth would be spread more broadly…”

No doubt, if a person was already wealthy, the plan would’ve helped them increase their wealth.  But, more importantly, if that person wasn’t yet wealthy, the plan would have set in motion a process by which he or she could have begun to build wealth to a level they might have never imagined possible.  For example, if they only contributed another $100/month or $1,200/year to a similarly invested 401k account, they’d be well on their way to having close to $2 million set aside at age 65 between the two accounts.  But since that didn’t happen, all they'll have to show for it is a promise of Social Security benefits from a trust fund that will run out of money in 2034 – twenty two years before their retirement date hits.

It’s a good thing we have politicians looking out for us, isn’t it?

Thing Two  

Learn From His Regret

In responding to the World Regret Survey (yes that’s a thing) designed and administered by Daniel Pink, author of The Power Of Regret:  How Looking Backward Moves Us Forward, Jason Dent, the employee relations manager for a large apparel chain, had this to say:

“I regret not saving money diligently ever since I started working.  It’s nearly crushing every day to think about how hard I’ve worked over the last 25 years or so, but financially I have nothing to show for it. I’m very transparent about being 43 and not having any money. I only wish more 43-year-olds had been more honest with me [when I was younger]”

When I first started working almost three decades ago, several people told me that I should start saving in the company’s 401k plan.  I didn’t object but I also didn’t fill out the paperwork immediately – for several years actually.  Luckily for me, there were constant reminders in those first few years from those same people and I finally signed up.  I’m not sure why they cared so much.  They really didn’t have any reason to but I’m so glad they did.

Maybe you are like Mr. Dent.  If so, it’s never too late to start.  Or maybe you know younger people who are just starting out.  If so, start gently encouraging them to put something aside for old age.  In either case, you’ll have one less thing to regret if you start or start encouraging. 

As always, let us know if we can help.

Thing Three

Just A Thought  

"No matter how many mistakes you make or how slow you progress, you are still way ahead of everyone who isn’t trying." - Tony Robbins