The 40-40 Plan is a Lie
I’m sure you’ve heard the rant of home business opportunity pushers. “You go to school, get good grades, study hard, and when you graduate you’ll get a good job with a good company. Then, just work hard, and The Dream will be yours! - Not true; that’s just an urban myth!” This is known as the 40-40 plan - work hard 40 hours a week for 40 years, and retire happy. It is a myth; this doesn’t happen all that much.
Have you also heard the other set of statistics? 95% of people get to retirement age and they don’t have enough money to support themselves. This has been reported in the US; it’s been reported by government agencies in Malaysia. Though I haven’t gone to look, I expect that this is one of those universal truths. If anyone has any numbers for Denmark, Australia, Yakutsk or Andorra, please leave a comment to update us all. I don’t expect the number to vary too much. And it doesn’t really matter. Let’s just take this as a slice of reality. To enjoy retirement funded by our own dollar, we need to shoot for being in the top 5% of the population. hmmm….
So, I know that could be a shock. But if I can reach a few people every few months, and if they can redesign their expenses, income streams and their financial plans based on something I say - HOORAY!! Have you read the book, “The Millionaire Next Door”? One example it illustrates is of two individuals that make over $900,000 US annually. The analysis in the book says that one of these people lives as if they make only US$225,000. The result is that they have $675,000, less taxes, to invest, save and grow their net worth. The other individual, I believe it was a doctor, actually spends a bit more than he makes each year. Net worth for him was barely fluctuating. That story scared me. It’s possible to make almost $1 Million in a year, and NOT improve your net worth. Ouch!
But let me get back to the gist of this discussion. I can’t share all of the information I gained from a 10-hour seminar. But the summary of it is this: There have been a couple VERY large changes in the way that money works. The assertion was that there is a humongous change happening right now. The world’s masses have made their living by seeking employment for years - hundreds of years. But the world is changing, and the masses will be earning a living from the new information economy.
Another fact I’ve heard recently is that the amount of information accumulated in our world is doubling now every so many months, something like every 18 months. What that means to me is that there is TOO much information. We all have to adapt. Those of us aiming to be in the 5% group of financially free (actually, financially comfortable) people in 10, 20 or 35 years will need to keep this in mind. While it will still be very possible to achieve financial freedom via traditional means, it will be quicker and more efficient to make use of new trends. Gaining skills in information age profits give us a higher margin of error when something unexpected or unfortunate happens.
What’s really going to happen in the next 10 years? How about the next 20? Few of us will make a change that the whole world will notice. But if we quietly make sure that we’re not part of the “normal” group - the 95% - then we will be a special part of history. And if we can teach enough lessons to our next generation or two so they can slip into that top 5% as well, I doubt that we need to worry about the history books. My hope is that by not having to worry about money, we and our next few generations will have the time to make a difference that the world will notice. And I for one have faith in people. I have faith that after 5 or 10 years we will all get around to contributing to the world once we’ve got our family’s finances sorted out for the next few generations.
One thing is for sure - doing things that “make sense” to the people we deal with every day will likely get us into the popular group, the group of the 95%’ers. How does that sound to you?
