How much money does it take to buy happiness and retire early? When I was younger every kid knew the answer. All you needed was a million dollars. The thinking went that if you had that much money you could spend the royal sum of $100 a day for life without ever running out. To be fair, back in those days everything cost less. You could buy a gumball for a penny, milk at school for a nickel, phone calls at payphones for a dime. Okay, so in the era of virtually free calls that last example doesn’t fit. Still $100 was a lot of money.
On top of that, banks paid real interest on savings. I had a passbook savings account that paid 5 1/4 percent compounded quarterly. Even if you ignore the quarterly compounding and only earn interest at the end of each year, you’d never run out of money. Yup, we may not have understood the power of compound interest, but we were sure one million dollars was the magic number.
Fast forward nearly fifty years and things have certainly changed. The last time I saw a gumball machine it took a quarter to buy a single piece of gum. My kids never bought milk at school. They have a strange aversion to anything richer than skim or 1%. Regardless, a survey of the menu lists milk at 60 cents. With the exception of a few things, like a phone call, most other things have also become more expensive.
On the revenue front, the story is a bit more mixed. The national average for interest on a savings account is around 0.1%. With that interest rate, spending $100 a day would bankrupt you in less than 21 years. On the positive side there are many more opportunities to earn higher returns. The stock market and other investments would earn you more money. Of course those investments would also entail taking on more risk. Just think about the big sell-off of 2008.
All right, so besides my old man’s trip down nostalgia lane what’s the point of this post? What’s it got to do with maps? Well, I’m glad you asked. While I don’t believe money can buy you happiness, financial freedom to retire early is another matter. Which of course leads us to this week’s featured maps.
For the young and ambitious the first map estimates the money you’ll need in each state to retire at 35.
For those of us who’ve passed the age of 35 there’s map number two focused on the money needed to retire at 55.
Both maps assume the same life-style and life expectancy, which makes it interesting that the numbers aren’t all that different. True you have twenty more years to earn a slightly lower amount, but you also have twenty less years to enjoy it.
Having said that, most studies I’ve read or listened to strongly suggest that life balance is the key to happiness. So while reaching the financial goal may seem to be the hardest part, don’t forget to have a life plan, too. After all once you retire, what are you going to do with all your time?
As always thanks for reading.
Armen
Note to pay the bills: While no one retires early, the Warder series, a James Bond-like thriller in a fantasy setting, does feature villains bent on domination, financial or otherwise. If that interests you, check out a summary of the series here or find links to purchase books here.
While your posts are always interesting, I can’t say as I can agree with the numbers listed on the 55 chart. In my own case, I retired at 55 and I can guarantee that I don’t have anything close to the number listed for the State of New York. Yet, I am comfortable.
Fair enough. I suspect the NY number is an average. As with all averages, there’s a lot of ‘wiggle’ room for different situations. In the case of NY a lot depends on where you are in the state, NYC vs. Upstate. There’s also the pension factor. Many baby-boomers have them, while far fewer in later generations do. Of course you just may be smarter than the average bear.