Do me a favor. Open your wallet and pull out any denomination of American greenback. It can be a Washington, Lincoln or a Jackson. Give it a stare for at least 10 seconds and then describe what you are holding in your hand with only one word.
I'll bet you said the word "money." That's what most people say and they’re not wrong, but there’s more to the story.
What is money?
What you are holding in your hand is a form of currency that gives you purchasing power. Simply put money is purchasing power. And isn't it beautiful! What a wonderful and effective medium of exchange for goods and services. Can you imagine life without it? Hey, Bob, how many dozen eggs do you want for that Toyota Corolla? Money is efficient for all kinds of transactional purposes but when it comes to holding its value...it's pretty terrible.
Your "money" loses a fraction of its value every single day and over time the loss of that value compounds. Every four weeks the government publishes a statistic called the Consumer Price Index. This index tells us the variation of prices paid by typical consumers for retail goods and various other items. It typically tells us how much more we are paying for everyday living items like groceries, gas, etc. The Consumer Price Index also tells us the exact percentage of value that our currency lost over the last 4 weeks. On average our "money" loses between 2-3% in value each year. In 2021 it lost 6%!!!
Money is purchasing power
If we know that on average our money is losing a value of between 2-3% yearly, then we know that in 20 years from now our money will have lost about half of its value. Or simply put, in 20 years our cost of living will double. That means if you make $50,000 per year now, you’ll need to be making around $100,000 in 2041 to maintain the same standard of living you have today.
What's your plan to double your income over the next 20 years of your retirement?
Think about the cost of your first car, your first home, the cost of gas, the cost of groceries or the price of a stamp 30 years ago. Prices continue going up year after year. To that point, the only rational definition of money is...purchasing power. If you don't have a plan to increase your money (purchasing power) during retirement, you have unfortunately, without realizing it, made a plan to run out of money (purchasing power).
One of our goals for you is to increase your time, money and peace of mind by helping you create an income and investment plan that outpaces inflation and aligns with your retirement goals while guiding you through the completion of that plan year after year.
You need a plan
A goal of retiring - without a plan - is simply a plan to run out of money. At 80/20 Financial Services our specialty is retirement planning for electric cooperative retirees and retirees in general.
We help our clients increase their income, protect their assets and minimize their taxes.
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80/20 Financial Services is an Independent Registered Investment Advisor (RIA) registered in the state of Missouri (CRD# 300772). We help clients in Missouri and throughout the United States prosper in retirement. Being independent allows us to work exclusively for YOU.