Mistake number 3 out of 10 when saving for retirement.
In this episode, I'm going to address the question. What mistakes do people make when saving for
retirement? This is a series of the top 10 mistakes out of probably hundreds that people could make.
But this is number 3, get ready. A lot of times people don't realize the impact this has on
their retirement savings and why they outlive their money.
So, my name's Doug Andrew and I've helped people for more than four and a half decades prepare
for a comfortable retirement. Now, what do I mean by comfortable retirement? Well, having enough money
to not worry about outliving that money to be able to do the things that you want to do during
retirement, travel visit the grandkids, and so forth. But there are a lot of factors that cause people
to outlive their money. In this series, I have 10 of the major mistakes people make and this is mistake
number 3. Are you ready? It's not realizing the negative impact that inflation or the cost of
living going up will have on your retirement nest egg. This catches a lot of retirees off guard
and they outlive their money because they never knew how to calculate the impact of inflation
and how to avoid that negative impact by linking your returns to the inflation rate. Even financial
advisors go, huh? I was never taught how to help my clients do that. So, get ready I'm
going to empower you. So, inflation is the cost of living as it increases through the years
and a lot of times people don't realize the negative impact of inflation or how to calculate
that. Well, in order to understand inflation simply I like to use the rule of 72 if you
don't know what that is. If you're calculating how fast your money will grow, you divide the interest
rate you're earning on your money and you divide that into the number 72 and we'll tell you how
many years it takes to double your money. So let's say you started out with a 125,000 and let's say
you were earning percent that means 7.2% divided into 72. Your money will double every 10 years.
Now, if you're earning 10% because I've averaged 10.07 percent with my favorite vehicle called the
laser fund which I'll talk about here in just a moment. 10 into 72 means my money will double about
every 7.2 years, every seven and a half years. So 125,000 a one-time lump sum will double to 250,000
in 7.2 years or at 7.2 percent every 10 years, 9 percent every 8 years, at 8 percent
every 9 years. You divide it into 72 and then the 250,000 doubles to 500,000. The next 7 or
10 years and then 500,000doubles to a million. I've actually had clients who started
out with $500,000 one time. It doubled to a million, a million double to
two million, two million double to four million, four million double to eight million and they have
eight million dollars now generating between 680.000 to 800,000 a year of tax-free income. It's the
rule of 72, well you can use the reverse of that to calculate inflation. So let's say inflation is 5%.
Now, inflation is the increase in the cost of living to maintain the same standard of living
or lifestyle. So, if inflation is going up 5%, 5 into 72 means the cost of living will double
every 14.4 years let's just round to 15 years. Do you know that with a baby boomer couple the chance
that one of you will make it from age 65 clear to age 95 is highly likely, that's 30 years. So if the
cost of living doubles every 15 years and you can get by on 50,000 a year at age 65, then at age 80
you're going to need a hundred thousand to buy the same gallons of gas and loaves or bread,
haircuts, golf green fees that you could have bought for 50,000 15 years earlier.
At age 95 you're going to need 200,000 to buy what 50,000 used to buy. Is that making sense?
Well, the government changed the way they report inflation here in the 1980s and 90s
and I'll explain what they did which a lot of people are not aware of. Now, before I share with
you something that blows people away, they didn't know what they didn't know. If this is intriguing
you and you want to share this video be sure and share, post a comment, click like, subscribe
to three-dimensional wealth channel. Because I have over 500 educational videos like this and I
post at least 5 new ones every single week to empower you. Where I answer financial questions
in-depth for usually 10 to 15 minutes. Now, this is the third mistake retirees make.
They don't know how to calculate inflation. Well, either does the government but it's on purpos.e
See, after Jimmy Carter caused inflation to hit pi of 13 percent the government back in the 80s and
into the 90s decided to change the way they report inflation, why? Because social security recipients
were supposed to have an increase in social security benefits every year based upon the actual
increase in the cost of living. The cpi consumer price index and they used to use a basket of goods
approach where they would take all kinds of like things whether it was a meat or produce or gas
for your car or haircuts and they would have this basket of goods and they would compare every year
apples to apple comparisons. Well, they wanted to change that so that they didn't have to increase
social security benefits to the true inflation rate. Long story short they changed from an apples
to apple comparison to where they could do sort of a like type of a comparison, I'll simplify it.
They basically can compare if they want instead of filet mignon steak one year to what it costs
the next year they can switch to hamburger. So they can compare filet mignon steak to hamburger
because it's still red meat okay and this is what the government does. So now, when they report
inflation is 3 or 4 percent recently as of the recording of this episode they were an alarm.
Oh, inflation has spiked to 4.2 percent based upon the way they used to measure inflation
it's over 11%. But people get confused they're like 4 percent. Well yeah, your computers
are cheaper than they used to be. right? Well yeah, but what about gas? People go to the gas pump and
in less than a hundred days gas went from 2 dollars to 3 dollars that's fifty percent.
It goes to 4 dollars in California it's a 100% increase. Same thing with beef
and food and everything. When they raise corporate taxes then the corporations have to charge more
for their goods and services. Folks, this is what happens when we have irresponsible government
spending and the printing of money that causes inflation. So, the only way to make sure inflation
doesn't make you outlive your money is you link your returns to the things that inflate.
I don't like inflation any more than you do but it doesn't hurt me, it helps me.
Simply put, when inflation was 10% or higher in the 1980s I was earning 15 and a half percent
on my favorite vehicle called the laser fund. Now, the laser fund means the liquid assets safely
earning returns. Now, if inflation is at 3 I've usually earned 8 and when inflation
has been 5 I've earned 10. When it's 10 I earned 15. Folks, you have to have your money linked
to the things that are inflating, Most financial advisors get a deer in the headlight look they go,
"How come nobody ever taught me about this?", because most financial advisors
are told just to have your money in the market and you'll come out okay.
Now market volatility is the number one mistake in this series. You can watch that video if you
started out on this one. But you want to have a strategy where you can outpace inflation because
what's gonna happen is inflation at 7.2 percent will double the cost of living every 10 years.
Inflation at 10% is going to double the cost of living every 7.2 years. Inflation at 12% will
double the cost of living every 6 years. What does that mean? Let's say that you could get by
on 50,000 a year right now in less than six years maybe seven and a half years you're going to
need a 100,000 bucks to buy the same gallons of gas and loaves of bread that
50,000 bought just seven years ago. In less than fifteen years you'll need $200,000
to buy the same gallons of gas and loaves of bread that 50,000 used to buy.
So what does it mean? The cost of living doubles every 7-10 years maybe sooner.
It means the purchasing power of the dollar is cut in half every 7 to 10years. If you do
not protect your hard-earned money. If you don't correct this mistake by linking your returns
to the things that inflate. So you'll outpace inflation, you will likely outlive your money.
So I would implore you claim your free copy of this book. I wrote this book it's book number 11
and it's been flying off of our warehouse shelves I've been sending out hundreds of these a week to
people who want to take ownership of their future and avoid these mistakes. The laser fund is a way
to diversify and create the foundation for a tax-free retirement. Click on the link below or
go to laserfund.com share it with someone and you contribute a nominal amount towards the
shipping and handling I'll cover the rest of that cost and I will pay for the book. There's options
there to listen and learn and watch and learn. But this will help you eliminate all 10 dangers
all 10 mistakes that I'm revealing in this series. So be sure and watch the other nine mistakes also.