(Thanks to BlogHer pic app for the cool photo!)
“After you get your bucket patched you start to fill it up. Drip. Drip. Drip,” Marlin said. (If you missed the first installment of Confessions of a Millionaire click here for Part 1 and here for Part 2.)
This statement made me wonder… Does faucet size matter? Or is it the size of the drip that matters?
The answer is…it depends on when you start dripping. If you start saving at age 18, you don’t need much of a drip to retire very rich. If you are like a lot of people and wait.
And wait.
And wait.
Your money faucet will have some catching up to do. You’ll need to make like the proverbial cow peeing on a flat rock. Let’s look at Dave Ramsey’s favorite example, Ben and Arthur…shall we?
| Ben and Arthur – Both save at 12% – Both save $2,000 Per Year – Ben starts at age 19 and stops at age 26 – Arthur starts at age 27 and stops at age 65 | ||||
| Age | Ben Invests | Arthur Invests | ||
| 19 | $2,000 | $2,240 | $0 | $0 |
| 20 | $2,000 | $4,749 | $0 | $0 |
| 21 | $2,000 | $7,558 | $0 | $0 |
| 22 | $2,000 | $10,706 | $0 | $0 |
| 23 | $2,000 | $14,230 | $0 | $0 |
| 24 | $2,000 | $18,178 | $0 | $0 |
| 25 | $2,000 | $22,599 | $0 | $0 |
| 26 | $2,000 | $27,551 | $0 | $0 |
| 27 | $0 | $30,857 | $2,000 | $2,240 |
| 28 | $0 | $34,560 | $2,000 | $4,749 |
| 29 | $0 | $38,708 | $2,000 | $7,558 |
| 30 | $0 | $43,352 | $2,000 | $10,706 |
| 31 | $0 | $48,554 | $2,000 | $14,230 |
| 32 | $0 | $54,381 | $2,000 | $18,178 |
| 33 | $0 | $60,907 | $2,000 | $22,599 |
| 34 | $0 | $68,216 | $2,000 | $27,551 |
| 35 | $0 | $76,802 | $2,000 | $33,097 |
| 36 | $0 | $85,570 | $2,000 | $39,309 |
| 37 | $0 | $95,383 | $2,000 | $46,266 |
| 38 | $0 | $107,339 | $2,000 | $54,058 |
| 39 | $0 | $120,220 | $2,000 | $62,785 |
| 40 | $0 | $134,646 | $2,000 | $72,559 |
| 41 | $0 | $150,804 | $2,000 | $83,506 |
| 42 | $0 | $168,900 | $2,000 | $95,767 |
| 43 | $0 | $189,168 | $2,000 | $109,499 |
| 44 | $0 | $211,869 | $2,000 | $124,879 |
| 45 | $0 | $237,293 | $2,000 | $142,104 |
| 46 | $0 | $265,768 | $2,000 | $161,396 |
| 47 | $0 | $297,660 | $2,000 | $183,004 |
| 48 | $0 | $333,379 | $2,000 | $207,204 |
| 49 | $0 | $373,385 | $2,000 | $234,308 |
| 50 | $0 | $418,191 | $2,000 | $264,665 |
| 51 | $0 | $468,374 | $2,000 | $298,665 |
| 52 | $0 | $524,579 | $2,000 | $336,745 |
| 53 | $0 | $587,528 | $2,000 | $379,394 |
| 54 | $0 | $658,032 | $2,000 | $427,161 |
| 55 | $0 | $736,995 | $2,000 | $480,660 |
| 56 | $0 | $825,435 | $2,000 | $540,579 |
| 57 | $0 | $924,487 | $2,000 | $607,688 |
| 58 | $0 | $1,035,425 | $2,000 | $682,851 |
| 59 | $0 | $1,159,676 | $2,000 | $767,033 |
| 60 | $0 | $1,298,837 | $2,000 | $861,317 |
| 61 | $0 | $1,454,698 | $2,000 | $966,915 |
| 62 | $0 | $1,629,261 | $2,000 | $1,085,185 |
| 63 | $0 | $1,824,773 | $2,000 | $1,217,647 |
| 64 | $0 | $2,043,746 | $2,000 | $1,366,005 |
| 65 | $0 | $2,288,996 | $2,000 | $1,532,166 |
| . . . And he never caught up! | ||||
(You can see this chart and other nifty things at Dave’s website.)
Whoa! Can you believe that? That makes me think our boys will be getting a $2,000 Roth IRA for their high school graduation gift along with a busking sign to help pay for tuition. They might roll their eyes, now, but someday they will thank us.
Is your faucet on? Do you drip, trickle or are you gushing?
If you aren’t dripping…what are you waiting for, the government? They’re broke. Bailouts will just bankrupt this country. Be your own bailout and start investing today. Dave Ramsey says 15% into retirement (social insecurity doesn’t count.) Go. Now. Why are you still reading? Open a Roth IRA today.
Simply,
Sis
PS ~ Take away lessons 1) Start now. 2) Automatic withdrawal is your friend. 3)You don’t have to make a huge amount yearly to retire well.
Tags: confessions of a millionaire, evil rich people, getting out of debt, ira, millionaire, rich, roth ira, saving for retirement, saving money, Simple Money
WOW it makes me sick to think that I am theoretically that far behind. I may need to open my faucet a little wider!
I’m fairly certain that my “proverbial cow” is just a bull dribbling in the sand……LOL BUT I do have hope!! Love ya Sis!!!
you forgot to put in what happened when they lost 60% of their retirement savings 2 years ago.
We took Financial Peace in 2005 and are debt free, saved enough for a new to us vehicle, and now put 15% into Roths. It seems like it is choking us to put 15%, though. I stay at home, so we put 15% of my husbands income and we both each have seperate IRA’s… Why does it feel so tight on the budget?
H.Mommie–the important thing is…you start. Since you’re young, TIME is on your side.
Connie–Now that’s a bunch a bull!
You’re comment left me laughing out loud.
Patti–That is a big deal isn’t it? My mom and inlaws are in the same boat. At least the stock market is coming back. Until then stuff is on sale. But the downside is retirement dates are getting moved back. I have a friend who is doing retirement in three waves, retirement from where she works, when that is gone, the Roth IRA she started at 65, when that is gone she’ll sell her home and live off the equity. I like her plan it gives her TIME, which makes money grow and houses build equity. (Hopefully.)
April–We are in the same boat. Dave didn’t say it would be easy. Keep in mind while others drive and eat out on their retirement dollars, you are building wealth with yours. It’s the slow and steady plodders that win the race of life.
I think you are doing great. Someday when your kids are older, you will be able to add to your income if you choose to. Seasons of life really don’t last that long. Good for you for focusing on your family, now while they are around you. God will provide. Sister
Thanks for your voices here, ladies. Love. Sis
Thanks!! That really encouraged me!
Marlin did not lose 60% 2 years ago he took it all out the market because he doesn’t trust government. Marlin paid everything he owns off including his houses and businesses. marlin has been slowly walking money back in to the markets and is up for the year and still debt free. marlin still saves aprox . 25 % of his net take home pay. The most important lesson is constant savings and realize money won’t make ya happy . it will however buy some killer banjos !
This is retarded.
You seem to forget about taxes, interest, deflation, cost of living, and unforeseeable future. Not to mention the market fluctuation and economic downturns.
What matters is what your doing for an occupation, how much you can put aside and for WHAT? make strong investments and start taking high risks alot younger then age 22.
Yes money does not buy happiness. it buys things. and things set you back. so you need more money to pay for them. besides, you never know when your going to die. enjoy what you have and be smart with what you have left over.
and research research research your investments. IF you decide to invest.
its the small things that count. a bed to sleep in and food in the fridge, everything else is bonus. most people don’t even have that!
Wolf ~ I think your love of simple life/things is great. I agree above faith, health and family little else matters. Regardless, being a good steward with whatever you have and planning for the future is important. So we will continue to pay ourselves first instead of with ‘what’s leftover’ even if you think it’s retarded.
Thanks for stopping and sharing your thoughts.
Sis