June 20, 2010

Just a quick thought from Adam Smith and I

A dollar today is better than a dollar tomorrow…..

However, most people are saving dollars today that will be worth considerably less in the future. Yet – we hope we have enough depreciating dollars to live off of in retirement. How foolish are we? Why would anyone try to save water in a bucket that has a hole in it?

We’re constantly told that we must save for retirement – especially since corporations have decided to do away with pension plans and require employees to be more responsible for their own retirement. (So, as the pension plan and guaranteed retirement was sliced…in comes the 401K and tentative retirement as employees have to save enough money while working incessantly to keep up with inflation, debt, and those darn taxes.)

Adam Smith (often dubbed as the Father of Economics) 1723-1790, in his interpretation of the Wealth of Nations, discovered that “wealth was an annual flow of goods and services, not an accumulated fund of precious metals.”

Putting that in today’s words – having wealth, or a comfortable retirement for that matter, means that you must have multiple income streams and not just an accumulated amount in your 401K, 403b, IRA or whatever. Don’t let your 401K be your sole means of retirement – it is only designed to be a supplement source of wealth to help fund your retirement.

It’s your life. BE FREE.