As descendants of the exploratory forebears, we are carrying the genetic desire for freedom in all aspects of our lives. The corner stone for the modern civilization is money. As a result, it is not a revelation that most of us have the financial constraint throughout a lifetime.
In the Game of Life financial hurdles encompassed even billionaires. Bill and Melinda Gates global pursuits require a substantial financial backing, much more than the accruement of their personal asset.
For an average citizen in any society, having a financial goal for a life of dignity is a worthwhile ambition. The definition of dignity presented here is not about title, fame or power – it is simply meant be able to finance a life without placing a burden to the immediate family and or society.
How much money do I need to make me happy?
It is not a coincidence that many of us have the momentary curiosity from time to time – specially, when the vocation that brings home the bacon is physically and mentally placing the seemingly ever and greater incremental stress to our general happiness and well being.
Happy is a complex adjective such that out of any ten random persons will have fifteen different definitions – the extra five are the resulted of biological fluctuation that brought on the vacillation from the same person at various moments.
Most of us can generally agree to the statement – a person who leads a dignified life is a happy person.
The “dignified” adjective can be determined with a scientific number – a computable statistic.
A better personal “Money” inquiry would be – how much money do I need to live a life of dignity?
As an example – every single one of us on every single day of our lives will have to satisfy our primordial need of hunger and thirst. If an individual who meet his or her need with the money he or she had earned from an employer who recognized the contribution he or she brought to the organizations, then we can say – the person is leading a dignified life.
On the contrary – suppose a person decided to meet his or her need by extended the hand and begged for money. Without passing a judgment directly to the person, most of us would generally agree – we are not leading a dignified life if we are stuck in the happenstance.
For many of us the definition of dignity is encompassed more than money. In addition, we need recognition from our peers through title and rank.
In this article, we will focus on the basic definition of dignity – the financial number that meets our rudimentary needs with our own personal competence – hence the Dignified Money Play.
Let’s start with the current state of saving by the working Americans in 2018 (source – MagnifyMoney).
We will focus on the median numbers as the averages are skewed by the millionaires and billionaires. Half of the 40 percents workers in the United States have zero saving.
According the US Bureau of Labor Statistics, approximately 59 percents or 155 millions of Americans are employed. That is approximately 30 millions of working Americans have zero saving for any type of emergency.
The next tier of income, the 20 percents, managed to have $34,020 savings. In totality, 60 percents of Americans will not have any money to live a dignified life if facing an unemployment situation which last more than six months.
The more somber financial statistic is revealed by analyzing the saving by age as depicted by the illustration Fig 3 below (source – MagnifyMoney).
How is it possible for the 55 years old worker heading toward retirement and have a dignified life with a mere $24,280 of saving?
As of 2018, the average Social Security benefit is $1413.37 per month or $16960.44 annually. The US Bureau of Labor Statistic reported the median personal income of $865 or $44980 per year. That is a 62 percents drop in standard of living if the worker retired in 2018.
Statistically, nine out of ten workers, 90 percents, will face a lower standard of living for the last 20 years in retirement – as of 2018, the average life expectancy for Americans is 78.7 years.
This is not an inevitable future for 90 percents of the population if the Dignified Money Play is implemented for 35 years – the typical span of the working career for most.
The Dignified Money Play is straight forward and simple – for every dollar earned, live on 85 cents and save 15 cents – 85/15.
The Dignified Money Play is designed with the following baseline assumptions –
- The saving is to be invested with a return between 6 to 7 percents.
- The withdrawal rate at retirement is 4 percents of the invested asset.
- The tax and inflation on earned capital gain and dividends is 2 – 3 percents.
For the inquisitive readers, the famous Trinity study in 1998 by the three professors from the Trinity University is a worthwhile publication for further peruse.
Figure 4 and figure 5 below illustrated a 35 years financial simulation for the 25 years old who executed the Dignified Money Play with an income of $44980 per year – net 2018 tax rate income of $39144.
After 35 years execution of the Dignified Money Play by any 25 years old – African American, Caucasian American, Asian, Male, Female, Gay or Straight – with a net income of $39144 annually, the following financial stats are the end results –
- At the 60 years of age, the 25 years old will have accumulated $836,000.
- At the 63 years of age, the 25 years old will have his / her first million.
- The 4% withdrawal rate from the accumulated saving/investment of $836,000 will generate the income of $33,440.16 for 30 years (Trinity Study).
- The total income of $50400.44 (the average social security benefit is $16960.44 annually) will allow the 25 years old to have a dignified retirement – beginning at 60 and for the next 30 years.
As of the first quarter of the 21st century, the United States continues to rank the wealthiest country in the world. Yet, overwhelmingly 60 percents of Americans are living paycheck to paycheck.
Figure 6 illustrated the financial survey conducted by GoBankingRates.com.
An emergency in the range of $1000 will cause the financial hardship for 71 percents of the people in the above survey.
The Dignified Money Play – live on 85 cents and save 15 cents for every earned dollar – is designed to eliminate the typical financial hardships for life for 60 to 70 percents of the general population.
Fig 7 is the Dignified Money Play for the income range from 20K to 200K.
Fig 8 is the simulation of the execution of the Dignified Money Play for 35 years for the income range from 20K to 200K.
Since the early days, money in one form or another has become the corner stone of civilization. It is the most effective motivator to bring out the innovation from the population.
Unfortunately, many of you will participate in the Game of Life from birth to the death without ever knowing the meaning and your true worth.
Having a financial game plan, the Dignified Money Play, is the crucial step in shaping the life path toward a life worthy of your existence.
Let’s play the Game of Life!
