There was a study awhile back at Princeton University by two economic professors that concluded the peak of happiness is at an income of $75,000 per year.
The sponsored study was done in 2010, thus with inflation at 3 percents per years – the income of $97,866 per year is extrapolated for 2019.
Let’s dissect the rationales behind the psychology of happiness behind the number $97,866.
According to the American Community Survey (ACS) in 2017, the median household income for the United States is $60,336 – extrapolated with 3 percents inflation for the 2019 value of $64,016.
Around the world there are established communities with well defined activities. Some are universals and many are cultural specifics.
Some of the universals activities are –
- Securing a mate
- Buying a decent home
- Acquiring a proper transportation
Many of the cultural specific activities are –
- Attending the football game in the United States
- Attending the sumo wrestling tournament in Japan
- Attending the Rugby game in England
- Tasting shark fin soup in China
- Eating the best of Sausages & Sauerkraut in German
- Enjoy the best of dripped coffee in Vietnam
All these activities have one commonality – money is required for the participation.
Monkeys see monkeys do is the rationale behind the happiness for people who have the capability to earned $97,866. We are social creatures and we reside somewhere in some community.
The income of $97,866 is $33,850 greater than the population median household income of $64,016 – ensures the monkey the full social life within its well defined community.
With the earning greater than the median income of the general population, the person in the specific locality can participate in all these activities without the constant feeling of financial constraint.
Being able to effort the life style of the general population is an important piece of puzzle toward the completion of the tapestry of an individual happiness.
In 1859, Charles Darwin published “On the Origin of Species”. It became the foundation for the theory of evolution through natural selection – survival of the fittest.
Competing for resource is the bedrock for all life form. Having a career that made more money than the average population is the next piece of puzzle toward the completion of the tapestry of an individual happiness.
Due to our individual genetic variations, it is easy to understand that a career that makes more money than the average population will have a physical or mental taxation or both on the individual – unless the career is in perfect tune with the individual’s natural potential.
There is less than one percent of the population is fortuitous with the perfect dance between natural gifts and career – they are the geniuses, the Game Changers in the Game of Life.
For the rest of the population, once the compensation for the individual’s utility to the society is greater than the average, the taxation on the individual’s overall well-being begins its toll – hence, happiness is peaked for people who make $97,866.
The Ultimate Money Play is designed with the following premises –
- Humans are social creatures – the majority of the population has a high tendency to be in line with the local specific based life style.
- Every single human being is unique. Consciously and unconsciously, the individual will spend his/her entire natural life to fulfill this specific biological variation.
The design of the Ultimate Money Play is based on the following components –
- The local specific median individual income.
- The scientific research of the 4% Safe Withdrawal Rate (SWR) – readers are encouraged to investigate the SWR topic for additional comfort and understanding.
- The long term average return of investment is between 6 to 7 percents.
- The inflation and tax on long term capital gain and dividends is between 2 to 3 percents.
- The participant is in good health and is highly competitive in comparison to the average population.
The design begins with the research the local specific median individual income. According to the US Bureau of Labor Statistics, the median weekly earnings for full time workers are $900 in the fourth quarter of 2018 – approximately $46,800 per year.
If you live in a state or country where public statistics are not easy to obtain, the next best set of data will be PPP (Purchasing Power Parity) per Capita – this number is typically high due to the fact that the billionaires and millionaires on the top of the food chain will skew the statistics.
Essentially, you will need to determine your peers’ competitiveness for resources in proximity to the area of your residence – eggs, bread, milk, home, transportation, mate and more.
Keep in mind, quality of data determines the quality of the play!
Once the median individual income is determined, multiply the number by 25 – that will be the financial target for the Ultimate Money Play in the specific local economy.
In 2018 and within the boundary of the United States, the financial target for the Ultimate Money Play is $1,170,000.
Below are the financial targets for the Ultimate Money Play of the top 20 countries ranked based on PPP per capita by Wikipedia – keep in mind that these financial targets are skewed by the hyper-wealth at the top of the financial epsilon.
For the United States, we will set the financial target of $1,170,000 calculated with the 2018 BLS data. The $1,487,375 financial target derived from PPP per capita is arguably and psychologically more desirable number – but it will be much harder to execute in time and effort.
Let’s review the characteristics of the last four money plays –
- The Dignified Money Play will take approximately 35 years to execute regardless of income – live on 85 cents and save 15 cents on every earned dollar.
- The Sixty-Forty Money Play will take approximately 20 years to execute regardless of income – live on 60 cents and save 40 cents on every earned dollar.
- The Fifty-Fifty Money Play will take approximately 15 years to execute regardless of income – live on 50 cents and save 50 cents on every earned dollar.
- The Forty-Sixty Money Play will take approximately 10 years to execute regardless of income – live on 40 cents and save 60 cents on every earned dollar.
Now, let’s combine the above four money strategies with the Ultimate Money Play.
Essentially, the Ultimate Money Play gives the player the option of living the median life style. It will require the participants to compete with their peers and earn the necessary incomes to achieve the financial independent in 35, 20, 15 and 10 years time frame.
In essence, the Ultimate Money Play will give the participants in the Game of Life the ability to live the life style of the average population, meeting the innate human behavior – monkeys see monkeys do behavior.
The play sets clear financial targets to the participants based on the individual’s capability and personal endeavor by designed the time frame flexibility and the range of incomes into the play.
Figure 4 and figure 5 below are the financial simulations of the Ultimate Money Play for the 35 years time frame with the net income of $55,058.82.
Let’s assume the participant of the play is 25 years old in this demonstration.
After 35 years of execution of the Ultimate Money Play by any 25 years old anywhere in the world, the following financial stats are the results from the simulation –
- At the 60 years of age, the 25 years old will have accumulated $1,171,966.25. The Financial Independent number.
- The 4% withdrawal rate from the accumulated saving/investment of $1,171,966.25 will generate the income of $46,878.65 for 30 years (Trinity Study).
- At the 58 years of age, the 25 years old will have his/her first million.
Figure 6 below is the financial simulations of the Ultimate Money Play for the 20 years time frame with the net income of $78,000.
Again, let’s assume the participant of the play is 25 years old in this demonstration.
After 20 years of execution of the Ultimate Money Play by any 25 years old anywhere in the world, the following financial stats are the results from the simulation –
- At the 44 years of age, the 25 years old will have accumulated $1,170,000. The Financial Independent number.
- The 4% withdrawal rate from the accumulated saving/investment of $1,170,000 will generate the income of $46,800 for 30 years (Trinity Study).
- At the 42 years of age, the 25 years old will have his/her first million.
Figure 7 below is the financial simulations of the Ultimate Money Play for the 15 years time frame with the net income of $93,600.
Again, let’s assume the participant of the play is 25 years old in this demonstration.
After 15 years of execution of the Ultimate Money Play by any 25 years old anywhere in the world, the following financial stats are the results from the simulation –
- At the 40 years of age, the 25 years old will have accumulated $1,170,000. The Financial Independent number.
- The 4% withdrawal rate from the accumulated saving/investment of $1,170,000 will generate the income of $46,800 for 30 years (Trinity Study).
- At the 38 years of age, the 25 years old will have his/her first million.
Figure 8 below is the financial simulations of the Ultimate Money Play for the 10 years time frame with the net income of $117,000.
Again, let’s assume the participant of the play is 25 years old in this demonstration.
After 10 years of execution of the Ultimate Money Play by any 25 years old anywhere in the world, the following financial stats are the results from the simulation –
- At the 36 years of age, the 25 years old will have accumulated $1,170,000. The Financial Independent number.
- The 4% withdrawal rate from the accumulated saving/investment of $1,170,000 will generate the income of $46,800 for 30 years (Trinity Study).
- At the 35 years of age, the 25 years old will have his/her first million.
Here at 1DesignerLife.com, The Engineer perceives the entire world as an Olympic stadium that hosts the Quadrathlon –
- Finance
- Relationship
- Health
- Humanity
It has been a little over one and half centuries since Charles Darwin published “On the Origin of Species”. As a species, we have been very successful competing in the Quadrathlon – the burgeoning population of 7.7 billion and counting is the unarguable metric.
Yet at the individual level, undoubtedly, there are additional trainings required in the four areas of the competition.
The six money plays, Minimalist, Dignified, Sixty-Forty, Fifty-Fifty, Forty-Sixty and Ultimate are designed for all to participate in the game of finance.
The decision to participate in the game is yours.
Let’s play the Game of Life!
