Alexander Lorenzo argues the standard retirement plan fails because $1 million in today's money will need $3.37 million to buy the same things in the future. At average U.S. income and savings rates, it takes 58.5 years to reach that inflation-adjusted target, so he says you need to learn investing, chase higher returns, or build your own business.
You will never be the same human again after learning this one fact about money. The status quo is to work a job, save money like everybody else, invest in an IRA, Roth IRA, or 401 like everybody else, and work till you're 65, retire, and do nothing. And it's always followed up with the fact that it's the safe, right, and proven route. Let's do the math. The average American family makes $80,000 per year. This means that you could save approximately $222 every single month. That's $2,664 per year. And so if you take that $222 and you invest it in the stock market, you'll get On average, 10% a year. But the problem is, is that there's something called inflation. And so if your goal is to retire for $1 million, you have to adjust for inflation, right? Which is not even that much money because if you're living for 20 years, $1 million divided, that's $50K a year. $1 million is not that much. But if you want to retire with $1 million, well, because of the way that inflation works, $1 million will feel like $300,000 today. So in the future, you don't just need $1 million, you need way more than that. If you want $1 million of today's buying power, you need $3.37 million by the time you retire to get the same effect. So really doing the math, it's gonna take you 58.5 years at the average American income to be able to retire with $1 million worth of purchasing power. And again, like we just talked about, $1 million is not even enough. Starting at the age of 21, you'll literally be 80 years old before you can get this type of money. The safe, right, and proven route, it literally is set up for your failure. See, the problem is people never do the math and look at the reality for themselves. They take other people's opinion all the time. So when you start doing it for yourself, you realize that you have to learn how to invest. You have to get more than 10% a year, depending on how you want to live. But if you want to live normally in today's society, you have to get at least 20%, 30% a year consistently, or at least get some big wins, build a business, get some cash flow, learn how to invest. Not everybody needs to own a business, but I will make the blanket statement by saying everybody needs to learn how to manage their own capital.
