The Life Changing Future Value of Money

For as conservative as I am when it comes to money and investing, I often bore easily, and this tends to force me into taking chances that others might not expect from me. This boredom left me one night about five years ago sitting in bed, fiddling with my financial calculator. While playing around, crunching some numbers, I stumbled upon what was to me, a rather a rude awakening.

I realized that I could, to what I felt was a reasonable extent, determine roughly how much money I would have at the end of my working life. This was like seeing a fast forward of the next 35 or so years. Unfortunately, it included working a 9-5, Monday through Friday job that I really didn't like, in a career in which I really wasn't interested, with only one or two weeks of vacation each year.

Discovering such clarity for some might have been comforting; for me it was demoralizing and de-motivating, and I began to question whether this was all there was to life. Was my existence limited to working a regular job, living by someone else's rules, with only retirement to look forward to? Of course there could certainly be worse fates, but such a realization left me feeling like a caged animal whose destiny had already been pre-determined. So I decided to take a chance, set out on my own, and do something about it.

What I Determined

You might be wondering what I did to figure out what my retirement future looked like. Well, getting a general idea is really pretty simple if you don't get too complex with it. I mean, as long as you know your annual income and multiply that by the number of years until you want to retire, you get a general number of how much you will make in your lifetime, not factoring in things like taxes, expenses, inflation, investment income, real estate growth or loss potential, and all the rest.

Let's say you make $40,000, are 35 years old and want to retire by the time you're 65. If your pay rate stays constant, you will have been paid 1.2 million dollars by age 65. Of course if this is what you're making it likely won't be what you're saving. After taxes and health insurance costs, you've probably cut that figure down to around $30,000 a year, and even really good savers have to spend some money, so let's take out another $20,000 for annual expenses, which leaves you with a saved amount of $10,000.

Investing that $10,000 a year at 5% interest for the next 30 years would leave you with about $664,000.

There it is. After 30 long years, that's it. While this wasn't my personal figure, my number wasn't high enough to make enduring the thought of my life at that point worthwhile for the next 30 years.

Taking a Chance

While I'm not a big risk taker in many aspects of my life, I don't like feeling trapped either. And in the regular working world I felt trapped; tied to a desk, a regular paycheck, and a promotion ladder that was pretty cut and dry. Pairing that with having a good idea of what the next 30-35 years plugging away at work was going to get me, and I just didn't feel like that was the way I wanted to spend the rest of my life.

Everyone is different, but I didn't want my life planned out for me. Personally, I need a little more excitement than that. If it means ending up with less money at the end, that's fine. At least there was a slight chance for a real shot at living the dream. Even if I end up chasing that dream like a greyhound chasing a rabbit until I drop dead of exhaustion, at least it gave me something to chase other than a promotion to the office with a view.

The Result?

So, after seeing the rest of my life planned out for me, and realizing it left me feeling dead and depressed, I left the safety and security of my office realm to explore the unknown. Like a gold hunting 49er heading out into the mountains of California to search for the mother load, I was finally free to chase my own dream.

Departing the world of hotel hospitality in which I toiled to pursue a career in writing was like a breath of fresh air. And although my income suffered, it was worth it. At least now I'm pursuing a line of work in which I wake up excited each morning at the prospects that lay before me. There is the thrill of the hunt as I pursue new avenues of business, excitement of the prospects of what might be, and the hope of one day hitting it big with one of my writing projects.

While hitting the big time may never occur, I'd rather live a lifetime filled with hopeful expectation, than one comprised of skullduggery, where I'm slogging away in a role that leaves me with little excitement or inspiration to succeed other than the prospects of payday, the hopes of an occasional bonus or vacation, and the dream of retirement.

More from this contributor:

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Disclaimer:

The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute legal or financial advice. For financial advice, readers should consult a licensed financial advisor. Any action taken by the reader due to the information provided in this article is at the reader's discretion.