[quote=Hobie]So true. What troubles me is that financial prudence is not taught ( or understood) at home. High school should fill this gap and really prepare kids in daily life skills including the value of compounding interest.[/quote]
It’s really as simple as understanding exponential functions and how they end in a finite world. The problem with exponential functions is that for each doubling time you expand equal to all the previous production combined. Of course our problem is we fail to see the problem until we’re into the last doubling time. For instance medicare spending has gone from 80 billion to 800 billion in the last 30 years. We think we have time to deal with the problem but based on the doubling time we have 8 years until medicare expands to 1.6 trillion and 16 years until in expands to 3.2 trillion which is more than the entire federal budget.
The sad reality is that everybody can’t live a long comfortable retirement. Retirement for the masses that we’ve seen over the past 30 years is abnormal. It was a result of a huge population explosion where there were numerous children born that would eventually be able to support the adults. We just don’t have that dynamic going forward. Essentially the top 20% by some measure will get to retire comfortably, the rest will scrap by.
