The “Layaway Life Plan”


The life plan most of us are taught to follow is to go to college in order to get a good job. Once we get our good job, we are taught to open up a 401k plan and save 10% of our paychecks. After 30, 40, or even 50 years of working, we’ll hopefully have enough saved in order to finally retire.

I call this plan “The Layaway Life” because it is similar to buying something on layaway.

We see something we want at the store and ask the store to reserve the item for us. We set up a payment plan with which we make small payments over time, and when the price is finally paid in full, we can finally have the item we reserved.

The life plan we’ve been taught all these years really is a “Layaway Life” plan because the item we are purchasing is retirement (our time) and we make small payments each month for decades, hoping to finally have enough to be able to live without a paycheck.

The underlying goal with this “Layaway Life” plan is to accumulate a specific net worth by the time we reach retirement age. Consider the following excerpt from Time Magazine:

“The fund company T. Rowe Price advises a multiple of 12 times final pay, while Fidelity calculates that a multiple of eight times pay will do the trick. All the firms use slightly different assumptions. But you can see that they are in the same ballpark and, more importantly, that it’s a big park.”

“Looking at it another way, BTN Research estimates that, assuming 5% average annual investment returns, for every $1,000 of monthly income you want over a 30-year retirement, you need $269,000 in the bank. Let’s consider that same household making $75,000 a year. To replace the commonly recommended 80% of income in retirement — or $60,000 in this case — the household would need $5,000 a month. In this calculation, this household’s number is $1.35 million, or 18 times final pay.”

This “Layaway Life” plan requires $1,350,000 saved before you can purchase your retirement. We make small layaway installment payments out of our paychecks for decades. We trade our time away, working 40-plus hours each week hoping to create a specific net worth amount.

The “Layaway Life” plan values wealth as the most important asset. We sacrifice our time, for decades, to build wealth. Then, and only then, can we finally retire and start valuing our time again.

The problem is we only have ONE life to live.

When we trade away our lives for decades at work, we may end up on our deathbeds asking for more time. We aren’t loving, or perfecting, our lives as Chief Tecumseh suggested in his speech.

The “Layaway Life” plan formula:


“Time is what we want most, but what we use worst.” William Penn

We typically do not understand the true value of our time until it is too late. It becomes too late when our time nears the end. Unfortunately, we don’t always know when the end is near.

In the life-changing book, “Your Money or Your Life” by Joe Dominguez and Vicky Robin, a very valuable lesson about time and money is revealed.

Imagine you’re walking down a dark street at night by yourself and a masked man steps up to you with a gun. The masked man says, “Give me all of your money or I’ll pull the trigger.”

What would you do? Would you give all of your money to the masked man in order to save your life?

I’m sure you would, and this is the incredible lesson for us to use in our lives. With this little scenario, the authors have quickly shown us the real value of our time in comparison to money. Our time is extremely valuable.

However, we don’t value our time properly when we think we have more of it. We make choices on a daily basis elevating money as the most precious commodity. We go to work and give our precious time away in order to receive money. We trade a higher-value commodity (our time) for a lower-value commodity (money) and, oddly enough, think it’s a good trade.

It is definitely not a good trade.

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