I’d like to start by saying that my mom is NOT BROKE. I just got off the phone with her fact checking this post, and she was very concerned that the first slide made it appear as though she’s living in poverty after a lifetime of bad financial decisions. But that’s not the case. She was very successful and has saved well for her own retirement.

That said, it COULD have been a different story if my mom did what many Americans do. Pay into social security their whole lives, expecting something magical to happen when they turn 65. But as you can see, my mom (who was a high income earner for much of her career) paid a lot into social security and isn’t getting much out. Trying to live on $29K/year in retirement would be very rough, bordering on impossible. Don’t let that be you.

That said, my mom is cool! She has a Computer Science degree from the University of Michigan. How many other moms do you know like that?! Also, my mom was a co-owner of my first company (RentLinx). I was a solo-founder but she joined a couple years later. I sold her 30% of the company for the “book value” (basically what we had in the checking account). She paid $1,500 for 30% of the company. Years later, that ended up being a good investment because she walked away with about $1.5M when we sold the company!

If you’re curious where that $3.7M number came from, I took the amount she paid into social security every year, and projected forward how much it would be worth today at a 10% rate of return. Don’t think 10% is realistic? Well it’s not only realistic, it’s real. My mom started paying into social security in 1970. Since then the S&P 500 has had an annualized return of 10.8%. If I used 10.8% instead of 10% that $3.7M would jump up to $4.7M. A good example of why avoiding a 1% fee on your investments is a good idea. 🙂

As always, reminding you to build wealth by following the two PFC rules: 1.) Live below your means and 2.) Invest early and often.

-Jeremy