While my self-image is a 21 year-old cross between Errol Flynn, Clark Gable, and Burt Lancaster when I look in the mirror the reflection back is a 67 year old cross between Mo, Larry, and Curly who really ought to be thinking about retirement. 

After replacing that mirror with a Robin Hood poster, I called my financial advisor to begin a plan for retirement. 

When I asked how much I could save in 2021 his reply was “probably as much as you saved last year”. Since, last year I spent 5% more than I made, that was not a particularly helpful answer.

In reality, if nothing changes then nothing changes. 

As human beings and as businesspeople the chains of habits with which we bind ourselves literally turn our past into our future. 

My advisor then quoted Albert Einstein who said: “Insanity: doing the same thing over and over again and expecting different results.” This evil advisor then pulled out a chart with five hypothetical people planning for retirement who invest in a 10% annual growth individual retirement account. 

At age 26, person “A” takes her $6 fast food lunch money, starts packing peanut butter sandwiches for lunch, and invests that $6 every day until age 65. She will have saved $80,000 and calories, which has grown into $893,704. 

Investor “B” started seven years earlier at age 18 and when she reaches 67 she has nearly one million. 

But investor “E” had parents who invested her dividends starting at age eight. When she reached 67 (this made me sick) she had $4,265,114.

The wicked advisor then reviewed my debt load and flipped the retirement chart over showing what the total cost of interest was if I continued to charge 5% more than I earned and not pay off the balance each month. 

There is an easy rule you can use to work out how your savings or investments can grow with compound interest. Just divide the interest rate (or average annual return) into 72. 

The result tells you how long it will take for your money to double without further savings. If you are earning 10% it only takes 7.2 years to double your money and in 7.2 years that doubles again (now being 4 times more).

On the other hand, if the credit card is at 18% it only takes 4 years (72 divided by 18) to owe twice as much. 

Some of us are brilliant. We charge the toaster on Visa and then refinance the house to pay off the Visa thereby effectively paying off the toaster for the next 30 years.

My wise advisor ended the session with some great advice that I now pass on to you: “Live within your income, not within your credit limit. Start saving now, it’s never too late. 

Take your income, whatever it is and give 10% to church or charity, save 10% for retirement, save 10% for major purchases and live on the remaining 70%. It may mean a reduction in fast-food meals, but it sure beats working the drive-up window at age 65.

Great thoughts for worthy graduates!

Finally, if all else fails, cover up your mirror with an Errol Flynn Robin Hood poster and hope tomorrow never comes.


Charlie Dexter is a professor of applied business emeritus at the UAF Community and Technical College. He can be reached at cndexter@alaska.edu. 

This column is brought to you as a public service by the UAF Department of Applied Business.