My Financial Services agent recently visited me. We changed the beneficiary on a small annuity. A review of my annuity shocked me.
When I was ten years old, my fiscal policy was shaped by a rhyming couplet:
“One for the money, two for the show, three to get ready and four to go!”
I’d mow a neighbor’s lawn for a few coins. I’d check the neighborhood movie. I’d change from grubby play clothes to school clothes. I’d spend a delightful afternoon with Frankenstein or The Singing Cowboys: Roy Rogers and Gene Autry.
In 1950 after graduating High School, I went to work summers in the shops at Union Wages of $1.41 an hour. I was rich compared to my part time jobs during the academic year at minimum wage of $0.50 an hour.
But this combination paid for food, shelter, transportation, taxes, tuition and delightful entertainment during my years in college and seminary.
When I married and had children, this childish economic strategy of “One for the money” didn’t work. Painful reality forced me to consider a different economic principle.
Frugality furthers freedom. Borrowing brings bondage. As a husband and father keeping those two in balance created a difficult learning curve.
In 1980, I earned $4.50 an hour. Our daughters were in college. We paid for food, shelter, transportation, taxes, travel and delightful entertainment.
In 2010, I ‘m fully retired. My income is $7.31 an hour. This pays for food, shelter, transportation, taxes and delightful entertainment.
Money is funny. I don’t mean counterfeit money but authentic dollars. The intrinsic value of a dollar bill is tiny: maybe a penny. Its value as a token to purchase life, liberty and the pursuit of happiness varies wildly over time.
Remember the shock a review of my annuity gave me. Thirty years ago when my wife and I bought it, we gave instructions to invest half in blue chip proven stocks and half in growth stocks. We never touched it in all those years either to change investment strategy or take a disbursement.
The agent informed me that since 1980 the annuity gained just a bit shy of ONE PERCENT – less than a penny per dollar in thirty years!
Money as a commodity to maintain life, liberty and the pursuit of happiness has always been funny. Given fifty years of enormous growth in our nation’s wealth leading up to the 21st Century, money today is even funnier!
It’s no wonder Economics is commonly called the Dismal Science.