Remittance to your future self idea

[Nika]

Seeing a segment on how diligent immigrants and migrant workers are about sending remittances to their family every month, I thought that this may be an interesting way to look at retirement savings.

Imagine that you are living on nothing but social security (whatever it may be), and that every month you are getting a remittance from your younger selves.

How much would you like to receive?

We'll leave out the thoughts of compounded interest and inflation, lets be conservative and say they almost cancel each other out.

So if you can spare $500 a month, it is getting you some nicer groceries and a little gas money. If it is $2,500 this month, wouldn't it be a nice feeling to go to Western Union and get this wad of cash? (You'll just have it in your account, of course, but you can still look at it that way.)

Whatever you save each month is the amount you are sending your future self some much needed cash per month.

I like it, because looking at it this way feels like you have some mastery of time travel

[bjl584]

It sort of works that way I guess and it's an interesting way to think about things. But, I don't think that the effects of compound interest and inflation can be ignored.

If I put away $1000 a month, then I need to make sure that I invest it in such a way that it will compound enough such that inflation won't be as big of an issue at some point in the future. It can't be a 1 to 1 ratio because $1000 today won't be the same as $1000 20 or 30 years from now.

[Nika]

It can't be a 1 to 1 ratio because $1000 today won't be the same as $1000 20 or 30 years from now.

Well, you will also have 20-30 years of compounded interest on that $1000, so I think looking at it as 1:1 is still OK. (of course, you can't have it in a savings account making quarter a percent). But if we go into such detail, one simple tread won't be enough. I was just talking about another way of looking at retirement savings that could perhaps help somebody be more motivated.

[bjl584]

Well, you will also have 20-30 years of compounded interest on that $1000, so I think looking at it as 1:1 is still OK. (of course, you can't have it in a savings account making quarter a percent). But if we go into such detail, one simple tread won't be enough. I was just talking about another way of looking at retirement savings that could perhaps help somebody be more motivated.

Well, yes, it will help you think about things and possibly motivate you to save today so that you will have something for tomorrow. Taken in that light, it shoul dhelp people to think about their future.

[YLTL_Dan]

I can't find it now, but I read a study once that showed people a rendered picture of their older selves and then had them make decisions about their future. The people who didn't see the pictures of their older selves made different choices that were more negative towards their future than the people who saw the rendered pictures.

So there you go, old me... enjoy the sacrifice I just made by eating at home... hopefully you'll find a great way to use it or give it away!

[Gailete]

What a fascinating idea! Also think about what you don't spend now can be money towards your future self or time you don't have to work now. We found out the other day that our propane for the winter is going to be 50 cents LESS than usual which comes to about $500 savings for the winter. That is money we don't have to earn. Since due to health issues we tend to live hand to mouth whether we want to or not, a big chunk of money like that that we don't have to come up with is thrilling. When I used to go out to work and had a pay check, I always looked for opportunities to save money so that if I wanted I could work less or save more. Any $100 saved was one day a month I didn't have to work and it can be turned around so that any $100 you don't have to spend now can be saved towards your future. Whatever helps you save is what is important!