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Published on February 5th, 2018 | by The Local Staff


Like Sirens to Sailors: Billy McCarthy

Like Sirens to Sailors

When I was growing up, it seemed that my parents had this hidden and ever-expanding list of things I
was too young to do. A quick sampling: ride my bike to school, shoot a BB gun, drive the car (peculiar,
as I was 18 at the time), drink coffee and swim in the deep end. I was never too young, however, to rake
the leaves, cut the grass in the front and back yards, catch the mouse in the kitchen, clean my bathroom,
clean my parents’ bathroom, and stack never ending piles of firewood. Still, I survived. Fast forward 30
years, it seems culture has no list of prohibitions for our youngsters – at all. It calls to them like Sirens to
sailors to “Start now, or you could miss out!” As the father of four boys, you better believe I have a list.
But I will join culture’s call on one topic – saving for retirement. Why start now, you ask? Because one
day you will retire. Because the government shouldn’t take you to raise. And because living expenses
don’t end when the pay periods do.

Most importantly, you save because it’s your retirement. It’s your responsibility.

You’ll want to be ready for it.

Enter: The Rule of 72

The Rule of 72: A rule stating that in order to find the number of years required to double your money
at a given rate of return, you divide the return into 72. The result is the approximate number of years
that it will take for your investment to double. So, let’s say you’re 30 years old and have $25,000 in your
retirement account. Let’s also assume you receive an 8% annual return on your investment. Given the
formula above, your money should double approximately every 9 years. See the illustration below:
Age Balance per Formula
30 $25,000
39 $50,000
48 $100,000
57 $200,000
66 $400,000
Granted, there are assumptions being made with respect to an 8% return year after year. But let’s look
at it another way. Let’s say you opted for the used Ford F150 with that $25,000 rather than having it
invested in a retirement account. Are you even driving that truck 9 years later? If so, a quick value
comparison with Kelly Blue Book and your retirement account will speak volumes. In this example,
buying that Ford is a $25,000 decision that could cost you $375,000. And it should be noted: These
numbers don’t include contributions that you could make to your account over the years or the company
match that you could be receiving. Now tell me again why you’re not saving?
Listen closely and you’ll hear the sound of the Sirens beckoning.
This time, it’s not only safe to listen, it’s imperative.

Start saving now.

Billy McCarthy is a Wealth Manager with CapSouth Partners in Dothan, Alabama.

Contact Billy at 334.673.8600.

Investment advisory services are offered through CapSouth Partners, Inc., an independent Registered
Investment Advisory firm. Nothing contained in this article is intended as, nor should be construed as, an

individual investment recommendation.

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