The Effects of Taxation and Inflation

cropped-bob-shapiro.jpg   By Bob Shapiro

Jan and John are imaginary friends of mine. They met in High School, fell in love, and decided to get married after graduation, in 1992.

They made a plan which called for sacrifices so that they could be financially independent.

  • They decided they wouldn’t go to college
  • They decided they wouldn’t have children until they were 40
  • They decided to continue their jobs at McDonalds and Burger King, working full time at one and part time at the other – 6000 hours a year between them
  • They would save half their earnings, and make their nest egg grow by 3.5% every year.
  • They expected that, as they gained experience, they would get raises averaging 3.5% every year.

They expected, using these assumptions, that at age 40 in 2014, they would have almost $1,000,000!

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