The Value Of A Projected Payoff Diminishes Over Time.

First of all, projections on high risk bets are notoriously overly optimistic. The later in a bull market, the greater the rate of return has been, the more likely that projection will be overstated.

Inflation, of course is the first culprit.

You have to look at the projected payoff in TODAY'S dollars. What is the purchasing power of it then? Getting a million dollars today is significantly more purchasing power and value then getting a million dollars 20 years from now!

Yet tricksters want you to get excited: "Joe, if you bet x dollars today, and the market does its "historical return" (which varies by which period you use and as such you can't know what you'll get) you'll be a millionaire in 20 years".

Let's put aside all the flaws of this reasoning and all the built in assumptions that must be met for it to have a CHANCE (and save it for another time!).

But, in 20 years, it won't be nearly as big a deal to become a millionaire. With a rate of 3% inflation over the next 20 years, that'd be like having $500,000 today. Sure, it's good, be they're greatly exagerating it. Duping the public.

But even if the payoff is the same in today's dollars (real dollars) where say, the payoff is significantly less value.

The age you get the payoff is important. How much time you have left.

And, I don't just mean through EXPIRATION DATE but QUALITY YEARS where you need that money and where it benefits you as much as before.

In reality, there'll come a point where you know you'll outlive your assets. I want to pick a point BEFORE that. Where I can honestly say "I need ALL of this and I enjoy it immensely".

If you were handed a million dollars at 25 that's significantly more valuable than if you were to receive that million when you hit 65.

One reason is that at 65 you have significantly less time to enjoy the money.

Enjoying the money is not necessarily spending it all or most of it. It's reaping the rewards that money provides: Security, freedom, control, comfort, etc.

I see no point taking extra risk and putting up with any stress for an amount that is above and beyond what I really need to live "well enough". Beyond that point, there's only marginal benefit that I sure wouldn't take risk my net worth for. Excess is UN-REWARDED RISK.

If someone says I'll give you a million now or 20 years from now I'll take now, thanks! Not only about inflation but I can invest it and make more. AND, enjoy it NOW. And have years to bask in it.

Even if they offer to give me the inflation adjusted amount I'd obviously rather have it today.

Lower cost of living

Furthermore, your costs will be far less and you will have less need of the excess dollars. When you're old, you don't need overkill, just enough to sustain your existence (very little money is required).

Sure, they say that your medical costs will go up. Maybe, maybe not. Perhaps medicine will be superior then and many illnesses solved cheaply. Research might find good solutions.

Just because medical costs are "going up" (always have been, the key is the RATE) NOW, and are "projected to keep going UP" (again the rate is the key), that doesn't mean that in a decade or two they will be significantly higher or as high a percent of your net worth.

Projections are notoriously WRONG. They just don't bother to show the many projections they made before (scare tactics, fear mongering hype) that failed. And, yet, one should ascertain the WIN RATE of such projections. If they would, they'd not bother heeding such projections.

Besides, while they assume the person with high medical costs will maintain the entertainment, etc. costs, in fact, they will cut that out to fund their medical costs. If you are in such bad shape at an age where remedies are only stopgaps, entertainment won't be so entertaining. If I have a medical bill I can't pay, I'll cut out my entertainment and I'll move to a studio apartment in a cheap area. They instead assume you'll keep the Ferari, mansion in a very expensive are, yacht, entertainment costs, etc. This way they can say "Gee, you need to have a lot more money to cover medical costs, etc. So, you better take much more risk."

Beware of those saying the way to deal with that risk is to jack up your risk. They call it "being on the 'safe side". Yeah, let's play it safe, jack up cost projections NOT because they'll be anywhere near that high and take significantly higher risk, but just to be on the safe side. There are other solutions.

History shows that what we today moan about is usually solved in time. We just don't bother to think about history. The problems people complained about in 1800 and projected to only get worse were eventually solved. We shouldn't allow ourselves to become so negative about the future.

And, you will have social security (or some equivalent if it's done away with - society is generally making progress so what's done away with is usually supplanted with something superior), pension, children who can lend support, etc.

Quality of life.

The suicide rate of men 65+ is 3 times higher than the average male. And the average male's suicide rate is 5 times higher than the suicide rate of females. With a suicide rate 15 times that of the average women in a society that says women have all the problems... one has to wonder how good it is for males 65+.

Excess money when you're old isn't as good as when you're young.

All the money in the world isn't going to do away with the problems of old age. And, it sure isn't going to extend your life much, if at all.

Despite all the hype, there's been little progress on the problems old people faced 40 years ago. Sure, they live longer, overall, but if you live a few years longer with the same ailments, loneliness, wrinkles, baldness, regrets, longing for youth, is that really the holy grail? All the efforts should be focused on QUALITY OF LIFE: We should be able to look and feel the same as we did at 25 our entire life. Why not?

Despite the hype, YOUTH is where it's at. We are just trying to rationalize our old age. Trying to make it palatable. But, this leads young people to wish for retirement, tie up their money for years. Put off doing things till later. What if instead you were told the truth: Do it while your young. You aint gonna do it when you're older.

All these plans to travel 24/7, etc. etc. Who sticks to them when they get so old that medical problems are the fixation?

Will you even be alive then?

You may not be alive then. The odds a 25 year old makes it to 26 vs. a 65 year old making it to 66 are greater.

Will you be senile?

You may not be coherent (of sound mind and body).

Benefits of money

You will not reap the same benefit. At 25, money has significantly more value to a guy. Pride, sense of succes (at 65 you can't do as much bragging about it! Few are impressed if you took so long to hit it big), getting attention of women, status, etc.

The older we get the more that money is merely for survival. The benefits dwindle.

As we age we should be LESS willing to "buy and hold stocks" and wait 15+ years for any gain to POTENTIALLY be better than lower risk alternatives.

Sure, in the short term, rates of return can be 25%+ but in 3-5 years of that most have not made much money. It will take years of upping the bet as one ages to MAYBE add up.

A key problem is that people EXTRAPOLATE those 25%+ returns. As if that will last 20+ years. Dream on. Even the top traders have a tough time doing that.