The Nest Egg Strategy was re-discovered by John Cunningham, a financial consultant in developing commercial real estate projects with more than 30 years of experience in solving financial riddles and mysteries.
He’s also the author of “Unscramble Your Nest Egg, which focused on the
“Shortly after learning that Financial Planners insist on a 5X “cash” nest egg for retirement, he began to look for ways other than the impossible task of scrimping that much from the monthly budget. Having written an earlier book concerning the the virtue of “principal acceleration,” he wondered what 15 years of mortgage payments would be worth as “alternative earnings.” Bingo!
It’s worth 5x an annual income, almost to the penny. Which makes perfect sense, when you think about it. Since the mortgage payment usually reflects a family’s income and standard of living, it only made sense that transforming it from expense to investment capital would result in a cash nest egg that likewise reflects their standard of living in retirement.
Transforming former mortgage payments into investment capital is only half of the payoff. The other half is earning compound income on the capital. Between 15 years while the account is being built and 20 years during the withdrawal period, compound income will account for fully half of the money paid during 20 years in retirement. Indeed, “getting “time on the side” of Millennials and Gen Z is the secret to retirement. After all, “time is money.”
Time is worth more than people realize. A 4 percent earnings rate might not sound like much but it accounts for half of living expenses in retirement. Returns on a 6 percent rate would be 20 percent higher. Returns on the S&P average about 8 percent over the long term. Simply put, compound earnings is the turtle that always wins the race. In order to unlock these returns, though, you must first save 15 years of career to invest in yourself.
Reallocating your career and making other changes in personal finance that accommodate the New Normal will take time, but every journey starts with the first step.
The first step for John was realizing he had a personal responsibility to provide these insights to Millennials and Gen Z in the same way a doctor has a responsibility to help an injured person he or she meets along the road. And not for a fee, but as a community service.
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