In 1854, a cholera epidemic threatened the city of London. Public Health Authorities issued vague warnings about ‘bad air.” Dr. John Snow disagreed. Over the long hot summer of 1854, he meticulously mapped every cholera death across the city. His research showed the outbreak centered around the Broad Street pump in Soho. No one really believed his theory about germs, but his research was impressive enough to lead the local council to disable the pump by removing the handle. The cholera epidemic ended.
As a British Army Doctor in WWI, Alexander Fleming, watched in agony as wounded soldier after wounded soldier died from bacterial infection. After the war ended, the Scotsman set out to find a cure. For 10 years he labored and then one morning in 1928, he came to work and discovered mold growing in an untended petri dish by the window. He noticed that the ‘juice’ from the mold was killing the bacteria. He named his discovery penicillin.
As a child growing up in Harlem and the Bronx during the great depression, Jonas Salk saw first-hand the ravages of polio on children his own age. The son of eastern European immigrants, Salk devoted two decades to finding a cure for the disease. Salk introduced his Polio vaccine in 1952. In 1955 it was declared safe. Salk became an immediate hero and celebrity, but he refused to patent the miracle drug, declaring that the patent belonged “to the people.”
As a result of those and other amazing medical advances, we are all living longer. In 1900, life expectancy at birth in the United States was around 47 years. Today it is almost 80. And the longer you live, the longer you are expected to live. If a couple makes it to 65, one of them is expected to live to the age of 92. What that means is that we need more money, a lot more money.
Fifty years ago, people often retired and died almost immediately. Corporations provided a comfortable retirement to retired workers who lasted longer. Today we live even longer and most of us are responsible for providing the money. Lots gets written about saving early and often and taking advantage of company 401k plans. This is certainly good advice, but you need to go further. These days the average person will have 12 jobs in a lifetime. Many of those jobs will be for less than five years. Even if all of those jobs offer a 401k or 401k type plan, we need to make sure those savings are working for us.
Most reputable experts emphasize the importance of stocks as a major component of a successful retirement plan. This is because stocks have historically provided the highest rate or return of any financial asset. That extra return matters. Since 1957, the S&P 500 has returned about 8% per year. Certificates of Deposit currently yield less than 2%. If you were to invest $250 a month for 30 years at a 2% rate of return, you would have $123,181 at the end of the period. But that same money earning 8% will grow to $372,590. Is $370,000 enough to retire? Probably not. You will need more.
There is a crisis facing the citizens of this country no less odious than disease. The savings crisis is real and threatens almost every American family. I and my company intend to take on that crisis locally through a series of Health & Wealth presentations featuring some of the area’s best-known medical professionals. We plan for a frank and open discussion of money and health. Join us for the first of these from 6 to 8 p.m., Jan. 16 at the Cultural Center at Ponte Vedra Beach.
Scott A. Grant is president of local fiduciary asset manager, Standfast Asset Management. In his free time he writes and speaks on a variety of topics.