Your age matters. How many years are left to turn your retirement plans into reality is crucial, an understatement if ever there was one. Over the years, my youngest client has been 22. My oldest? I’ll quote her here: “Sonny boy, let’s just say I don’t buy green bananas any more.” I can still hear her cackle. I miss her. Having switched from the traditional house side of the biz to investments at 25, it took me well over a decade before I was older than a client. 🙂 At 59 I’m now older than most of ’em. In fact, I now have a couple who’re literally less than half my age. Ouch. Most have been taught the concept of the time value of money. Yet, when I speak at conferences/seminars around the country, it becomes painfully evident that that factor is rarely infused into serious analysis, especially when the analysis is comparative in nature. Last week’s post hinted at this most important principle. Here’s a very simple definition, the one I’ve used since the days of teaching after tax cash flow analysis to aspiring real estate agents. More is better than less. Sooner is better than later. More, sooner, is much mo betta. I plead no contest to the charges of corny, and oversimplified. But you understood it, right? Bottom line, sometimes it’s more beneficial to take a buck today than it is to take a couple bucks a week from next Tuesday. Sometimes it’s not. Hence, the intrinsic value of solid, reliable analysis based upon vetted, well researched data. In last week’s post I concluded that having half a loaf today, was better than keepin’ the whole loaf on the path on which it was traveling. There are literally 100’s of thousands of regular people out there with significant capital tied up in their 401k’s or IRA’s. The vast majority of ’em are ecstatic (if indeed true) that their balances are back to the levels enjoyed pre-2008 crash, or a little above. If anyone understands the relationship of time and money, it’s surely them. If it took three years or more for them to get back to pre-crash levels, that’s time they’ll never get back. Meanwhile, they blew out candles on 3-4 birthday cakes. That’s why when folks reach their mid-40’s and older, things like, you know, retirement income, push their way into constant awareness. Today I spoke with a very smart guy, and canny investor in his early 50’s. He’s got well over half a million in various retirement plans. He knows in his heart of hearts that continuing down that road will lead to things other than silly drinks with sillier umbrellas in ’em. Let’s say his balance was, give or take, $800,000. (It’s not, but close enough for horseshoes, OK?) Furthermore, let’s give him 10 years to make a viable retirement for himself and his wife. If he projects a doubling of his account, that would require him to average almost 7.2%/year. That also assumes not one losing year in the next decade. If he’d made that bet 20 years ago, beginning in 1991, he’d of been kinda OK, till his ninth year. Then, as happened to many of my clients back then, much of the stock market lost 35-45%. Oops. I remember one particular client whose stock account went from half a million bucks to just over $300,000 almost before they knew they’d screwed the pooch. But what if he’d began his 10 year period a decade ago, in 2001? Man, he’d of done just fine, as long as he was able to delete 2008. Double oops. So, tell me again why you’re so eager to keep throwin’ your hard earned money into qualified retirement plans. Let’s look at real estate investment over the same two time periods From 1991-2000 the market went from in the sewer (S&L Crisis) to retrenching of values, to, ‘Holy crap on a cracker, look what’s happening to prices ‘n rents!’ Those who could buy in 1991 had little to show till around the latter part of 1997 when measurable improvement began to emerge. It heated up perceptibly through the end of 2000. At worst, there woulda been empirically quantifiable increases in both value and income. From 2001-today the market went from ‘Things are lookin’ up.’ to, ‘Oh come on, not again.’ The thing is, those who invested vs speculated have done just fine with their real estate investments. Even in the hell that has been my own hometown market, San Diego, if you began investing in 2001, the duplex for which you paid $225,000 is now worth roughly $375,000 — AFTER the correction. The rents are appreciably higher too. If they’d then traded their equity(s) into far superior markets than San Diego, their retirements would be well on their way to becoming reality. Compared to having poured untold thousands into their employer’s qualified retirement plan, they have more than a candle’s chance in a tornado of actually sipping from that drink with the silly umbrella. Those who’ve put their trust, and worse, their retirement plans into the hands of Wall Street, are learnin’ a whole bunch about less, and later — and not much about more and sooner. They can pretty much forget about combining more/sooner, unless they change their strategy. Want more articles like this? Create an account today to get BiggerPocket's best blog articles delivered to your inbox Sign up for free Notice, it says change their strategy, not modify. It bears repeating. Take your after tax ‘loaf’ now, start over, and ultimately end up with a far bigger loaf than you’d ever have gotten in your qualified plan. Skeptical? Fair enough. So, how’s that whole 401k/IRA thing workin’ out for ya lately? Bookin’ any cruises? Time is your friend — till it’s not.