The Theory Of Financial Relativity

While you already may be aware of Albert Einstein and his Theory of Relativity, it’s worth a refresher before we discuss the theory of financial relativity. There’s a famous example of his theory using a train. Imagine that you are playing ping pong on a train and the train is going 60 miles per hour. The ping pong ball is going 5 miles per hour as you’re hitting it back and forth with a partner. So if you’re on the train, the ball appears to be travelling at 5 miles per hour, but if you’re an observer outside of the train, the ball would appear to be travelling at 65 miles per hour in one direction (60 mph plus 5 mph) or 55 miles per hour in the opposite direction (60 mph minus 5 mph) as speed is relative in his equation E=mc2.

The Theory of Financial Relativity

Now how does this apply to your finances, particularly as you plan for retirement? Well, your finances are relative. To start, there’s no magic number that’s perfect for everyone that means they will feel comfortable enough to retire. Saving a million dollars might feel right for one person, but may not be nearly enough for another. Your retirement number is completely relative to you, and contingent upon so many factors – the most important being what you anticipate the cost of the rest of your non-working life to be, and how long you anticipate that lasting.