The “three-legged stool” is a financial term that has been used for years to describe a stable, long-lasting retirement.
Do you know why a three-legged stool is so sturdy?
Here’s a quick mathematical explanation: if you hold a cane in your hand, you can move it any way you want. It has no constraints and can move in all 3 dimensions.
If you put one end on the ground, you can move the cane around in a variety of ways, but only in 2 dimensions. The bottom of the cane is rooted to the ground.
If you connect the tops of two canes together and put their bottoms on the ground, they can only move along one straight arc, back and forth. They have one single dimension of movement.
Finally, if you attach the third cane, the tops don’t move at all – they move in zero dimensions. This is what supports a three-legged stool.
The three legs of a stable retirement used to be:
- Social Security
- Employee pensions
- Savings accounts
Sadly, the reality is that the only leg you can truly rely on here is your personal savings, and even those saved dollars become less valuable every year due to inflation.
Is expecting that single leg to support you through retirement realistic? Will it ensure that you live the retirement you’re hoping for?
Now is the best time to test your strategy, to ensure that your one leg is stable and secure!
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