The 25 Year Gap Rule

Remember the tagline, “Fall into the GAP”?  Well, a number of years back we started McFie Insurance’ radio program out by reading this tidbit of wisdom from King Solomon about life; “A feast is made for laughter, wine makes life merry, and money is the answer for everything.”[i] Fascinatingly, several folks thought I was quoting from some pagan tome. Maybe they were confusing this quote with Oscar Wilde’s writing where he says, “Young people, nowadays, imagine that money is everything.   Yes, murmured Lord Henry, settling his button-hole in his coat; and when they grow older they know it.”[ii]

Currently, we find that most people still don’t grasp this piece of wisdom because they keep tripping over “The 25 Year Gap Rule.”  And falling into the gap instead of overcoming it isn’t the answer to anything.  Therefore, people continually suffer unintended money and financial consequences because Americans today “save 40 years of their life and earn a zero percent rate of return.”[iii]

“The 25 Year Gap Rule” is unpretentiously: “Saving 2 Xs as much while earning 50% less AND keeping more.”


  • $5,000 saved annually for 24 years earning 10% comes to $442,487
  • While $10,000 saved annually for 24 years earning 5% comes to $445,020

As you can see it is wiser to save more money than to seek a higher and riskier rate of return while saving less.  Saving more overtime will prove that you KNOW money can be the answer for everything. And on top of that you will HAVE money to provide some of those answers.  Here’s why:

  1. With a small fee on your savings account you can lose more money than what you gain on your savings.
  2. Inflation marches on. If you are not able to earn more on your savings than what inflation is eating up, you are losing money.
  3. Higher returns are associated with higher risk. Accordingly, market corrections typically retrace their gains by 15 to 20% forcing people to give up 30 to 50% of their profit margins.
  4. Market Corrections are inevitable.

Because of these basic facts it is fundamental to your financial survival to:

  1. Avoid even small fees on your savings and replace them with contractual guarantees.
  2. Use savings vehicles that are a hedge against inflation.
  3. Overcome the urge to risk your savings to earn higher returns.
  4. Save more money NOW not later. Compound annual grown is the eighth wonder of the world and you don’t want it working against you

Once you’ve come to grips with “The 25 Year Gap Rule” you will be ready to assume greater risk without exposing yourself to financial ruin.  Opportunities will knock at your door.  And with the wisdom you have acquired by understanding how money supplies an answer for everything, you will be in a position to move on certain opportunities without the risk of starting over from scratch because greater risk can develop into harsh reality.

“Money is the answer for everything.”  And understanding this earlier than later will allow you to keep more of the money you make.  And of course, as you know, that will prove to be a sounder solution for you and your financial well being.

[i] Ecclesiastes 10:19

[ii] Oscar Wilde, The Picture of Dorian Gray and other Writings

[iii] Robert Shiller, Nobel Prize Laureate and professor at Yale