The date of the Southern Daily Lunch menu shown here of 1910 is a guess, but notice the menu of the Copper Kettle restaurant in Norman is 1943 during WWII price controls.

1910 Menu

The date of the Southern Daily Lunch menu shown here of 1910 is a guess, but notice the menu of the Copper Kettle restaurant in Norman is 1943 during WWII price controls. Due to inflation, dinner prices in 1943 were 6 times those of thirty years earlier. As a boy, a Pepsi was a nickel. Now I pay $2 for drinks in a restaurant. When teaching at OBU in 1963 I took out insurance to pay survivors $200 a month [one-half of my monthly salary.] I dropped it only a few years later because inflation had made the payout trivial. Assuming a person works to age 65 and lives to the average age of 85, they will need savings to support them 20 years in retirement. They will need big bucks in retirement and that requires long years of savings.

Compound Interest

Compound interest, earning interest in the future on interest accumulated on your past savings will be needed to accumulate an adequate retirement fund. If at age 25 you saved $2000 a year and earned 4% interest annually on it, you would have $60,000 in 20 years, $83,200 in 25 years, $112,000 in 30 years, $147,200 in 35 years, and $190,000 in 40 years. Your accumulated savings would have increased $4,640 per year between years 20 and 25, $5960 per year between years 25 and 30, $7040 per year between years 30 and 35, and $10,560 a year between years 35 and 40. Like an avalanche, your savings would have grown geometrically. This illustrates the importance of starting saving when you are young.

Einstein said, “compound interest is the most powerful force in the universe, the eighth wonder of the world, the greatest mathematical discovery of all time, and he who understands it, earns it, but he who doesn’t pays it.” In his recent book, Capital, French economist Thomas Piketty explained how the return on capital [r] is always greater than the growth in the economy [g] hence inherited and invested wealth explains the permanent advantage of the rich and the current inequality of income and wealth in the world. In the vernacular, the guy living off investments is going to do better than the working man. [1] Compound interest [r] on invested savings underlies his theory


In the thirties my family began saving through a whole life insurance policy which combined both insurance and savings. Each week a ‘debit salesman’ of the Metropolitan Life Insurance came to our house and collected the premium. The week after my birth the premium increased $0.25 to $1.50. During WWII kids bought 10 cent stamps, pasted them in a book, and when filled [$18.75] exchanged the book for a $25 bond. It was a lesson in saving for a generation.

Saving requires the discipline to defer consumption-a character trait not distributed equally among the population. Forty-two per cent of Okies have no savings and 62% have less than $1000—slightly worse than national averages of 39% and 57% respectively.

Here’s how to save that $2,000 illustrated earlier. Put your loose pocket change in a jar every night. My change averages 82 cents a day or $300 a year. Eat out no more than three

times a week and order only water to drink and save $234 annually. Skip on-the-job drinks and snacks saving at least $200 a year. Buy generic foods when available and save at least $1400 a year. These savings total $2134 a year—enough to provide one with the $190,000 at the end of their 40-year work life illustrated earlier. If your spouse duplicates some of these measures, the two of you might have $250,000 by age 65.

Unfortunately, employers have almost universally ceased defined benefit pensions, but some have instituted defined contribution plans employees pay for and which some employers contribute to. Never pass up such plans. [2]

Buy only term life insurance—never whole life. Follow the advice of the second richest man in America, Warren Buffett. In 2007, he made a bet that the S&P 500 stock index would outperform hedge funds. Hedge funds select stocks in contrast to an index fund which ‘passively’ invests in stocks tracking the S& P 500 index selected by a software algorithm [aka robot]. It was a $1 million, 10-year bet with Ted Seides of Protégé’ Partners. By the end of the bet Seides’ funds had gained $220,000 and Buffett’s $854,000. Ignore the ubiquitous ads on television by investment firms claiming to be able to outthink the market. Invest in an index fund which bets on the market e.g., America. Never buy a new car: Buy a fleet car having lots of miles remaining on its new car warranty, and don’t buy an ‘extended warranty.’

If you have a lot of outstanding credit card debt, begin by paying off one you can pay off the quickest then work your way through the rest the same way. As your total monthly payments decline, use the extra discretionary funds increase, use them to pay off debt not make new purchases. Seeing your escape from the debt trap each month will be motivating to continue.

Final Advice

Make a budget including 10% savings and put it in an index fund. If you are a church member who tithes, it will force the lifestyle adjustments required to save that other 10%. With the character required to do this, you might impress your boss enough to merit a raise.

[1] Piketty, Thomas, Capital in the twenty-first Century, Belknap Press, 2013.

[2] Hacker, Jacob S., The Great Risk Shift, Oxford Press, 2006.