Jamie Lee Curtis's retirement plan in "Trading Places"

Factual Questions
1

For you financial types… yup, another *Trading Places *question…

Jamie Lee Curtis’s character says she has $42,000 in the bank “in T-bills earning interest,” and that she figures “two-three more years on my back and I can retire.” (Someone correct me if I got the number of years wrong.)

This was 1983. Even if interest rates were double-digit (and I admit I don’t understand the mysteries of compound interest and frankly, don’t even know if it applies here), how would she have enough to retire on in only 2 to 3 years? A person needs a LOT of money to retire on. Enough money to generate a LOT of income.

So… can any banker-types 'splain to me how she was thinking this would work? Thank you.

2

Just a guess, but perhaps she only meant “retire” as in retire from her current business. Perhaps her plan was to buy a legitimate business?

3

Well, IIRC she said something like “I’ll have enough to retire.” I think.

4

No, you’re right that she said that. But you’re also right that $43,000 (or even two or three times that) isn’t enough to retire on, not even in 1983.

5

It’s a movie. Trying to find reality or even logic in what a screen writer says is silly.

6

She also owned the building she lived in, free and clear.

7

Well, the trading scene at the end got explained pretty well in another thread. I don’t think it’s “silly” (what does that word mean anyway?) to ask the question. I’m a writer, and I give thought to things like this, because I know there are readers like me who will ask the questions.

ETA: Okay, owning the building, even in that neighborhood, would be a source of income. So her retirement plan included more than just the $$.

8

Are you sure about that? She said, “Taxis cost money, food costs money and rent costs money! Now, you want me to help you out, I expect a lot in return.”

9

Theline I was talking aboutwas, “This place is a dump. But it’s cheap, it’s clean and it’s all mine.”

10

I took that to mean that she was renting it by herself. Not that she owned the place.

11

So what you’re saying is that, as a retirement scheme, prostitution sucks?

12

It isn’t that bad as far as professions go. You can always drop down to part time work or free-lance in various ways to make ends meet. Corporate types don’t always have such options. You can’t just drop by a truck stop and pick up a few bucks if your specialty is accounting or IT work for instance. Crack whores and meth heads are blessed because they probably won’t have to survive on meager money all that long. You can’t spend much money while you are in jail either.

That does bring up a greater point though. You will hear many people today saying the versions of the same thing. Even half a million isn’t much when you don’t know how long you will live and you are used to a middle-class lifestyle but plenty of people think it is. Now that pensions have mostly gone out of favor in the private sector, you really need to be a millionaire before you can retire safely at 65 and a multi-millionaire before you can retire early. The vast majority of people do not have that and that will put a huge strain on the system as time goes on. I am not sure what younger people will do but I know it generally isn’t fast or aggressive enough right now.

13

What I’m looking for is the numbers. I want to know how she saw turning $42,000 plus whatever she earned in the next 2-3 years into enough money to augment her retirement if not finance the whole thing.

I guess I need to wait until the banks open tomorrow and all the financial dopers start checking the board. :wink:

14

$42,000 in 1983 dollars is about $92,000 in 2010 dollars (source: Department of Labor inflation Calculator)

I always thought she meant “retire from being a whore” not “never work again.” $42k then/$92k now would do that.

15

No you don’t. It is and was impossible to retire on that much money unless you happen to make some incredibly lucky picks and win. The calculations aren’t that difficult but you do need to know the assumptions. I can do that type of financial analysis but it will be based on a throwaway line from a prostitute in a fictional movie.

T-Bills were paying a lot back then but certainly not enough to retire on with that amount in principle. They hit a little over 13.05% on November 1, 1982.. That is for a 5 year T-Bill so that would leave a three year gap in her plans. Based on $42,000 initial investment, she would have:

Year 1 $42, 000 initial investment
Year 2 $47,481 interest $5,481
Year 3 $53,677 interest $6196
Year 4 $60,682 interest $7,004
Year 5 $68,601 interest $7919

5 year T-Bill rates that high haven’t been offered since then (they are at about 1.7% now). Even if they were still offered and she could hold out to year 5, she would have to live on $7900 a year for the rest of her life to avoid cutting into principle and making the future payout even lower. The interest earned is subject federal taxes as well at maturity so she wouldn’t get all of the money when the bills matured. It isn’t possible.

16

Shagnasty, thank you for those calculations and for being a good sport.

I’m thinking she would keep EARNING for the next 2-3 years and meanwhile the interest on the original $42,000 would be compounding (as you show). We don’t know how long it took her to earn the original $42,000, but let’s assume over the next 2-3 years, she earns an additional $30,000.

She had no way of knowing interest would plummet. She made her assumptions based on the rates at the time.

I agree that even if she “retired” with $72,000 in the bank, it wouldn’t kick off enough interest to live on. Maybe she did own the building and could collect rents.
Aside: My father grew up in East Texas and actually knew a kid in the 1930’s by the name of Shagnasty Flint. A name one doesn’t forget.

17

It’s been a while since I’ve watched the movie, so I can’t remember the exact lines.

But did she say she earned that $42,000 in a year? Because if she didn’t say that, then it pretty much throws out all the calculations in this thread.

She may have earned that in a few months or more than one year.