The secret to retirement? Contabulation

The news these days is full of financial advice for people in their 40s and 50s who might be concerned that they haven't saved enough for "retirement." Experts seem to agree that the wisest financial strategy available to such folks is foregoing their $5 morning latte and investing those savings in various miracle stocks, which will yield a shining pot of gold at the end of the retirement rainbow. That, and pack a lunch.

Beyond that, they haven't got a clue.

The painful truth is that it's virtually impossible for anyone trying to sustain a family on either side of Minnesota's median income — $59,000 — to even think about retirement, let alone plan and save for it. Why? Because at the same time they're supposed to be socking away those retirement funds, these people's finances are being sucked dry by the cost of raising children, the expense/extortion of sending those children to college, the financial needs of their aging parents (e.g., drugs Medicare doesn't cover), car loans, the interest on their credit-card debt (Minnesota's average: $4,541 per person), home repairs, cellphone bills, medical emergencies, dental work, and the rising cost of everything: health care, food, clothes, beer.

To make matters worse, corporate America is busily ridding itself of people in their "prime earning years," precisely because they do make a decent salary. So, 40- and 50-somethings can add to their list of financial stressors the prospect of unemployment, underemployment, self-employment, retraining or bankruptcy.

Indeed, for those of us who already drink green tea in the morning, work at home, eat leftovers for lunch, shop at Aldi and wear the same socks three days in a row, there doesn't seem to be much hope. For us, the prospect of living to 90 or 100 is terrifying, because it would take at least 340 years at our current earning level to undo the financial devastation incurred during the first 25 to 30 years of our working lives.

There has to be a better way.

Fortunately, there is. It's called "happy math."

Happy math works like this: Suppose you buy a coat at a thrift store for $20, but that same coat would cost you $200 at Macy's. That means you have "saved" $180, which you are now free to spend somewhere else.

Using the $180 you saved on the coat, let's say you then go to Best Buy and get a $600 HDTV on sale for $180, thus saving another $420. Flush with those savings, you then score a $5,000 piano on Craigslist for $400, netting you savings of $4,600, plus the extra $20 from the TV coup. You now have $4,620 in savings, which you can use to buy that Groupon for a two-person luxury cruise to the Galápagos Islands valued at $12,000.

Using the $7,380 you saved on the Galapagos trip, you are now in a position to buy a used Mercedes-Benz with a Blue Book value of $15,000 — which leaves you with only $7,720 in savings, I'll grant. But hey, now you're driving a Benz!

If you've ever wondered how governments can continually boast about budget "cuts" while increasing spending, it's because they are using the fabulous, number-neutering principles of happy math. But it isn't just for governments. Using happy math, anyone can go from having practically no money whatsoever to living a rich, satisfying existence supported by a cloud of ever-expanding savings.

My wife and I used to worry constantly about our financial future, but now we estimate that by the time we are 90 and ready to slow down a little, we will have accrued millions in savings — all because we discovered happy math before it was too late.

I want to share the miracle of happy math with everyone because I am concerned about the future. For our generation, it's the only way the numbers work.