U.S. Retirement Woes

Start by reading "What is Retirement Anyway." Do not approach the problem of your inadequate retirement savings with a defeatist attitude.  If that were the case, first consider an attitude adjustment!

Then, consider this disclaimer:  Trying to repair your self-inflicted financial mismanagement is no different than trying to repair, for example, uninhibited weight gain over a 20-30 year period... a crash diet simply won't work!  Translated, and in simple but direct terms: no-one can attempt or expect to fix years of financial mismanagement in one article, so keep that in mind as your read.

Let's first explore some simple mathematical facts:

If you have $1,000,000 invested in a mix of market-performing Dow stocks, you will likely be able achieve a return of around $70,000 - $100,000 (with reinvested dividends, and before tax) on an annual basis.  This means that a similar $100,000 investment will return $7,000 - $10,000 annually, and so forth.  

Now that we know that 46% of Americans have only $10,000 saved for retirement, we also know that these savers will be able to generate a return of $700 - $1,000 annually, or less than $100 per month.

Hopefully this helps to frame the discussion? 

Now, some further discussion points (likely the first of many posts on the same topic):

1. It is highly improbable that you will be able to "save your way out of trouble."
2. Your inability to save now and invest for your future (or, your ability to consistently spend more money than you earn) requires a fundamental change to your lifestyle, or way of life.  Refusing to acknowledge this would be like an alcoholic saying "one drink won't do any harm;" a smoker saying "I'll quit after this pack of cigarettes;" or a spender saying "my credit score is blown anyway, so getting more into debt doesn't matter."  These are obsessive human behaviors, requiring help - find a person you can trust, who may be able to help you overcome these compulsions (Note: I said "who can help you overcome these compulsions", and not find a person to manage your money, consolidate your debt, etc.).
3. There is likely no-one other than yourself, and (perhaps) your immediate family, who you may be able to rely on for some measure of sustainable financial (or similar) assistance in the future.  However, it is NOT your family's responsibility to help you pay for your mismanagement of your own financial affairs!
4. Alongside # 3 above, note that the government - hopelessly unable to manage the state's financial affairs - also CANNOT be relied on to provide you with financial support in the future.  If you end up getting a regular gratuity from your government in the future, then consider yourself lucky!
5. Pensions - aka Defined Benefit plans - are going away.  If you still have a pension plan, you may be one of very few people to have such a promised benefit for your future.  However, this financial safety net is also "safe as houses."  Or, in other words, nothing is guaranteed, least of all the ability to rely on working people to pay for your relaxed living, when you've stopped contributing.

Famous philosopher, Victor Hugo, was quoted as saying:  

"Forty is the old age of youth; fifty the youth of old age"

If you've read this post to here, you may have arrived, or perhaps are approaching the "youth of your old age."  What we need to do now, is to step up to the retirement challenge and your financial responsibilities.  Start working with me and others to fix the retirement woes of older adults, wherever you may live.  Share the message!

In the next few blog postings, we'll start exploring some solutions to this shared problem.