With the many uncertainties in today’s new global economy, we have reason to harbor financial doubt and fear in some regard either for ourselves or our loved ones regarding money, debt, retirement, and our retirement readiness. Here are some noteworthy statistics: Consumer debt has doubled in the past twenty years with the average family credit card debt standing at over nine thousand dollars. The average interest rate on this credit card debt stands at 18.9 percent. Making only the minimum payments on this debt, these families will need thirty-six years to pay off their credit cards. Thirty-four percent of workers surveyed responded that they would have to guess to estimate how much money they would need to save for retirement. Personal savings rates have fallen to a negative number for the first time in our nation’s history, down from 10 percent in the 1980s. Outstanding household debt stands at over ten trillion dollars, doubling since 1992. Forty percent of Americans spend more annually than their net earnings. Median household income has risen only 11 percent since 1990, while the cost of living over the same period has risen almost 30 percent.
Thirty percent of workers say they have not saved a dime for retirement. Two-thirds of households have less than ten thousand dollars saved. Sixty-three percent of Americans do not have a financial advisor or plan of any kind. Sadly for many Americans this leaves them hoping to die early or the mathematical certainty of becoming a financial burden to their children and/ or the government. This is not the American dream that I was taught as a young man and it perplexes me to no end, because I know that anyone with some heart and desire can assure a secure retirement if they are willing to do just a little work, practice good money habits and live inside their means. This starts with a gut check. Where am I am now, where do I want to be and how do I get there. There are so many good books, resources, classes and professional people that help Americans on this issue that I really cannot think of a good excuse for one not getting their financial house in order.
I would recommend the following action steps for anyone reading this article and there is absolutely nothing wrong with doing them in this order. Get a Will, Power Of Attorney and Physician’s Directive. Get a reserve account of 3-6 months living expenses. Manage your cash flow. From your net earning live 70%, save 20% and give 10%. Carry the proper insurance coverage regarding life, health, home and auto. Shop these around annually. Meet with a CPA who is a tax planner and explore ways to minimize your taxes. Find a Financial Coach who is a Fiduciary who can help build a well-conceived and appropriate investment plan and who can create for you a model to illustrate your retirement readiness. This person should be someone you like and can trust. Work only with a Fiduciary if you wish to avoid being sold products which is the norm in a self-serving financial services industry. A Coach can hold you accountable to your plan, and this is important as we all tend to be our own worst enemy.
When I speak to groups and I ask the audience to raise their hand if they have a commitment to good health, and of course all the hands go up. Then I ask if anyone wishes, over the last two weeks, if they had visited the gym a little more and eaten a little less. All the hands go right back up. I must admit that I had to raise my hand too. Sometimes I eat well all day and then then to blow it in the evening. Blue Bell has my number...We ALL need a Coach, someone who can hold us accountable to our goals. A good Coach will push back and challenge you when you slack. A good Coach won’t accept behavior that is inconsistent with your goals, and will fire you as a client if you continually practice dysfunctional money behavior. Success in retirement planning is all about a lifetime of good behavior. No investment can save anyone from a lifetime of poor money habits. So what are YOU going to do? Are you going to take my challenge, or keep doing what you have been doing?