34% of middleclass Americans say, ‘they will have to work until they are 80 in order to have enough to retire and maintain their lifestyle.’ That is up from 25% in 2011 and 30% in 2012, according to this year’s Wells Fargo Middle Class Retirement study. The closer the Baby Boomers get to retirement the more vivid and bleak the picture becomes.
I speak to thousands of young people on campuses across America and when I quote this study I always ask for a show of hands, ‘How many of you dream of working until you are 80?’ I am still waiting for a hand. Working until you’re 80 because you want to is okay; but working that long because you have to is not. Read on.
Before I share some facts on the Baby Boom generation, the good news is, this does not have to be you.
The opposite of success is not failure, but conformity. Following the status quo is not a path you want to take.
Normally I let these weekly blogs travel their own path in cyberspace, but this message is so very important I urge you to spread it via a Tweet, Link, Like and the rest. Your peers and you are very much all in this together. Spread the word.
You cannot squander your 20’s. The effect of starting as soon as you enter the workforce and using compound interest over time to your advantage is the game changer.
To warn you where the status quo goes, look no further than the most vivid case study on your horizon, the Baby Boomers in America:
- 25% of 46-64 year olds have NO retirement savings
- 46% have less than $10,000 saved
- 60% say they’ve saved/invested <$25k total
- 1 of 6 elderly live below the poverty level
- 70% say they will work after retirement
- 40% say they will work ‘until they drop’
- 56% have outstanding debt when they retire
- Average amount in the 401k at retirement is 3x last years comp (vs. the necessary 6-8 times)
- 1/3 on Social Security have nothing else but Social Security
- And now this, 34% say they will have to work until they are in their 80’s in order to maintain their lifestyle.
- This does not have to be you:Leave campus with as little debt as possible. You may have student loans, but know that debt is your enemy and you have to fight to have as little of it as possible. Every dollar you don’t spend on campus is victory.
- If you use your credit card to buy something that loses value over time (say clothes or entertainment) and you cannot pay it off at month’s end, then you can’t afford it. “But everyone else does it.” Remember what I said about conformity.
- When you begin work, immediately fund your 401k at minimum to the match amount most employers contribute. Know that fully funding it is a priority. The goal is to put 15% of your gross income toward your future financial independence (and with this you will get there). And never, ever touch those funds until your Golden Years and if so, they will be Golden.
- Read David Bach’s, “The Automatic Millionaire,” or better still, go to his website at http://www.finishrich.com for the free downloadable update, “Start Over Finish Rich 2010,” still very relevant today. My advice, as Nike would say, read it and then ‘Just Do It.’
- Get motivated by reading Wells Fargo’s press release of this year’s report, https://www.wellsfargo.com/press/2013/20131023_middleclasssurvey, you do not want this to be you.
- Install, learn, integrate and use, Quicken http://quicken.intuit.com or Mint https://www.mint.com. Both of these are leading personal money management programs from Intuit, the leader in this space. Everything in life starts with awareness. Awareness provokes actions, actions repeated over time become habits and habits define who we are. The problem is most people are NOT financially 'aware.' These products will change that. Also, while you’re at this stage of your life your finances are the simplest they’ll ever be. You’re more computer savvy than most and you have the time to do this. Integrate this software with all of your bank accounts and credit cards so that you have your own personal financial Radar Screen. This will serve you well over your career and life.
- Relax. If you:
- Do not squander your 20’s,
- ‘Get it’ regarding navigating to financial independence,
- And know ‘getting there’ is an intentional decision, where you in fact become intentional relative to building your financial independence, all will be fine!
You will end up one day, at a relatively early age, with enough discretionary time and discretionary funds to follow your heart’s desire. That, my friends, is Freedom.
Now run toward that goal!