In speaking with women about financial matters, I’m generally surprised by how frequently I get this response: “I’m good!” For some, these words are a polite way of changing the subject. But many actually believe themselves to be “good”. Walk with me for a moment and let’s shed some light on this belief.
Let’s begin by re-visiting the basic facts about retirement. First, only 5% of the workers in the U.S. are able to retire well. Four percent will be financially independent, and a mere one percent will be wealthy enough to leave a legacy for the next generation. The remaining 95% will struggle to live from age 65 throughout her retirement years.
The second startling fact is the life expectancy of those who reach age 65 is 95 years or more. So the resources amassed during the working years will need to be stretched to cover 30 years plus.
Given these facts, I find it astonishing that most of us in our 40’s, 50’s and early 60’s still think “we’re good.” Each of us seems to be operating under the following assumptions:
- I’m healthy.
- My family is healthy.
- My income is adequate for current expenses.
- I have a retirement savings.
- I have retirement income.
- My family is financially well situated.
- I’m expecting everything to remain “as is” throughout my lifetime.
Assumption #7 is the key and should cause us to pause and think. We find comfort in believing in the stability of things, but this belief is a false one. Realistically, we can expect that our physical health and the health of family members is likely to decline over time. A decline of just 1% each year will result in about a 25% degeneration by age 100. A decline of 2% or more each year will leave us with 50% more health problems and the accompanying increase in expenses which stress financial reserves. Even if one person manages to escape the ravages of age-related illnesses, she will be impacted by the ill-health of someone in the family. The problems of parents, siblings, sons, daughters, nieces or nephews whose health problems can drain family resources.
However, over time, inflation will pose the greatest threat to financial resources. Many economists acknowledge that inflation is alive and well, and some even fear that hyper-inflation is on the horizon. The price of goods and services is increasing at a pace that is greater than wages and other income sources. Our government is printing money, which can only devalue the dollar and stir up more inflation. Banks are not paying interest on savings and many investments are not performing well.
According to the Fidelity Investment Retirement chart, the average retirement savings is $95,776, compared with a suggested amount of $644,000 for a person 67 or over. Obviously, the gap between what most of us have and what we need is huge. And I have trouble imagining that the higher number is truly adequate – it’s only $21,000 per year if you live to be 100! Just a thought!
So, for those who say, “I’m good” and really mean “Let’s not talk about it,” I am pleading with you to talk about it. The topic is too important and the threat is too real to simply not engage. And for those who actually believe you’re good, I am pleading with you to make sure. I am appealing to all of us to consider the reality of our financial future and take action now to position ourselves well.
And what do we have to do? The simple answer is GO BACK TO SCHOOL! The world is constantly changing. Advancements in technology continue to give us options for (1) restoring and maintaining health and for (2) acquiring and preserving financial assets. But these are only available to those who are motivated and those who are relentless in learning to navigate in a new world. Every day we awaken to a brand-new world—changing at the speed of thought. Through the years of the stone age, the bronze age and the iron age, the base of information remained rather static. Then from the 1800’s to the 1900’s information doubled – in just 100 years as the industrial age unfolded. In the 1990’s the base of knowledge began to double every 5 years as the information age gained momentum. And today information grows exponentially as we have fully transitioned into the age of technology. New tools and research are developed and pushed out to the masses with lightning speed. Everything relating to our lives, including our health and finances, is in a constant state of change. What we knew to be true yesterday may be totally obsolete today. Only those who get up each morning and go back to school will succeed in this environment.
School is not a traditional institution, not accredited, has no walls, issues no degrees. School is online, YouTube, apps, blogs, podcasts, conferences, empowerment groups, followings. It’s self-designed, self-directed, self-activated. The individual is totally in control, and totally responsible for her own education. This new world is exhilarating, fun, and terrifying!
If everything you believed turned out to be untrue, when would you like to know?
I’d want to know right now. Time is of the essence. New technology and research is dramatically changing our money and our opportunities to acquire and preserve wealth. Social, political and economic factors that our parents could never have imagined are realities that present phenomenal opportunities for those top 5% who live and retire well.
The bad news is that almost no one can truthfully say, “I’m good.” But if we, together, go back to school and stay educated, we can get to the good place of financial security for life.