The start of a new year brings with it my re-commitment to achieving financial stability.  I am like one of those people who sign up for gym memberships in January and by February have given up on going, but haven’t stopped the automatic payments from my checking account.  2020 has been no exception.  I have committed to learning as much as I can about retirement, since it is now on the near horizon for me.  But, I am finding it might be too little; too late.

There are plenty of sources to choose from that warn me of the dire outcomes if I fail to put sufficient money aside.  There are no end of blogs, podcasts, online and TV ads for companies that will insure a good return on my extra income as I age.  Each invites me to put my hard-earned money into their trusted hands and then just go off and exercise at the gym or take a cruise, or indulge in a new-found hobby.

Money_EmotionsMoney is one of those things that carries with it a HUGE emotional charge for me, yet I know it is only a number.  How I feel about my money seems to have less to do with the actual amount than the narrative I recite to myself.  Depending on that story, I can feel ashamed that I do not have enough or guilty that I have so much.  I can tell myself I “should” be doing more, or that I need to watch my pennies.  I have long, involved dialogues about how and why I haven’t saved for my retirement.  I have soliloquies that rival Shakespeare about how I was underpaid, under-appreciated, and why I am worthy of winning the Publisher’s Clearinghouse or Lottery, but won’t play because they are rigged.  I am awaiting a Pulitzer for my work!

The numbers themselves are merely metrics.  If I have enough coming in to cover my rent, my utilities, my groceries, and my mortgage, then I am doing well.  If I don’t, then I am in trouble.  Knowing how much is coming and in going out seems to be the key to this whole thing.  The goal is to have more coming in than going out.  See – I am a financial wizard!

What has changed dramatically for those born just before World War II (which includes many of us now approaching or in early retirement), is the source of where that money comes from.  Social Security was signed into law in 1935.  This was in response to the cataclysmic effects of the Great Depression, causes of which included a wealth distribution gap, an unregulated banking industry and stock market, environmental catastrophes, and lack of government oversight and enforcement. (Sound familiar?)

Employment trends have shifted dramatically in this country in the last half-century, and along with that, who contributes to the retirement pot.  Prior to World War II, most Americans worked for themselves on farms or in small businesses.  After World War II, more Americans became employed by corporations like GM or Ma Bell.  Workers produced different goods in different amounts, and enjoyed higher salaries and job FICAsecurity in white-collar jobs.  The company paid a fair wage due to the hard work of labor unions, and promised a retirement benefit.  In exchange for showing up on time and working hard for 25 or 30 years for the same company, workers came to expect their employer would pay them even after they stopped working.  Americans over the age of 65 were also guaranteed a specific return on their “investment” (FICA) over and above anything their employer might offer.  This was a sweet deal during the boom years of full employment and huge corporate profits.  That this money was essentially put in an investment account for each employee seems to have benefited a lot of Americans over the years.  And before someone got the notion that individuals could do better investing for themselves.

But things changed.  After Americans elected Ronald Reagan, Social Security began to be called an entitlement program rather than a savings program.  As the strength and influence of unions declined, companies dramatically changed their retirement and benefits offerings.  After the recession in the 1980s, many employees were left without guaranteed retirement benefits at all, and were encouraged to start investing themselves in things called annuities, IRAs and 401k’s.

roth-ira-401KThroughout the 1980s and 1990s, distribution of wealth continued to drift away from the middle class resulting in popular culture defining the 98% as besieged and holding the 2% responsible for most of our economic woes.

Over these decades, however, financial behavior hasn’t changed much.  For those who have excess income, the primary financial behavior is to invest.  For those who live paycheck to paycheck, the primary financial behavior is to rely on Social Security or keep on working, depending on family, government services and support or charity to make up whatever gap exists.  Because there is the population bubble, however, a greater number of Boomers may find themselves needing to rely on different sources of income once they stop working.

According to the “401k Specialist”, 42% of Boomers “have absolutely nothing saved.”  The implications of this are not complex.  As a matter of fact, they are as clear as that “E” on the eye-chart.  There are approximately 74 million Boomers in the U.S. today.  That means 31 million will be not only be drawing down their Social Security, but also needing to tap into local, state and federal services, as well as charities, to support them.

Where are the funds going to come from to keep those among us who own property from foreclosure?  Where is the expanded public housing being built to house those of us who can no longer live independently?  Where are the medical providers who will need to accept Medicare or Medicaid insurance?  Who will feed us?  Why aren’t our duly elected officials putting these issues front and center?

saving_penniesEven though I have some money set aside, I count myself among those 42 percent.  My plan to address my financial vulnerabilities includes working until I can’t, putting as much money aside as I can, and trusting that government services will be available to me.  Based on what I am seeing, reading, and feeling, this plan is too little and too late.

While most financial planning is directed at younger investors, the basics remain the same.  Here is a link to a great article in Lifehacker with nested links that might give you a leg up!

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