You and I have a 40 year work life. That means of the 365 days in a year, roughly 250 are spent working and each year that passes is about 2.5% of your total work life. That means if you are 45 years of age, you are about half way there!
Time is finite and we live and act in the fantasy that it is infinite. We have 40 years to accumulate the wealth for those 40 years and 20 beyond. In California that’s $2 to $4 million in capital at work at retirement at age 65 (for 20 years, and somewhat less if you live 10 years longer).
So, let me ask you, how are you doing on your savings? Not how much do you have although a good question, but as a percentage of your gross monthly income, how much have you been saving?
Consider this, in 2004 The Putnam Group did a study of 2,000+ randomly selected retirees and made these conclusions:
- This is a money-worried, cash strapped group
- They are primarily dependant on social security
- Their satisfaction increases as their income does
- 50% experienced a drop in quality of life from before they retired
- 41% had a strong fear of outliving their income
- 78% regretted not saving more when they could
- 16% had a formal written plan for reaching retirement
- 40% of Americans save less than 5% of their net monthly income
- Budgets are rare and seldom used
Due to current events and what’s projected economically for the next five years again we confront having to work longer to take some well earned time off. We may have to create an entirely new conversation for retirement since we may need to work until our life ends. Also, we will likely have little to nothing to pass to our children who will be paying off the debt now being amassed to encourage us to spend, buy, and get this economy going.
The solution, might be to train our children to do it differently. So consider this example of saving consistently for 40 years and 3% income increases every year:
The cry of the ages, save more & spend less. We now know the purpose of savings and lots of it, maybe the US savings rate will stay up & we will discover we not only like it but will live more peacefully doing it. So, what we’ve learned about money so far is about our choices and savings.
