This is the time of year when you hear a lot about scary and frightening things and a lot of those things are not real. What is really frightening is the way people avoid thinking about financial planning and retirement. Earlier this year, The New York Times published an opinion piece entitled “Our Ridiculous Approach to Retirement,” in which they published some startling findings:
“Seventy-five percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts. The specter of downward mobility in retirement is a looming reality for both middle- and higher-income workers. Almost half of middle-class workers, 49 percent, will be poor or near poor in retirement, living on a food budget of about $5 a day.”
The piece was written by Teresa Ghilarducci, a professor of economics, who hopes that “fear can make us all get real.” Rather than becoming so scared we get frozen with fear, we need to face these fears and let the knowledge that we haven’t done any retirement planning spur us into action. Ghilarducci also feels that even if some individuals know what to do, the retirement system needs an overhaul.
She also points out that:
- If there is a poverty crisis among the elderly, it will become a shared, societal issue
- The 401(k)/IRA model is ineffective because it relies on people without financial backgrounds to manage their money the way a professional would
- While you may be able to live longer, you may not be able to work longer for a variety of reasons (layoff, inability to find work, illness)
If you avoid money management because you are afraid, you can get help. In fact, it is wise to seek the advice of a Fee-Only financial advisor who spends time keeping up with the latest changes in the laws that effect your retirement savings. As Ghilarducci comments, you wouldn’t pull your own teeth or wire your own house—get expert help in managing your finances and fear no more.