Economists categorize people as wealthy, middle class or poor, but according to my late grandfather that leaves out the layer he was fond of calling “50 Dollar Millionaires”.
According to my grandfather, many people who give the appearance of affluence actually are highly leveraged with little wealth or savings. It was his favorite snarky topic after my father moved our family to an address more prestigious than his own.
While I never considered my grandfather a great philosopher, I thought about him when I read “Seven Resolutions to Get Your Nest Egg in Shape”—a Wall Street Journal call to action published in January. The title is, of course, a parody on all the weight loss promises that top resolution lists each year.
I’ve written about this stress-inducing topic before, but I don’t think it can be said enough that too many people have too little saved for retirement. My observation is that many women, thinking that their husbands have important jobs and often more than decent salaries, feel that they do not have to contribute to the household income. By default they also mistakenly think their retirement savings are adequate, if not robust.
That’s where the $50 millionaire concept comes in. There may be plenty of money for mortgages, clothes and cars today, but is there enough financial security for tomorrow?
According to the Wall Street Journal article (and hundreds more you could find on the subject), 67% of workers say they are behind schedule in planning and saving for retirement. Even more disturbing is the fact that 60% of workers age 55+ have less than $100,000 in savings and investments, excluding home equity and pensions. $100,000 would literally be eaten up in a snap.
With few exceptions, most workers find it difficult to save a tremendous amount of money each year. Houses have an annoying habit of needing repair, big trees fall in windstorms, cars die, refrigerators break and kids need more and more shoes.
The good news is that most financial planners will tell you that saving in even small and steady amounts makes a difference. But it may take more than one worker’s contribution to your family’s nest egg to fund many retirement years. You may not want or need a full-time job, but even earnings from a small part-time job could help your nest egg grow.
The path to retirement security begins when you face the facts. Sit down with a financial advisor and see if your spouse is on track for the retirement savings you need. Then decide if his job has a lifetime guarantee. As the article so aptly says “chances are that your nest egg and preparations for later life need more work than your physical condition”.
The Wall Street Journal did not publish just a scare article—it provides a useful “how to”. Writer Anne Tergesen gives 7 great steps to read, absorb and follow. –KAS
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