Yes, I’m a consumer debt expert. But in personal finance, the debt might be stressful, but it is not the ultimate personal finance killer. The lack of retirement savings is.
It is human nature to discount a crisis in the future to worry about a bump in the road today. Technically it is called Hyperbolic Discounting. And that is what most people are doing when dealing with retirement savings. They focus on the struggle to make ends meet today but fail to plan for the known crisis ahead.
Just look at the actual cost of repaying debt versus eliminating that debt quickly and getting back to saving for retirement. Use my online calculator.
People piss away 1 Million dollars in future retirement value by repaying bad debt over five years in their 40s. The numbers don’t lie. Emotions make financial fools of many. A question people need to ask themselves:
Do you have a greater duty and responsibility to fix your financial past or your financial future?
You can take care of the unmanageable debt with a Chapter 7 bankruptcy for less than $2,000 and get to saving for retirement. But, unfortunately, you can’t unwind the clock to save money you never did.
The tiny amount people have saved for retirement is alarming. However, I don’t know the right words to help explain to people that your financial house is on fire and burning to the fucking ground.
Consider this: an employee who makes the median 2020 salary of $35,800 and plans to spend 20 years in retirement will need about $572,800 in total retirement savings.
A recent survey from Anytime Estimate found many boomers believed a company pension or retirement plan would take care of them in their later years. As a result, they did not start to save independently early enough.
Millennials have started saving earlier than boomers and have about $70,000 in retirement savings, putting them on track to reach the $107,000 they need by age 40.
The study showed that only 63% of adults are saving for retirement (down from a pre-pandemic level of 93%), meaning that 37% aren’t saving. Moreover, of those who aren’t saving, more than 1 in 3 have never saved, reporting $0 in retirement accounts.
Additionally, the survey found that more than half of Americans spent some of their retirement savings during the pandemic, and 1 in 6 spent $15,000 or more from their retirement savings.
A whopping 79% of Americans are worried they’ll have to lower their standard of living in retirement, and 56% believe they’ll outlive their retirement savings.
What’s the plan then? Shall we stack you by the curb when you outlive your retirement savings?
Another surprising result was that 1 in 4 Americans, including 30% of millennials, say they will rely on cryptocurrency as a source of retirement income. Hopeful but misguided.
It is hard to reconcile the discrepancy between the belief of half of Americans that Social Security funding will run out before they retire and that most believe Social Security will be their source of retirement funds.
I don’t want to leave you depressed so let’s see what takeaway I can come up with to give you some action item to help you avoid this problem. Let’s see. If you have a problem with debt, call Damon Day, and if you can cut back and start saving more now, do it. If you don’t take action, the only people who will suffer will be yourself and those who love you. The rest of humanity doesn’t give a shit about you.
Have a nice day.
You are not alone. I’m here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don’t give up.
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