Category: Personal Finance

Students Fail At Personal Finance

Retirement is a scary thought for many. Why? Aside from retirement ringing the alarm that the end is nearing and we need to have fun everyday, 60 year olds and older either have had to tap into their retirement already to live in the present or they have not begun to save money. According to the most recent State of U.S. Employee Retirement Preparedness study from financial education provider Financial Finesse, sixty-one percent of respondents never calculated their retirement.

 

State of U.S. Employee Retirement Preparedness compared those who hike the Appalachian Trail for 2,200 miles unprepared. They forge ahead with no compass for direction or gauge to let them know where they stand, having no idea how long the trip will take or how much food they will possibly need and wearing only a single pair of sneakers. When the picture is painted in that way, there are millions of Americans in this position.

 

A long hot journey has to be planned out. Many are starting out in the wrong vehicle that is unable to get them to their destination. The road to retirement suggests most Americans are starting out unprepared and have no idea why to prepare.

While the numbers are mind numbing and float over the heads of many Americans, employee retirements have improved since 2011. Up from 18% in 2012 and 14% in 2011, the State of U.S. Employee Retirement Preparedness believes the improvement is due to market appreciation and improvements in employees’ investing behaviors, not increased savings. Many Americans do not earn enough to save.

 

If the numbers are still not making any sense, go back to walking the Appalachian mountains. We all need a guidebook or map. If you are young, female, not making nearly the amount of money you are worth or any combination of the three, read On My Own Two Feet: A Modern Girl’s Guide to Personal Finance, subscribe to a personal finance magazine such as Money or signing up for Go Girl Finance to read online.

We are instructed to take a map and structure our retirement plan. There are millions of people out there who have attempted this great feat many times and have failed miserably. The thought of retirement sends them into a depression simply because they cannot afford to hire anyone to structure a retirement plan for them or hire anyone to be sure they stick to the plan. What ends up happening is he or she living paycheck to paycheck with more month at the end of the money.

 

What do you tell those who are over 40 years of age who have been laid off several times due to down sizing or has had to take a job in the meantime at a job working as a barista at Starbucks while they hold a Masters and PhD? Life has happened to them and there just is not enough money to set aside for retirement. It comes down to them making a choice between groceries tonight or putting the grocery money into a retirement account to be able to eat twenty years from now. No one has been able to talk to these people about how to prepare for retirement. What will happen to them?