We ran across a wonderful – and convicting – article on the financial website MarketWatch. It contains an admonition many of us need to hear, especially in our Western consumer-driven society. It also reflects a warning we’ve repeated over and over to our clients preparing for their retirement years.
The title of the article is “Don’t let shiny things reroute your retirement.” You can click here to read this provocative piece (which happens to have been written by a retired Boeing vice president, Henry Hebeler, a frequent contributor to MarketWatch).
The article begins with a sobering – even shocking – statistic: over 40% of baby boomers have no retirement savings. Hebeler points out that many of us like to blame this fact on things we can’t control, like inflation or the slow growth of wages. But these apparently aren’t the true culprits. Instead, the article says, the blame rests on our love affair with what Hebeler calls “shiny things.”
As Hebeler states, “Fishermen know how a little piece of bright flashing metal can attract fish. Some animals collect bright things in their nests. Many humans aren’t much different, but the scale is a lot bigger.” He goes on to admonish us that the cost of acquiring and servicing all these things “takes money that could have been saved and grown over time to support a more comfortable retirement.”
So what are these “shiny things” Hebeler is talking about? Generally they’re expensive choices we’ve made that we later come to regret. Hebeler conducted his own informal survey and came up with a list of some of the top “shiny things” that have sucked up what could have been the retirement savings of many boomers. Here are three. See if you can relate.
The first on the list is Housing. Not only have many boomers bought houses that were too expensive, they spent even more on upgrades and remodels – money that in some cases will never be fully recovered. Other “shiny things” in the housing category include vacation homes and time shares.
The second (and single biggest) “shiny thing” category is the broad term Lifestyle. This refers, Hebeler says, to “keeping up with the Joneses and their kids,” not to mention “wanting it all now” – the demand for instant gratification fueled by easy credit. He also cites the influence of social media on our spending habits, fueling a greater temptation to match our friends’ lifestyles even if we can’t afford it.
Transportation was the third commonly-cited “shiny thing” on which Boomers have squandered money. This not only includes personal vehicles but those for family members as well, coupled with the almost-universal pattern of long-term financing of expensive new vehicles instead of saving for used vehicles and paying cash.
There are several more in the article, and we suggest you take a look – then do what we tell all our clients: examine your own spending habits. The time to make adjustments is now, before the demands of retirement force you to make changes for which you’re unprepared. We can help you, just like we’ve assisted thousands of clients, to establish a retirement plan that allows you to protect your assets and maintain your independence as long as possible. But if you’re going to do that, it’s imperative that you begin the journey as soon as you can.
A good first step: come to one of our free LifePlanning Seminars. You’ll gain valuable information that will help you begin putting all the elements of your retirement plan in place, including finances, medical coverage, legal affairs, housing options and family communications. Click on the Upcoming Events tab on this website for seminar dates, times and locations. We’ll look forward to meeting you and to assisting you in your retirement planning.
(Originally reported at www.marketwatch.com)
