This week’s CBTV show is entitled, “Are You Ready for – The New Financial Reality?”
What’s causing this “New Financial Reality?” A perfect storm really, such as: the continued volatility in the stock market, the uncertain future of Social Security and Medicare, the real estate collapse, mortgage foreclosures, high unemployment, the staggering national debt, dwindling personal savings, and much more. The number of people concerned about their long-term financial future has risen dramatically, to two-thirds of all retirees and working Americans, according to the Principal Financial Well-Being Index. As a result of this loss in confidence, many Americans are downgrading their expectations for the future, and being forced to take more personal responsibility for their financial future than ever before.
There are many contributing factors shaping this “New Financial Reality, most importantly is the current and future state of our economy. Americans can’t hide from the fact that Standard and Poor’s downgraded long-term U.S. debt for the first time in history, and that the unemployment rate has continued to linger above 9%. Real estate values for most Americans, has continued to remain low, and the stock market volatility has been so unpredictable that millions of Americans have lost trillions of dollars in their retirement plans. We also, can’t help but be concerned about pension plans that are “under-funded,” and the very real possibility of Social Security going bankrupt in 2036.
However, the “New Financial Reality” is self-made as well. Not everything happening to boomers and retirees are because of external pressures – some are because of internal pressures and decisions. For example, some people have lost their confidence in retiring comfortably because they’ve spent the greater part of their adult life spending everything they’ve made, to keep up with the Jones’. Here’s some late-breaking news: the Jones’ are broke, too! Unfortunately, instant gratification has replaced delayed gratification, and as a result, a new financial reality is on the horizon for many. A prime example of this, is the “reality” that more than half of all U.S. workers have less than $25,000 dollars in savings and investments, according to the Employee Benefit Research Institute’s latest Retirement Confidence Survey. That type of savings won’t get you through the first year or two of retirement, let alone a more than likely 20-year plus stretch. Now is the time to get serious about your financial future, by writing out a monthly budget, spending less and saving more! Your retirement success depends on it!
The key to dealing with this “New Financial Reality,” is to make better informed financial decisions, and rethink your approach to preserving and protecting your money, through your own personal checks and balances system. This may involve doing a number of things differently, including finding additional ways to pay off debt, stretching your paycheck (or unemployment check), hoarding your nest egg, reanalyzing your retirement plan, keeping up with payments on an upside down mortgage, or saving as much money as you can each month. You have two choices when it comes to your financial future, either accept this new reality, and work hard to make your financial dreams come true, or just hope for the best, but don’t change your spending and savings habits. The choices you make now need to be the right ones, if you’re ever going to achieve financial security and stability in retirement.
I would like to hear from all of you who have read this blog. Do you agree with me that we are all living in a “New Financial Reality” that will continue on, perhaps forever? What steps are you taking to financially succeed in this new reality? Until next week, Dump Debt, Invest Wisely, Believe in Yourself and Make it Happen!
-Matt
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