It amazes me how someone could reach retirement and have little to show for it. This is especially puzzling when couples and families appear to be thriving financially for decades.
I look around and see people living material-driven lives by spending without reserve. My initial thought is they must be making all the right financial moves. But behind the scenes, we discover that reality is not what it seems.
Behind the scenes
When new clients come to our advocate advisors, we gather their information to build their personal financial statements. This allows us to assess their situation and help them reach their goals, including their children’s education, retirement, etc.
In doing so, I see:
- A lovely home along with a nice mortgage
- New cars, along with large auto loans
- Maybe a boat with a boat loan
- And often, household income exceeds three to four times the national average
A great example is a couple in their early 40s that came to me a few years back. From the outside, it appeared they were doing quite well financially. They had a nice house valued at about $450,000, two nice cars, traveled, their careers seemed to blossom, and their kids were in private school.
But as we dug a little deeper, the picture was quite different. They had a $400,000 mortgage, $50,000 in student loans, $16,000 auto loan, and $35,000 on credit cards.
They had $2,000 in the bank, which will only cover them for the next week or so. This was all the money they had (no retirement savings at all). They were not even living paycheck to paycheck.
They continued to dig a deeper hole, but the people around them saw it differently, and that’s how they wanted it.
Since our initial meeting, there have been no changes in their spending behavior. They have purchased a new luxury SUV and renovated their house, with no significant improvements to their financial situation.
There will not be a happy ending to this scenario unless something drastically changes. Not only will the end be a disaster, but the journey will be miserable, holding them in bondage.
Unfortunately, this is an ordinary reality that retirement financial planners like us have to witness.
Living in the clouds
Retirement savings is not even in the picture for many people retiring in Greenville, SC, and beyond; I often see many with little retirement savings. They may have a few pennies in a 401(k) but have very little, leaving them behind in savings to satisfy their retirement needs. If there were a temporary job loss or a minor emergency, they would be racking up more credit card debt, if that is even an option.
What are some major issues with this?
- They are a few paychecks away from a disaster.
- They are held in bondage by debt because they desire to have things now.
- They have no way to support themselves in their retirement years.
While trying to maximize “fun” now and living for today, they create more stress and strain on their family. As you probably know, more than 50% of marriages end up in divorce, with finances being one of the leading causes.
I’m all for taking risk, but this risk is not worth taking! How can one possibly put their family’s livelihood in jeopardy just to have a nice boat, new cars, and “live it up” today while creating bondage for themselves?
Someone must tell you the truth
If this sounds like you, either:
1) You are ignoring the truth, or
2) Don’t understand what savings are required for retirement.
Therefore, somebody must tell you that you are On the Road to Brokeville. As a fee-only investment advisor serving as a fiduciary financial planner, that is my job!
A few simple questions to ask yourself are as follows:
- Can you pay your mortgage for the next six months if you lose your job?
- Do you have half of your annual income in emergency savings?
- How are you saving for retirement?
- Do you know how much you need for retirement?
- Do you know how much you need to save each year to get to that point?
If you answered NO to any of these questions, now is the time to change course. If no one has dared to tell you the truth, maybe they are just riding this destructive wave with you.
There is hope, but change must start now. Our investment advisors in Greenville, SC, are here to serve as honest, professional partners.
Instead of waking up in a dream, it might be a nightmare, so start now by getting off the road to Broke-ville!!! Those that have a budget and abide by a plan do significantly better financially, with much less stress.
Contact one of our financial advisors at 864-272-0818 to have an honest conversation today! Time is a factor in retirement planning, which is no game at all.