Financial Illiteracy Threatens Retirement

Aspiring retirees face many challenges in pursuit of financial freedom. While job security, financial markets and longevity may be beyond one’s control, desire and knowledge are not. It’s up to individuals to acquire the knowledge to secure their retirement.

 Step #1 is accepting the retirement responsibility. With the exception of federal government employees – some of whom retire with six-figure guaranteed lifetime incomes - no one will do it for you. Not the state government, federal government, brother or neighbor. Accordingly, aspiring retirees must pro-actively seek resources that will get them on the right path 

Step #2 is acquiring knowledge independently. Experts agree on the universal lack of formal education, and as a result, the great majority of Americans are financially illiterate. Acquiring knowledge begins with a desire to learn and a willingness to prioritize the required time. Studies indicate that average daily TV viewing is nearly five hours, with much of it spent on sports or reality shows that provide little, if any, financial expertise. Experts advocate watching programs like MoneyMasters on PBS, and reading books including The Millionaire Next Door by Dr. Tom Stanley, which identifies the common traits and best practices of those who have accumulated wealth, often quietly.

Step #3 is adopting and implementing a saver mindset, which is often the exact opposite of the human nature to spend. Rather than rush to acquire the latest gadget, funds can be used to dollar-cost average stocks with the potential to grow, rather than a new car, which will surely depreciate. A wealth builder is the matching retirement plan contribution offered by many employers. To pass up this free money is a lost opportunity that cannot be recouped. Both the save vs. spend mindset and the free-money 401(k) contribution require discipline, but are more deeply rooted in accepting responsibility for one’s own financial future and a desire for a fruitful retirement.