I was on a heavily monetized blogsite today, and the author had a well-written article about how most Americans don't have bubkis saved for retirement - the average 401(k) savings being $50,000 while the mean is $2000.
Of course, such surveys can be misleading - this data includes people who are getting pensions from their companies (and thus have no need to save), or people who are 18 years old (and have had no time to save) or people who may not qualify for 401(k) plans (and thus have money in other assets).
But the underlying idea is true - most Americans have under-saved for retirement, and this is alarming. The author goes on to say that the fault for all of this is........Wall Street.
Yes, we are all victims here, and if you don't put any money in your 401(k) plan, this is the fault of "Wall Street Fat Cats" who have cut your investment in half though manipulation of the markets.
Oh, wait, that can't be right. If you chose not to save, then how can they cut your non-existent investment in half?
And since the "great crash" of February 2009, the markets have recovered to levels above the peaks of the year before that.
So how did we lose all that money again?
The author of that piece is selling fear and helplessness, not real solutions. And people like to hear those sort of "answers" to their problems - that there are no answers and you are just a victim, so you might as well not bother trying.
Because that sort of answer feeds into their low-self-esteem, poor financial planning, and laziness. Why bother trying to cut expenses? It all makes no difference - the Wall Street Fat Cats will get it all, anyway. So let's get shitfaced and spend it all.
Sounds like a plan. But I'd rather get shitfaced and be rich, which I think is a better plan, frankly.
One responder to that depressing posting noted that a lot of Americans choose to spend their money instead of saving it, and things like $100 a month smart phones (and buying the "latest model" as soon as it comes out) end up putting them in the poor house.
And like clockwork, a hater responded in knee-jerk fashion, dripping with sarcasm, that it was all the fault of the Wall Street Fat Cats and that a trivial expense like a smart phone couldn't possibly be the reason people don't save money.
But it is, as we have illustrated here.
The people at MoneyChimp had a nice Compound Interest Calculator, and you should use it - often. Because if you plug in that $100 a month smart phone bill, you will see that over a 45 year working life, it costs you $200,000 at even a modest 5% rate of return. Ditto for your $5-a-day Starbucks habit, or that $15 lunch you have at work, or the 8-mpg SUV you CHOSE to buy. It all adds up, over time, and small sacrifices can mean a lot of wealth.
But of course, sacrificing and doing without isn't "fun" - and many people CHOSE instead to try to drown their depression in the distraction of a new toy or endless hours of bad television.
Fine for them, no one is "telling them what to do". But they are making a CHOICE and a poor one at that. That is their business. But don't blame ME for sacrificing and doing without and saving money and then coming after me, via the tax code, to TAKE MY MONEY to finance your POOR CHOICES in life.
And yet, this is what we see happening. Social security benefits will be cut for those who chose to save and do without - and those who spent it all will get a bailout. Those of us who bought modest houses within our means and made the mortgage payments are screwed, as banks write off half the balance on a loan to someone who used a funny-money mortgage.
Yea, life ain't fair. But even with all that, you still come out ahead CHOOSING wealth instead of spending it all.