Are we are being set up for perhaps the biggest crash of the middle class since the Great Depression? With the stock market over-performing, people have earned high double-digit returns, and we should be celebrating big time, correct?
But if we take the emotion out of this and look at dollars and cents, we are fighting an enemy that is undefeated against man: time!
We are saving today’s dollars to one day stop working and pay tomorrow’s prices while facing the uncertainty of the future. Here’s the scary part: a Google search for the term “retirement crisis” turns up many studies that show we have a colossal problem heading our way.
It’s a simple math equation. We want to stop working at, let’s say, 65. Then we have to factor in our life expectancy, which we have to calculate for the worst-case scenario. Unfortunately, the worst case is actually living too long! Let’s say we live until we are 90. That means the money we saved from our entire working career has to last 20 to 25 years! All the while our money is depreciating due to inflation.
We also have several unknowns, like out-of-pocket medical expenses or catastrophic illnesses, as well as unknown future tax rates. Most individuals are deferring their taxes while using a 401(k) plan, which means they have to pay the taxes when they start drawing that money.
Financial experts say we need to save eight to 10 times our salaries for retirement. But considering all the variables I mentioned, even if individuals can save eight to 10 times their salary, they would likely run out of money eight to 10 years into retirement, if not sooner, depending upon market volatility!
The government allowing Wall Street to have a subsidy has made it one of the most profitable entities on the globe. That’s totally fine if it were to give you the income that would allow you to stop working. But we are living in the first generation that mostly will be without pensions. In addition, there are mixed reviews on the future of Social Security as more and more baby boomers reach retirement age.
My observations and reasoning for what I have shared to this point are based on my early life experience facing retirement after my NFL career ended and I was running out of money. That experience provided me perspective and a forewarning of what potentially will be facing middle-class Americans when they attempt to retire and realize they likely will run out of money.
I have worked in several sectors of financial services for the last 18 years, including real estate, insurance, and credit. I was a former NFL player with a short career who went broke soon after football ended for me. When I went broke I wanted to educate myself on how I went broke so it would never happen again. The interesting thing I discovered was that in order to be labeled a certified financial expert, I would need to be educated and trained on the inner workings of the laws in relation to securities, or in layman’s terms, Wall Street.
Everything points back to people investing in stocks that ultimately make Wall Street wealthier. I wouldn’t have an issue with Wall Street making money if people who invested their retirement savings into the market were able to retire and prosper. I do believe Wall Street has a part to play in someone’s investment portfolio, but to be 100 percent dependent on one system for your retirement savings, and one that isn’t proven to perpetuate your income, is not a wise strategy!
Mario Henry, a former National Football League player, is a financial services professional with 18 years of experience in the industry and author of "How to Hire Your House," an innovative guide on how to create a tax-free pension and sustain sufficient income through retirement. Mario also is a licensed insurance broker and a national motivational speaker. He was a wide receiver with the NFL’s New England Patriots and a scholarship football player at Rutgers University.
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