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  • Tom Boyd

Financial Illiteracy: This One Will Cost You

The financial illiteracy crisis in this country costs us a fortune – and this will only continue. It has already crippled the retirement lives of almost half the boomers, and if something isn’t done, the Gen Xers and millennials aren’t going to fare much better. It’s a sad fact, but 47% of boomers have nothing saved for retirement. And a full 21% of elderly married couples, and 45% of unmarried people, rely on Social Security for 90% of their income. The average Social Security check this year is $1,422. That’s $17,532 per year. Most of us spend more than that on restaurant meals and travel. And a full 40% of households with people ages 35 to 64 heading them will run out of money in retirement. The same households have a total retirement deficit of $3.8 trillion. In case you haven’t already figured it out, no one will be left on the street starving. We, and our children and grandchildren, are going to pay that $3.8 trillion bill. Those of our age group who are expecting to run out of money in retirement have few options. We can downsize and live on what Social Security will pay us, or we can return to work. Some of us – not many, but 6% – plan to ask our children for help. These are not the golden years any of us expected. The only explanation for the pickle we’re in is that no one, and I mean no one, has been trained in personal finance.

In my experience, most adults are unqualified to manage credit, spending, retirement savings and any savings at all. It’s a national disgrace. And we aren’t talking about brain surgery, either. This is not rocket science. I hope this doesn’t sound like I’m coming down on just the education system. It’s not the only weak link in this national tragedy, but less than 5% of students in 23 states have to take a stand-alone personal finance course. Considering how badly prepared the boomers are (and the millennials and Gen Xers aren’t much better), that’s pathetic. There is a growing effort to get teachers qualified to teach courses in personal finance, but it’s truly a herculean effort. It’s not impossible, but we’re not going to turn the tide anytime soon. And the proposed changes in the education system will do nothing for the boomers’ situation. Steve McDonald September 24, 2019 (excerpt from Wealthy Retirement)

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