Allianz Life cited the Retirement Risk Readiness Study, April 13, 2020, to buttress their claim that many Americans are not saving—or cannot save—enough money to retire. Fifty-five percent of non-retirees are worried they will not have enough saved for retirement, while six in ten say running out of money before they run out of life is their biggest worry. “Even the top earners don’t have as much as you’d expect them to have,” says Siavash Radpour, a research associate at the Schwartz Center for Economic Policy Analysis [April 16, 2019].
Entitlements may be cause for the problem, and I am not talking about Social Security, Medicare, or Medicaid. Rather, I am talking about the kinds of things to which people of means feel entitled. Let us look at some examples.
We deserve—or our children deserve—a good college education, regardless of cost. Since we do not want them to be burdened with student loans, we will pay as we go. Money that may have gone to retirement is rerouted to tuition, room, and board, along with the money those dollars could have earned from now until retirement.
We deserve to own our dream home in a good neighborhood with great schools. And, if not great schools, our children deserve private school.
On a flight from Seattle to Kansas City, I heard a man describing his decision to buy a new BMW 7 series, saying that by the time he got to the office, he was relaxed and ready for the day. And if he has a luxury car, how can he do anything less for his spouse?
With professional careers being intense and demanding, we deserve two or three nice—really nice—vacations a year with at least one of them being across The Pond. And we deserve a boat, RV, ATV, motorcycle, or golf membership, too.
We are people of privilege who, in many cases, spent years at the academy to do what we do and earn what we earn, but it is growing clear that those things to which we feel entitled have a direct and present impact on future wealth accumulation. These kinds of entitlements preclude and inform what we can save for the future. They may be the arch enemy of wealth accumulation.
Consider, for a moment, an opposite approach. Know for certain what you must set aside for the future. Then, determine how many “privileges” you can afford. You are entitled to that.
Randall E. Davey, CAP® is a financial advisor with Guide Advisors, Inc. In certain circumstances, he may offer insurance as a sole proprietor or through Guide Advisors, Inc. He resides with his wife, Bonnie in Mesa, Arizona. Randall can be reached at firstname.lastname@example.org or by phone at 425.478.5668.
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