It’s that time of year! True to form, Costco started putting their Christmas merchandise on sale in October. They, and every other retailer both online and bricks and motor, want you to buy, even if you haven’t done any financial planning for the holidays or cannot afford them! It just seems that sales are everywhere.

Years ago, people used to save more money on a weekly basis, on a monthly basis, on an annual basis. It was the norm to put money aside and not live beyond our means. Today, unfortunately, it seems that people are just buying things, spending money that they do not have.

The Dangers of Loans

When it comes to big purchases like cars, often the loan repayment lasts longer than the car itself. Manufacturers found a way to get more people to buy their cars, often stretching loans to 6+ years. It might be cheaper on a monthly basis, but who wants to risk paying for something that has already gone to that junkyard in the sky? The fact is that most people will not even keep their cars that long and when they try to trade them in they will find out that they are underwater, meaning they owe more money than the car is worth. So what happens, the car dealerships will roll over the balance to a new more expensive loan. It becomes like a treadmill that you cannot get off.

Growing up we used to have Christmas or Holiday Clubs. People would put money into an account at their local bank: a dollar, $5,  $100, or whatever they could afford. At the end of the year, they would have a nice amount of money in their account that they could use to buy gifts for the holidays. Unfortunately, this type of plan, while it still exists, is far from common. Now it seems that whenever anyone has some extra money, they decide to buy something they don’t need, or a bigger, more expensive version of something they do need – anything but save it.

Then and Now

In the 1950’s, 1960’s, or 1970’s, people went to work for a company and the company would put aside money into a retirement plan for them that would guarantee a certain amount of income. Today, almost all companies have decided that they cannot afford to provide these plans. Back in the 1960’s when a worker retired at age 65, about half of them had pension plans from their companies, and Social Security was in existence at that time, but the reality was, life expectancy was only 70 years of age.  Today people, if they choose to retire at age 66 or 67 may live for 20 to 25 or even 30 or more years. A lot of people that reach “retirement age” today really do not want to retire. Some need to work, others like to work and are good at what they do. These people wouldn’t know what to do if they retired. In years to come this might change, as new generations have different ideas about this concept.

401(k)

Today’s companies provide a specific type of retirement plan, a 401(k). The company is now not responsible to provide a specific amount at retirement. It was up to the plan, based upon performance, to provide an income for the retiree. The work environment has also changed. Years ago, it was very common for someone to get a job at a company and stay with that company their whole career. That just does not happen today. People change jobs so much more often today. Their retirement plan (their 401(k)) is rolled over to an Individual IRA, or in many cases the individual will simply just take the money, pay the penalty and tax and then begin all over to save for retirement.

The result of all this “job hopping” is that statistically most people at retirement do not have even $50,000 saved. They rely on Social Security. Younger generations do not even think that Social Security will be there for them as they age. Yet with all this, most individuals today do not have a financial plan.

Everyone Can Save

We believe that all individuals should have a financial plan. Financial plans are not only for “rich” people. Our goal is to help our clients structure ways to save for a home, for education, and for retirement. Everyone can save. You just must learn how.

How much someone saves is irrelevant, it is just an economic decision. The key is to develop the habit of saving. Once that is accomplished the amount saved will naturally increase as you make more money. We help to teach you ways to accomplish this.

For a no cost, no obligation consultation we can help you start a program that will enable you to begin to get on the right track and live a rewarding, less stressful life. Call us at 1 (866) 212-9696 Wealth Preservation Planning, LLC or email us at stevenk@wealthpp.net or brianm@wealthpp.net.