Key Takeaways
- April is National Financial Literacy month. It calls attention to how much work people of all ages have to do to improve their money skills.
- Over 120 million Americans do not have estate plans. It’s never too early to start one.
- The majority of people in their 70s could run out of money if they live into their 80s and/or 90s. Don’t let this happen to you.
Back in my younger days, the first time I decided to buy a house I asked a friend to help me understand how a mortgage works and other key steps to becoming a homeowner. It’s pretty complicated, especially the first time you do this.
My wife and I were lucky. We sold that first house three years later in a good market and made a little bit of money. If we had tried to do the same thing in 2007, it would have been horrible. In honor of tomorrow’s start of National Financial Literacy Month, which Congress enacted in 2004, here are some sobering statistics about how poorly prepared we are for retirement:
1. According to the Financial Awareness Foundation, the majority of Americans reaching age 70 today are likely to run out of money before they die. They have a good chance of living to age 80, even 90, and they can’t rely on friends, family, nonprofits and the government safety net to cover them entirely.
2. A recent Consumer Financial Protection Bureau report studied the link between financial education and financial well-being and found that most of us seek those within our social network to help us with financial decisions. It’s just like I did when I was young. We tend to seek people we trust, even if they’re nonexperts, to help us with critical, long-term financial decisions. And that’s how a lot of wealth gets destroyed (or never accumulated).
3. Sadly, 120 million Americans do not have an estate plan (i.e., no will or trust). Without an estate plan, you can’t specify who gets your assets or who becomes guardian of your children if they’re minors when you die, or how your medical bills are paid if you become disabled. Even if you don’t consider yourself wealthy, it’s still important to have some kind of basic estate plan.
Now that it’s April, commit to addressing one important money issue you’re struggling with—student debt, for example. Seek out credit counselors or advisors who work for nonprofit organizations devoted to this cause. Financial well-being and financial literacy are two important money areas in which you can keep getting a little better, step by step, every day.
So until next time, enjoy.
Gary