The Vast Majority of Americans Will Struggle Financially All Their Lives

The book The Miracle Morning: The Not-So-Obvious Secret Guaranteed to Transform Your Life (Before 8AM) features an interesting money-related comment.

Here's what it said:

According to the Social Security Administration, if you take any 100 people at the start of their working careers and follow them for the next 40 years until they reach retirement age, here's what you'll find:

• Only one will be wealthy
• 4 will be financially secure
• 5 will continue working, not because they want to but because they have to
• 36 will be dead
• 54 will be broke and dependent on friends, family, relatives, and the government to take care of them

Monetarily speaking, that's only 5% of us who will be successful in creating a life of freedom, and 95% who will continue to struggle for their entire lives.

Well, that's a depressing series of points, huh?

A few thoughts on this from me:

• Of course, it's not surprising, especially after the stats we've been covering here on this blog lately.
• They don't define what "wealthy" means, so it's impossible to classify it versus "financially secure".
• I'm guessing that the goal for most people reading this would be to be at least financially secure.
• I'm surprised that only five continue working. I would have guessed that more like 30 would do so. Perhaps more are not working due to physical constraints.
• Over half are broke. Ugh.

So of those alive, 92% (59/64) will struggle financially their entire lives.

Why is this? We've been over it before, but it's caused by not following the basics of growing your income, saving as much as you can, and investing for growth (initially) and then income.

The concepts are not hard to understand, but they sure are difficult to implement for most Americans.

Where are you in this group? What does your life look like at retirement?

Comments

[john]

You missed the golden nugget. You only have 64% of making it to 65 years old. You better file for social security at 62.

[Apex]

That is historical data likely including people born in the early 1900s. Those numbers are getting better all the time. For people born in 1950 its already up to 75% of 25 year olds and 70% of infants who will make it to 65 and for those born in 2010 it is up to 85% of infants who will make it to 65 and about 88% of 25 year olds. For those of us born closer to 1970 it is probably somewhere in between, probably close to 80% or so of 25 year olds who would make it to 65.

Also notice that this includes all demographics which includes gang bangers, drug addicts, coal miners, smokers, etc. For white collar professionals with access to quality health care the numbers would likely be considerably better.

http://www.calculatedriskblog.com/2015/05/the-projected-improvement-in-life.html

[MoneySheep]

You will struggle all your life if you believe that living high and glamorously is the way to live life, which is falsely advertised on TV and Web.

Instead of acting like rich by owning consumption artifacts like they show on TV and Web by advertisers, how about live on the principle of how little you can live on.

I know this guy starting out making $8100 per year for 10 years (I saw his 1040). He lived as cheaply as possible and save. He is now a multi-millionaire.

[Apex]

@MoneySheep,

You are correct. Unfortunately you and FMF and Dave Ramsey and everyone else can scream it from the roof tops and 95% of people will never listen. You can reach a few people but most won't listen. This became clear to me when both my brother and a brother-in-law held financial planning sessions that lasted for multiple months for a group of people that were coming to them seeking how to improve their finances. One went through a Dave Ramsey program and one did something else. Nearly every person who was seeking had finances that were wasteful and were shown how they could fix their situation and get on the positive side of the financial ledger. To a person every single one of them looked at the suggestions and said we can't do that. We can't give up that. We didn't come here to learn how to live like a hermit. If that is what it takes then what is the point.

They were looking for magic bullets, the secret formula. People believe there are secrets that require no real work or sacrifice and if only they could know them then they too could have what the rich have. The suggestions by the way were things like drop cable for a while. Stop ordering pizza 2 times a week. Don't buy $100 jeans. These suggestions were offensive and constituted living like a hermit.

Remember, these weren't interventions. These were people who knew they had a problem and were seeking a solution. And the suggestions weren't that radical. But they were still unacceptable to them. If you have people who admit they need help. Seek that help. Get reasonable suggestions and then find them completely unpalatable what hope is there for reaching most people with financial advice?

There is only 1 solution to the savings crisis in our country. It is what I suggested in a previous post on this topic. Govt forced savings.

http://www.freemoneyfinance.com/2016/08/americans-have-low-net-worths.html

The vast majority of people are simply not capable or not willing to manage their own money effectively. As I stated there, I am not arguing for or against such a thing, but history has shown that the vast majority of Americans will retire with very little which will increase the call for more govt programs to help them.

We can have govt programs to force people to save their own money or we will likely get govt programs to provide them with more support. We already have a number of those and we will simply get more.

[FMF]

@Apex

100% on target.

My wife and I used to do free financial coaching which was mostly developing a budget and getting it to balance so people could get out of debt.

We worked with a national organization who would refer people to us when people wrote to them for help. The national organization would send the people our contact info and send us a note that we may be contacted. But the initiative had to be taken by the people -- they had to contact us first, we could not contact them.

If they did contact us, we'd set up a meeting.

These aren't the exact stats but the numbers sorted out something like this:

*Of the people who contacted the national organization, only 30% would contact us (they didn't want the hassle of meeting with someone, I guess)

*Of the people who contacted us, about half would actually set up a time to meet.

*Of the ones who met with us, maybe 25% would do the budget work and meet with us a second time.

*Of those who we got to a balanced budget (and it was HARD to get budgets balanced as we needed to convince them they couldn't afford weekly nail treatments and a new boat), maybe 25% actually went through with it and saw success.

The point is what you stated -- very few people want to change their lifestyles to get on track financially. They want to keep living like they are living and expect a quick fix here and there can change it.

And as we all know, a quick fix does not exist...