In the united state health care costs have by every measure, outpaced inflactions and other budget items. For example; the average employee contribution to company-provided health insurance has increase more than 143 percent since 2000 during that same period. Food cost are also soaring.
According to a consumer finances survey, which the federal reserve conducts in 2016. Above was the average amount of debt for each age group.
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- Under 35: $67,400
- 35-44: $133,100
- 44-54: $134,600
- 55-64: $108,300
- 65-74: $66.000
So you can see that, with the cost of living soaring up Every day and the high amount of debt among the working class of American citizen. A lot of folks really don’t have much of a financial cushion by the time they get to the end.
Due to the shift of paying for the retirement plan from the employer (define benefit plan) to the employee (define contribution plan). One that’s to be funded by the employer, the financial future of many has been in a big problem.
And not only that, for many retirees. There end of live comes with major medical costs that can wipe out there entire savings to begin with. In discussing is related issue with a friend of mine not long ago. He told me about a friends father who got a severe lives threatening accident, and a daughter being diagnosed with leukemia. He went on saying this accident wipe out the little savings this man has accumulated. And is now looking for charities to assist him. This is at is seventy one.
This alone can be a big reason you need to be educated money wise. Last fall, a Harris poll conducted for wells Fargo found that a third of respondents between ages 25 and 75- with a household median income of $63,000-weren’t contributing anything to there 401(k) IRA or other retirement savings account.
Taxes and our traditional retirement plan.
Not only that high student loan debt and consumer debt are not letting people contributing to there 401(k). People fail to understand that 401(k) is the most taxes. Government is legally stealing money from people through a 401(k) retirement plan. Because taxes bracket rarely keep pace with real inflation, so you could found yourself in much higher tax bracket just from inflation. And also in most countries there are significant penalties to talking money out of your retirement account before you you retire.
Average people don’t know that there are legal way to keep and make more money, in other to have a save and secure retirement. The government taxes employees and self-employed people most. And they are the people to get less financial security because they hang on to financial security.
has my beloved teacher Robert kiyosaki always said. “The more security you find the less freedom you get”Tweet
okay. Let’s assume you are eighty-five years old and your retirement plan is depleted you can’t return to your former employee and he give you any attention. This alone means you need to be more smart and savvy when it comes to your future and money. Even though you are working now and earning those large paycheck, once you will be weak to work for money.
Even though at retirement you may have payoff your mortgage you don’t have any child to sponsored in college. But don’t forget that medical bills will always skyrocket. Just one life threatening sickness can wipe out the entire or have of of your saving.
The industrial age is far gone. Define benefit is now things of the past. Your employer and the government is no more in charge of your retirement, you are in charge. And when you put all your trust in a 401(k) that does not have any insurance, what if the market crashes like it does some years ago.
- None investors.
- Passive investors
- Active investors
They ate the types that get depleted even at there first year of retirement, they don’t have any asset at all, they expect that some one (such as their parents, their kids, a spouse, a company, or the government) will take care of them when their working days are over.
This group still have money for at least ten or seven years, but they suffer the most if a threatening medical issue come up, and also pay the highest in taxes. They turn their money over to some organization like a mutual fund to manage it. The passive investors who tend to believe the financial planners mantra. Of “work hard, save money, get out of debt, invest for the long term, diversify.”
This is were financial security is. They create a legacy wealth and transfer to generation between them. They are not employees, if they may be “they also have side hustle working for them” they pay the least in taxes because the government give them taxes incentives. This people tend to manage their own portfolio and assets- as well as handpicking their advisor, who are not brockets or sales people. To be a successful active requires a higher financial IQ. More real world entrepreneur business esperiense and a very smart advisory team.
Active investors have full control of there finance and retirement
A good investor has control over there business, and non investors takes the highest risk with lower return, this is because they pick investment which doesn’t welcome control at all like stocks, savings bond and mutual funds. All dangerous pick since investor’s lacks control..
Like Warren buffet says he’s a better investor because he’s is a business man who has control over the six levers of business, which are income, expenses asset value, liabilities financial education, insurance.