I received a copy of Cosco's magazine for business owners today. As I was breezing through the articles to see if there was actually anything of value, I came across a featured member response section with a well known female financial advisor. Being that this particular woman is not one of my favorites, due to her super conservative financial advice (save every penny and dare not enjoy a latte every once in a while), I just had to read what she had to say.
One woman wrote in and explained that at 57 years old, she had $45,000 in an IRA. She was wondering if she should use some of that money to pay down her credit card debt (obviously paying a penalty and tax on it) or if she should keep it for retirement. Her credit card debt was sustantial and bore a rather hefty percentage rate.
What struck me most about the response she was given was the last line of it. The "savvy" financial advisor told her to keep her money in the retirement account because after all, if you spend it, what will you live on when you retire.
Seriously.?!
Let's think about this for a second. This woman is 57 years old. She has $45,000 in retirement. Even if it grows a little over the next 8 years, the woman would be able to withdraw about $300.00 a month if she plans on stretching that $45,000 for 20 years or more. $300.00 a month! What does this woman plan to live on after retirement? NOT THAT!
How deceptive to infer that the woman could live off that...$300.00 isn't even grocery money. Heck...it's not even gas money these days. How about giving her some real advice...like it's time to make some serious money if you ever plan on retiring!
The #1 place I avoid on this planet is Wal-Mart. Now, there are tons of reasons to avoid Wal-Mart...the people, the lines, the quality of everything cheap. But all those reasons are not what keeps me away. It's that every time I've gone in there someone who could be my grandpa is handing me a cart. And it breaks my heart. Truly, it does.
These are good people who worked hard and had the idea that the government or the companies they worked for would take care of them. It was a false concept. We have to learn from this. We have to ensure the next generation understands money: how to make it, how to use it, how to experience it, how to manage it and most importantly...how to grow it. Live for today, plan for tomorrow. My female friend in the Costco magazine would rather us sacrifice today, save for tomorrow. For some I guess that's OK, but I'd rather enjoy my life and have plenty for tomorrow as well.
How is this possible? Through education. The more I learn about money, the more responsible I am and the more control I have. The more control I have, the more responsible I am...it all goes hand in hand. Can you believe I graduated high school without even knowing how to balance a check-book? It's not in any high school textbook. When I graduated college, I had already amounted $5000.00 in credit card debt. A credit card was easy to get and even easier to use.
I had to learn how to make money and more importantly how to manage it. My first year as an entrepreneur I made a little over $480,000. At the end of that year I had a lot of shiny new things and great experiences but nothing saved. I didn't even have the money for taxes, so I had to work even harder next year to pay for last year. I didn't like that and said never again!
Let's educate ourselves and provide real advice to people. Inferring that someone is going to be able to live off of $45,000 for retirement when they are already 57 years old, in my opinion, is deceptive. It perpetuates ignorance. Instead, offer education. Say what the reality is and offer solutions. Empower people to make better decisions and understand the reality of their situation. The ostrich-effect (putting your head in the ground) has left thousands of grandmas and grandpa's serving up burgers and handing out carts. We can be at cause for empowering the current and next generation so they avoid the hang-ups of credit card debt, miss-use of credit and appropriate planning for the future (wealth building).
Here are some great resources I highly recommend:
Rich Dad Poor Dad by Robert Kiyosaki
Why We Want You To Be Rich by Donald Trump and Robert Kiyosaki
Cash Flow game by Robert Kiyosaki
Excellent Post!
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