“It can’t wait until tomorrow, it has to begin today.” — Bob Benish, former executive director, Plan Sponsor Council of America.
As we all know, common sense is a valuable commodity. And although there is an industry of people trying to help others save for retirement and they are spending billions of dollars and millions of hours on education programs in the process, the problem remains that people are not saving enough for retirement. The problem is that we have started telling our overall retirement story at chapter three or four, instead of setting the foundation of the story first. People need to learn how to effectively manage their finances today before they can effectively save for tomorrow.
People cannot focus on saving for retirement if they are struggling with financial issues such as credit card or school debt and living paycheck to paycheck. They don’t know what a budget is or how to live within it. If people suffer from financial stress due to a poor credit rating or other related issues, they cannot think in terms of saving in a retirement plan for 20 to 30 years.
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When we talk to people today, what we are hearing is that the most effective retirement wellness programs are those that start with the basics. The basics are to live within your means, control your expenses, and find the way to get out of debt. In other words, people need to live on a budget. What is the objective of a budget? Basically, a budget is a “spending plan” that helps you focus on what’s coming in (your income) and what’s going out (your expenses). The goal is to gain control of your financial life, pay down debt, and start building an emergency fund. Then you can start planning and saving for the future and your retirement.
Paycheck to paycheck
More than half of Americans and 62% of people who make an average of $40,000 a year are living paycheck to paycheck. Most people don’t have the financial resources to handle situations that arise and they have to turn to their credit cards or borrow from friends or family. Thirty-five percent of Americans have credit card debt that averages over $18,000, and the average college debt is $28,400. With some credit cards charging almost 30% interest, as people fall deeper and deeper into a financial hole, they may find themselves paying these excessive interest rates and may be on the brink of financial disaster.
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The bottom line is that people are financially overstressed and they aren’t leaving the stress at home, but are bringing it with them to the workplace, where it impacts employers directly. In order to address the problem, we need a holistic view of wellness and to break down the barriers between financial wellness, physical wellness and behavioral wellness. We need integrated benefit programs in the workplace that look at the whole person. And we need financial literacy programs in our schools, our communities, and in our workplaces. Without this commitment to financial wellness, America faces socioeconomic challenges and the harsh consequences of a “those that have it” versus “those that don’t” society.
Singer, CFP, is the author of three books, including his most recent, The New Financial Wellness: Changing the Conversation. He is also the creator of The Financial Literacy Toolbox, a virtual resource center to help financial advisers, wellness providers or institutional retirement services firms change the conversation about financial wellness. Get more information at
