Your Financial Reckoning Day Is Coming . . .

For those familiar with the title this is not a review of the book by Bill Bonner of the same title (although I highly recommend you read it). This is about a day of financial reckoning for a lifetime of decisions that you have made financially. In other words, the day where you finally realize that all (or most) of the decisions you have made about money over the course of your life either worked or didn’t work.

The reason I am talking about this comes from my encounters with people who are the verge of retirement. Being a financial advisor and author of a book on personal finance I run into people who upon learning about my book or what I do say to me (paraphrasing) “I don’t have any money so you really can’t help me.” In response, I typically offer a polite smile and simply say “that’s okay, all the best to you” but deep inside I feel a bit of worry for these individuals. Even though the person is usually smiling I feel this is far from a laughing matter.

Now I realize it is totally possible the person has money and they are just trying to avoid talking about it or getting a “sales pitch” from me but I venture that many of them may not have money. Not having money on the verge of retirement is a serious issue and one not to be taking lightly. I understand the whole idea of “wanting to live life” when they were younger but understand for almost everyone there will be a tomorrow. A future in which a person will either have money or not have money. A future in which a person might have to decide on spending money for food or on medication for their health care. A future in which a person is either living at home or living with their kids or in a nursing home.

Laughing about not having money on the verge of retirement is about as serious as it gets when it comes to your financial reckoning day and means that you have effectively mismanaged a lifetime worth of earnings. Living a long life will become a curse too many people as they realize that they will live a lot longer than they expected. Can you imagine working for 40 years then being retired for another 30 years? Now imagine having no money for those 30 years of life in retirement.

Have you noticed I haven’t even mentioned health care expenses? This is just about having money for the basics to live. A recent report by Fidelity found that a couple retiring at age 65 will need $240,000 saved to pay for healthcare expenses throughout retirement and that expenditure will eventually consume nearly 61 percent of a retiree’s social security payment. The average SSI check is only around $1200. Another study by EBRI found that outside of home equity (which most people don’t have anymore) and pension plans (which most people don’t get anymore) 60 percent of workers have less than $25,000 saved.

Can you now see the writing on the wall? Being on the verge of retirement with no money is not the end of the world but it most certainly will mean a lot of changes and soul searching are forthcoming for those individuals in this situation. Will they make it? Only time will tell . . .

© 2012 Fischer Financial Group L.L.C.