financial reflections

I’ve heard this one several times before: everyone’s becoming a millionaire.  It goes right along with the idea that the rich are getting richer and the poor are getting poorer.  These days, that certainly seems to be the case.  Some of us are watching the numbers on our quarterly statements getting bigger, while the rest have the bankruptcy attorney on speed dial.

But there is a question I can’t avoid here:  Why are there so many millionaires today?  Here’s a few answers I came up with:

1. Inflation - A million bucks ain’t what it used to be.  It’s understandable that there are more millionaires.  When I was a kid, they’d only be half-millionaires.
2. Stocks and Real Estate - Stocks have gone up recently, and the real estate bubble is well documented. 
3. These days, you can’t afford to not be a millionaire - Pensions are quickly becoming a thing of the past.  Social Security is in trouble.

I’d like to focus on that last one for a second.  My parents aren’t millionaires, but they are pretty good with money.  In fact, if I was as good as they were, I might not be blogging right now.  I’d just be marching merrily along to my first million, wondering why everyone else was making such a fuss about money and going bankrupt all over the place.

But my parents also have a full pension.  They didn’t need a gigantic cushion.  The same goes for my spouse’s grandfather.  He’s been retired for as long as he’s been working.  He was also good with his money, as many in his generation were.

But you and I likely don’t have that option.  No pensions, questionable social security benefits and an ever increasing life span make it imperative for us all to save now.  In Lee Eisenberg’s book The Number, he states that one can safely retire on 4% of a nest egg.  That’s only 40 grand if you have a flat million to draw from.  What will that look like 10 years from now.  What will it look like when you’re 100?

I don’t want to be all doom and gloom.  I realized these things later than I should have, but early enough to do something serious about it.  I’ve set aggressive financial goals for the year, because I’m really not interested in living like most Americans are these days - spending more than they earn.