While some American families are fiscally fit and confidently executing their plan for retirement, unfortunately that is not the case for far too many Americans. A cursory glance of newspaper headlines or surfing news sites on the Internet on any day of the week communicates that very clearly.
After reading numerous news stories and based upon lots of conversations with family and friends, my experience has been that most families generally fall into one of five groups.
The first group simply has no understanding, and no real desire, to learn more regarding saving and investing for their future. Often their focus in on living solely for the moment, certain that things will somehow work out in the future. Winning a lottery perhaps? Or maybe hitting it big in Las Vegas?
The second group understands that they should be doing something, but are not sure where to start. They may have little money set aside in a savings account but aren’t committing any money to an investment or retirement account.
The third group is saving and investing something; however, they are doing it blindly and could not tell you why they chose their particular investment products, have no discernible way to tell if they are saving enough for retirement, and they do not know how much they will need to sustain them in retirement.
The fourth group has at least the broad outlines of a plan in place, has used some type of calculator to quantify how much they should be saving, and is actively engaged in managing their finances with an eye on the future.
The final group is well on their way to being financially independent and are looking beyond their own retirement and mortality; they are actively engaged in planning for generational wealth transfer. We’ve discussed the topic on multiple occasions here at RetirementSavvy. The importance of estate planning and wealth generation in black families has been covered; as has dealing with inheritance taxes; and establishing family values and retaining family unity to ensure a successful transfer.
I think it’s safe to assume no one from the first group visits this blog or is reading this particular post. Do you belong to group two, three, four or five, dear reader?