Several weeks ago I was on a webinar given by my IRA custodian. The presenter talked about what my later search on the internet called the "100 Man Story" as follows:
Out of 100 people age 65:
- 1 will be wealthy
- 4 will be financially secure (having at least $3,000 a month in income which equates to at least $36,000 a year)
- 5 will be working
- 36 will be dead
- 54 will be dead broke
In my brief searching, I found several other versions that were frequently quoted:
The one I give the most credence to (although perhaps erroneously since the data is from 2000) is:
The 100-man story is a widely used historical study that was compiled by the Department of Health and Human Services that found that for every 100 people in the workforce, the following outcomes would exist at age 65:
§ On average, roughly 16 out of 100 do not live to reach age 65.
§ Sixty-six who do live to reach age 65 and have incomes at or below $20,000 annually forces them to become dependent on their children, government, or charity, or requires them to continue working in some capacity beyond age 65.
§ Fourteen will have income in excess of $30,000, giving them the ability to be financially independent. Unfortunately, $30,000 of their annual income does not provide a very substantial quality of life.
§ Only four people have an income in excess of $50,000 annually, which make them both financially independent and successful. Some would argue that the number would have to be much larger than $50,000 annually in order to maintain the current standard of living of many individuals.
*Source: Social Security Administration, Office of Research and Statistics, April 2000.
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According to the U.S. Department of Health, Education and Welfare (HEW was renamed to Health and Human Services (HHS) in May 1980 so this is 30 years old):
1 very wealthy
4 comfortably well off
5 still working
36 dead
54 flat broke and in massive debt
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Another version (no idea of the date these were computed):
4 will be well off - they will have annual income of more than $40,000
49 will have annual incomes of between $7,000 and $40,000
22 will have income below poverty level - less than $7,000 a year
25 will be dead.
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Although I've seen one of these versions before, it didn't hit me because I was not yet 65 myself! Now that I've reached that age, I am thinking a bit more (or not).
What comes to mind are several things:
- where people live makes a difference in their views
When we owned the locksmith shop in Reno, Nevada, we were pretty much near the bottom of the income scale which won't make any sense at all to those who thing that small-business owners are rich. I was kind of awed by people who had money since we didn't have any.
When my daughter and I moved back to New York State in the early 1980s and I eventually was hired on at IBM, went back to school, and moved up the income food chain, I saw things a different way. Many of the people in the area where we lived had college educations and held technical positions where they made pretty good money. My friends were primarily drawn from those I worked with and we all kind of fell into that category. So, what I saw was fairly well off people and very few economically challenged people.
It wasn't until the early 2000's when I accompanied family on a driving trip from Texas to Northern California bypassing the freeways that I had a pretty eye-opening experiencing seeing how most of the rest of the country lived. These were mostly the people who were making do. It brought me back to the reality of how very lucky we were to be living and working where we were. It was humbling. It also helped me understand how the numbers in the above charts could make sense. It is primarily the pockets of people along the East and West coasts and some of the specific areas of the country that have big universities and/or one or more industries with good-paying jobs that fall into the smaller category of the more well off. The rest of the country seems to make up the lower income numbers. That's not to say there isn't a mix in most communities; just that more well off dominate in some areas and less well off dominate in others.
- our nation's current financial situation
Our current national situation is not so good. Our federal government has done a couple of things (at least) that have helped a lot to get us into this miserable situation:
- they have acted like money grows on trees just like many of the rest of us. They have truly set a horrible example for the people. The government should be setting an example of balanced budget, following that budget and cutting spending.
- they have taken on way way too much responsibility for the people. I believe the government is the main reason why we have so many "poor" people. (See my blog post "Broke vs. Poor".) If Big Brother will take care of you, why should you lift a finger to take care of yourself. That's who many of us are in this country today and it is ruining the country. I believe the government should get out of our lives and get back to doing exactly what the Constitution spells out for them to do.
- our possible future outcomes
Because of the mess we are in, we do not have a clue what the future will hold for America. There are many theories but no one knows for sure. And, it's darn sure the government will take the wrong steps to get us back on track since they almost always do.
So, will we get back on an even keel with little or no damage or will we crash and burn? No one knows for sure. In my opinion, the best thing to do is deleverage and hunker down a bit. The reason I like this strategy is that it is always good strategy whether we get back on an even keel or we crash and burn. Debt is a horrible thing. Society and the media make it sound like a great idea when it is really an awful choice to make.
The best advice in any financial situation is:
- Cut your lifestyle and pay off your debt as quickly as you can.
- Create a budget for each month before the month begins and stick to it!
- Build up an emergency fund of 3 to 6 months of expenses (I suggest 6 months given the current situation)
- Get rid of credit cards since, without you even being aware of it, you usually spend 18% to 20% more than you might spend if you were using cash. Debit cards are OK as long as you track each expense in a check register and be sure to track them to your budget.
- Always cover your "4 walls" (rent/mortgage, food, utilities, transportation) in your budget before anything else.
If you have no debts and have money in the bank, the stresses are greatly limited. Those who achieved this before the recession, could choose not to participate in the recession.
- people's perceived needs may vary
If you are struggling financially, your primary needs are pretty clear: the "4 walls" - rent/mortgage, food, utilities, transportation. Everything else is gravy. When you have enough to pay the "4 walls," work your way down the list of expenses from highest priority to lowest priority. The higher up the income chain you are, the more "things" become perceived needs to you in many cases.
However, there are those people who are quite content with less than they can afford. I give those people a big hand. We have become a society of STUFF. Granted some stuff is nice and makes our lives more comfortable. BUT, you can't take stuff with you when you die. We need to rethink our priorities about stuff. There are way more important things in life than stuff like our families, our friends, our relationship with our Lord. I think we need to begin rethinking our "stuffitis" and stashing away some of the money we used to spend on stuff and giving some of that money to support the Lord's work.
At Thanksgiving, one of my daughter's friends was talking about the possibility of purchasing a small plot of land and a "tiny house" to put on it to live in. In my opinion, that's going a bit far. But, for some people, that may make them perfectly happy.
Blessings,
Mary
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