My wife is always accusing me of lecturing when I am trying to make a point. She also tells me not to point with my finger as I make the point. Well, tonight as I point to the bottom line of my real estate tax bill that came in the mail, I cannot help but slip into my imaginary plaid jacket with the elbow patches, grab a piece of chalk and begin scribbling on the likewise imaginary blackboard that stands in my living room lecture hall.
And the subject of today’s lecture? Well class, it’s about the money cycle and how it rotates through your life if you are an average joe like me.
When Rosemarie and I were married in 1967, my first job out of college paid me $90 a week. Rosemarie, as a nurse, brought home $11 more. I used to go to the A&P supermarket every weekend with a grocery budget of $14. Can you imagine that today?
It took us ten years before we accumulated enough money to put down on a house and actually have our very own mortgage….still do. We had young kids and job commutes and two car payments and all the usual stuff. It took us, oh I’d say another 15 or so before I felt “comfortable” with our income serving our needs and even having some left over for an IRA contribution. We were not living in the lap of luxury by any means, but we were “okay” as long as we didn’t go nuts with the credit cards and some huge impacting disaster didn’t come along.
Then, once we became empty-nesters we were able to devote a lot more attention to the retirement fund. By then, we realized we better start stoking away as much as we could because the Social Security checks we’d be getting wouldn’t be enough to survive on.
Next, comes the retirement cycle. The greatest joy retirement has to offer is a sound one…literally. It’s not having that damn alarm clock buzzing away every morning. And, correspondingly, the worst element of retirement is not having a paycheck.
So it seems, based on my personal worldly experience with economics, there exists a money cycle for families like mine…and it goes like this:
As a young adult you struggle with bills and live paycheck-to-paycheck. Unexpected bills present a formidable challenge and thing like dental appointments don’t exist unless there’s pain.
As you establish a family you work harder and with growing skills and some luck your income grows. As you earn more during this cycle you are finally able to keep up with the bills—just barely—and you may even get to take the family on a summer vacation to the beach. You will probably devote a little more time at the dentist, since the teeth you neglected the past decade are now falling out of your mouth. Meanwhile, you are constantly on the prowl for greater opportunities because now represents your prime time for upward mobility. Then, eventually you reach retirement. Don’t expect a gold watch or a big a party. Most big companies don’t do that anymore…nor do they have a pension waiting for you. They may provide a box in which you can pack up your personal things as someone representing the company stands in the corner and observes to make sure you don’t steal the stapler.
Then you go drive the commute home for the final time and guess what? The money cycle now reverts back to exactly the same role it played when your earning years first started. Once again, you struggle with bills as you live Social Security check to Social Security Check. You hope those funds you stashed away in your IRA and 401Ks are enough to handle the overflow, especially if you wind up with catastrophic health issues. Don’t look to be standing on the edge of that big rock from the closing scene of the Lion King, holding up the new generation lion cub and singing Hakuna Matata.
For many people, their lives went in all the right directions because they were talented and worked hard…or not, and still managed to compile a comfortable stash to see them through their so-called golden-years. But for those, who like me, worked hard, had some great opportunities and accumulated some wonder friendships along the way…the piggy bank was never stuffed enough. So if you are among this latter group, here comes the main point of my lecture. Even if it’s only a buck a week in a jar, start as young as you can to accumulate money for your retirement. It’ll be here a lot sooner than you think.